Monday, June 22, 2009

Protecting the Steel Frame
*Saumitra Mohan

In a recent survey by 1274 experts working across 12 North and South Asian nations, the Indian bureaucracy has been dubbed as the worst and the least efficient in the whole continent, behind Vietnam, China and Indonesia. While the findings are not very shocking and surprising, one has every reason to worry about. After all, the future development does depend on the strength and efficiency of this institution. There is, therefore, an urgent need to grope deeper into the reasons to fix the problem rather than just keep cursing the once famed Steel Frame of India.

Among the various reasons responsible for the present sorry state of affairs of Indian bureaucracy, one principal reason relates to the constant interference with its functioning as well as the power of the political class to transfer or shunt the civil servants to inconvenient or insignificant posts. The transfers are often made for the most absurd of the reasons or sometimes for the alleged or suspected proximity to the opposing political party or faction. More often than not, if a bureaucrat decides to put his/her foot down against illegal orders or just decides to go by the rulebook, he or she often gets the boot. It is against this background that the proposed Central legislation to tackle such irregularities becomes significant.

The Centre is believed to be busy preparing a legislation which shall not only assure the civil servants of a fixed-tenure posting, but is also likely to protect them from mundane political interference in their day-to-day functioning. Not only this, all such appointments, transfers and postings of top civil servants are likely to be subject to parliamentary scrutiny to remove the element of discretion in such orders. If the proposed Bill becomes a reality, the IAS and IPS officers in the country will no longer be at the mercy of the whimsical transfers and postings which seem to be order of the day in many parts of the country.

However, there is a rider to the proposed legal protection against irregular transfers and postings. The government is also learnt to be planning to bring in a new Public Service Code which would lay down a strict performance evaluation regime for promotions and postings of India’s ‘Babus’ (read bureaucrats).

All these provisions along with many other proposals are already on the anvil as part of the proposed Civil Services Bill, 2009 to reinvigorate India’s famed steel frame to prepare it better to deal with the newer challenges of development administration and governance. The Bill is being further fine-tuned and is supposed to be a spruced-up version of the Public Service Bill, 2007, which could not see the light of the day during the previous regime. The various provisions of the Bill are likely to be applicable, first to the IAS and IPS officers and may later be extended to all the other All India Services including the Indian Forest Service.

The Bill, having incorporated sundry suggestions of the Second Administrative Reforms Commission, has also envisaged setting up a new Central Public Service Authority (CPSA) at the national level. This Authority will not only supervise the professional management of the premier civil services, but is also expected to be a watchdog to secure the interests of the civil servants and citizens through a system of checks and balances.

If the Civil Service Bill does become an Act, all the civil servants are supposed to get a minimum fixed tenure of three years. And if one is to go by the provisions enshrined in the Bill, a civil servant, being transferred prematurely, shall have to be suitably compensated for the inconvenience and harassment caused due to the same. The top-level appointments including that of the Chief Secretary and the Director General of Police in the states are to be made out of a panel of candidates to be screened and drawn up by a State-level Committee comprising the Chief Minister, Leader of the Opposition as well as the Home Minister. As of now, the Chief Minister is the sole authority taking a decision on such appointments.

Usually, such transfers and postings have been the prerogatives of the government in power, with no reference to the Opposition. The proposed Bill fixes this anomaly with due recognition being given to the Leader of the Opposition as well in making a decision regarding such top appointments in the states and at the Centre. So, the Leader of the Opposition is likely to play a crucial role at both the levels. Like the state-level top appointments, the Leader of the Opposition is also to have a say in the appointment of the Cabinet Secretary and other top posts. Like the state level postings, the Cabinet Secretary, too, is likely to be selected from a panel to be drawn by the Central-level Committee comprising the Prime Minister, the Leader of the Opposition and the Home Minister. If the government decides to deviate from the norms laid out in the Act, it shall have to inform and explain the reasons for the same to the Parliament for doing so.

The performance evaluation of the bureaucrats has also been given adequate attention in the said Bill. The performance parameters of the officers are to be given due importance before being considered for the top jobs. A more scientifically-designed objective system of performance evaluation is proposed in place of the extant practice of Annual Confidential Reports (ACR) which merely takes a panoramic view of a civil servant’s work through the year. The new Performance Management System shall evaluate the bureaucrats on their job-specific achievements and the number of tasks that they perform as a Team Leader in a particular department.

The proposed system is likely to be managed by the CPSA which will supposedly be supervised by a Chairman of the rank equivalent to that of the Chief Election Commissioner. The Chairman, CPSA is to be appointed for five years by a Committee comprising the Prime Minister, a Supreme Court Judge, the Union Home Minister and the Leader of the Opposition in the Lower House of the Parliament. With the Cabinet Secretary acting as its Convener, the CPSA will aid and advise the Central Government in all matters concerning the organization, control, operation, regulation and management of public services and public servants.

CPSA is also to be the custodian of the Public Service Code for the civil servants. This Code, supposed to replace the current All India Services Conduct Rules, is to be framed with a view to enable the civil servants towards proper discharge of their official duties with competence, accountability, care, diligence, responsibility, honesty, objectivity, impartiality, without discrimination and in accordance with the law of the land. The CPSA, comprising three to five members, will also have the power to recommend action against the public servants who do not adhere to the Public Service Code and public service values. After the Bill becomes an Act, the CPSA will also compile and submit a report to the Central Government detailing the compliance with the various provisions of the new legislation by every Ministry and Department of the Government every year.

One hopes that the necessary spade-work for making this Bill into an Act shall soon be completed to make it a reality sooner than later. However, one does feel the need to hammer out the various implications such a Bill is likely to have for the Centre-State relations in our federal polity.
Employment Guarantee, Not Employment Subsidy Approach Suits Indian Conditions
*Saumitra Mohan


A liberal welfare state tries to ensure equitable distribution of the development pie by resorting to myriad ways of redistributive allocation of values among its citizens. One of such measures include employment guarantee schemes for the toiling masses to ensure them work for minimum number of days on pre-decided subsistence wages. It is with this objective that the National Rural Employment Guarantee Scheme (NREGS) was launched in all the districts of this country. This follows on the back of various employment generation and food for work programmes including Integrated Rural Development Programme (IRDP), Community Development Programme (CDP) and Swarnajayanti Jawahar Rojgar Yozna (SJRY). NREGS is actually predicated on the experiences and knowledge gained during implementation of all these previous schemes.

Since then, many observers have come up with suggestions and proposals for further fine-tuning of this flagship employment guarantee programme. This author read with interest an article recently which espoused the idea to provide employment subsidies to employers instead of providing guaranteed jobs through state-run employment generation programmes like the NREGS. The underlying assumption of the said proposition was the belief that such an approach would create jobs more efficiently and effectively than done by the present employment guarantee scheme.

Nobel Laureate Prof Edmund Phelps was quoted in the said write-up as saying, “Although such programmes have been substantial in Europe and the US, the working poor remain as marginalized as ever. Indeed, social spending has worsened the problem because it reduces work incentives and, thus, creates a culture of dependency and alienation from the commercial economy, undermining labour force participation, employability and employee loyalty.”

Proposing an alternative, Prof Phelps says, “The best remedy is a subsidy for low-wage employment, paid to employers for every full-time low wage worker they hire and calibrated to the employee’s wage cost to the firm. The higher the wage cost, the lower the subsidy, until it has tapered off to zero. With such wage subsidies, competitive forces would cause employers to hire more workers, and the resulting fall in unemployment would cause most of the subsidy to be paid out as direct or indirect labour compensation. People could benefit from the subsidy only by engaging in productive work.”

It is believed that the employment generated through this alternative scheme that Prof Phelps proposes, shall be an asset for the economy instead of a burden. Prof Bharat Jhunjhunwala of IIM, Bangalore believes that the present approach provides for taxes to be imposed mainly on urban business enterprises while money is spent in rural areas. The urban businesses have to bear the tax burden while the benefits are reaped by faraway villages. The business sector suffers on account of higher wage rates. The availability of some employment in the villages acts as a disincentive for workers to move from labour-surplus to labour-scarce areas because some employment is available locally under the Rojgar Guarantee Scheme. The author bemoans the fact that the business enterprises do not only have to pay higher taxes, but also have to pay higher wages. The author believes that if Prof Phelps’ suggestion is accepted then the taxes paid by businesses are recouped by receiving employment subsidies. The net outgo on wages shall be reduced due to subsidies thus received.

While the author’s suggestion for subsidy to labour-intensive industries does make some sense, but going whole hog for Prof Phelps’ proposed alternative definitely does not, more so in the Indian context. To begin with the beginning, notwithstanding the supposed failure of the employment guarantee scheme in the developed countries, they still have not been able to replace the same with the ‘employment subsidy’ approach as advocated by many including Prof Phelps.

This is notwithstanding the fact that such employment guarantee schemes have been in force for over 50 years in most of these developed countries. Prof Phelps’ proposal is fraught with loopholes and complexities and prone to more corruption than one thinks. Moreover, it also does not promise to increase the job opportunities for the jobless as has been proved to be practicably possible by the present employment guarantee scheme, the many implementational hitches and glitches notwithstanding.

First and foremost problem with this approach is the moral hazard of passing off the extant employment in a firm to claim wage subsidies falsely and dishonestly. The employers led by petty and comprador bourgeoisie, in stead of creating new employment, would try to ingenuously cheat the system for claiming the subsidies. After all, we don’t necessarily have a data-base of employed manpower of all such firms and industries. And such a data-base, even if created and maintained, may not be completely sacrosanct. Our experience tells us as to how such data-base is often tinkered and tampered with, often to the advantage of the high and mighty.

So, any system of working out compensatory subsidies for employers by establishing contrived linkages to employment generation is going to be very complex and is also likely to involve a lot of scope for discretion and subjectivity for the bureaucracy than the extant system. There is definitely no need to compensate big businesses for higher taxes levied on them as there are already multiple government schemes and incentives for performing enterprises and businesses. Moreover, even after paying those taxes, they are still left with decent profit margins to go shopping the world over for acquiring many of the renowned companies even in times of recession. Over the years, our tax and incentives structure have come to be comparable with the best in the world.

The assumed fear that such employment guarantee scheme actually encourages mediocrity and dependence on government is far from the truth. The present system is an incentive-based transparent system where a more productive worker can earn more if she/he gives more output and her/his wages shall correspondingly be higher compared to others whose output is less. The fear that villages unduly gain at the expense of towns is unwarranted, to say the least. The fact remains that towns are always better endowed in terms of basic services and facilities than those found in the villages. The employment guarantee scheme not only ensures assured employment for a household throughout the year (considering 100 days for each adult member of a family including the handicapped), it also envisages creation of basic infrastructures in the countryside.

It is believed that the progressive creation and availability of such infrastructures and employment opportunities in the countryside shall discourage people from migrating to the urban areas where basic infrastructures and services are already feeling pressure of increasing population. It shall also bridge the gap between rural and urban areas in terms of socio-economic indicators which are quite uneven at the moment. It is believed that wages in the urban areas shall go up consequent to reduced emigration and reduced availability of workers from the rural area. With less workers competing for more works, the real wages in urban areas shall go up which would continue to attract a minimal number of workers from the countryside as per changing demand and supply curve. The increased wages for urban workers shall be in keeping with the increased expenses required for urban living eventually enabling them to lead a better life than has been possible otherwise.

The apprehension that reduced availability of low wage workers shall either lead to shut-down of enterprises in the urban areas or relocation of many of them to the rural areas is also unfounded. At a time when we are talking of liberalization and globalization, we definitely should have no reason to think of the industries who shut down as a result of having to pay higher wages to the workers, more so when multiple government incentives are available. The enterprises need to learn to survive the cut-throat competition in the market. They always have the option of shaping up or shipping out. Moreover, such an apprehension remains far fetched as the pool of low wage workers shall still be larger in this unreasonably populous country despite local availability of guaranteed employment in the villages as there still are many push and pull factors which drive people to the urban areas. As such, there is no reason to panic.

Still, if some of them decide to move to low-wage areas which are likely to be under-developed, it is all the better as that would lead to infrastructural and capacity development of such areas and further improvement of quality of life there which eventually may see rise in labour costs in those areas as well. The cycle may go on till all parts of the country are more or less equitably developed. The government can actually think of giving incentives for relocation or establishment of new industries including labour-intensive ones in the backward and underdeveloped areas.

The belief that the current employment guarantee approach reduces labour force participation and employability of a worker is also not true. The experience from all over the country tells us that labour force participation in the economy has only increased as a result of operation of such a scheme and as a result, per capita income has also gone up. The multiplier effect of such a rise has been perceptible in the relatively high economic growth rates and other development indicators of our economy, recession notwithstanding. Besides, an employment guarantee scheme is also immune to the negative impacts of a recession. While the government shall have more reason to persist with such employment guarantee schemes in difficult times like recession, the employers, finding reduced demand and market for their products, would shut down overnight rendering all the workers under their dispensation jobless.

Again, contrary to the belief, the employability of a worker is also not compromised because of in-built incentive structure in such employment guarantee schemes as the worker learns to be more hard working to earn higher wages by giving better output and by being more productive. The various training programmes given to people under the said scheme and under many other schemes do give the workers a choice to decide for themselves as to what do they intend to do. The dovetailing and convergence of many such cognate schemes and programmes further could yield better results with better value allocations among the hoi polloi. The cascading multiplier effects and resultant pay offs for the country as a whole is bound to be better and greater than commonly understood.

The supposed acquisition of newer skills under the employment subsidy approach is quite problematic and is more at the level of assumption than a reality. The belief that the innocent, ignorant and gullible workers would get better jobs and acquire better skills as per their choice and aptitude moving from one industry to another for job-shopping is misplaced and fraught with danger. The danger emanates from the feared exploitation of workers by these enterprises who are likely to take advantage of their helplessness and non-possession of requisite skills by paying low wages and forcing them to work in unhygienic and undignified working conditions.

Most of these enterprises are not likely to be enlightened enough to do a charity by employing an ignoramus and inexperienced worker to teach him/her newer skills to employ him/her later. However, the spirit of the proposal here is well taken and one does feel that the scope and ambit of such employment guarantee scheme needs to be further broadened and diversified. It could also be creatively fine-tuned to offer better wages and better opportunities to the people. But one has to give the scheme some time to evolve naturally and be more promising and better suited to the requirements of the employment-seeking workers.

After all, the Constitutional Right to Work, as envisaged in the fourth chapter of the Indian Constitution detailing directive principles of state policy, which took five decades to be translated into a reality, is likely to be some more time to be better customized to the requirements and needs of the target people. The very fact that NREGS, after being launched selectively in some districts of the country for guaranteed employment in the rural areas throughout the year, has now been extended to the entire country, is itself a big achievement of sorts.

The belief that the alternative proposal is corruption proof compared to the present one is also not true as already pointed out above because of the element of discretion and subjectivity inherent therein. The extant scheme because of the transparent system of job-card, fixed responsibility to provide jobs within fifteen days of receipt of an application demanding work or to pay unemployment allowance in case of failure of the same and the provision of social audit is much better placed to do the needful. The provision of job cards, public hanging of Muster Roll, public notice of details of an on-going works and Muster Rolls and a participatory social and financial audit of all the aspects of the schemes ensure better transparency and accountability than any other scheme. The Right to Information plugs the loopholes and fills the gaps, if any left anywhere.

Yes, one does feel that there is lot of scope for further improvement of the scheme. One is sure that as more feedback from the field is received and fed into the system to further fine-tune it, the extant scheme shall respond better to the tasks and objectives it is supposed to realize. To give some credit to Prof Phelps, his proposal can be tried on an experimental basis in selected areas as a pilot project rather than completely replacing the extant scheme. After all, it is too early to pronounce a judgement on the success and failure of the same. And in any case, an ingenuous and creative mix of the two conceptions rather than an exclusive reliance on any of the one can always be a better idea. One hopes that NREGS would evolve with time in keeping with the objective of realizing and ensuring growth with equity and justice.

Also, with the failure of the invincible capitalist system of economic development as represented by the Washington Consensus, it is all the more accepted and acknowledged that we can no longer depend on market forces for taking up social responsibilities. Rolling back the state completely is no longer an option. The state has to be there as a regulator and disciplining force with minimal responsibilities of maintaining law and order, dispensing justice and building an equitable society. So, the ‘employment subsidy’ approach, as dependent on private enterprises, is just not acceptable in preference to the employment guarantee approach.

Monday, June 15, 2009

Indo-Bangladesh Relations: Moving Forward
*Saumitra Mohan

Indo-Bangladesh bilateral relations have been through many ups and downs in recent times even though one expected the same to be ensconced in better understanding and appreciation of each other’s problems and expectation. The expectations were predicated on the positive and proactive role played by India in Bangladesh’s liberation. Though, it also helped India by reducing the need to fight Pakistan on two fronts because of the latter’s ability to mount a pincer attack on India from two sides.

This, however, turned out to be pious wishes merely because of the ensuing political games in Bangladesh. Whatever may be the reason, the fact remains that the present state of Indo-Bangladesh relations actually belies the expectations of the initial euphoria immediately in the aftermath of Bangladesh’s liberation.

Now, with a supposedly pro-India liberal government in the saddle, expectations of an improvement in the bilateral ties have naturally soared again. The visit of the Bangladeshi brass to thank India for its neutrality during the recent revolt is another example of a simulated bonhomie. Different issues including bilateral economic ties, illegal infiltration from Bangladesh, sheltering anti-India forces in its territories and disputes relating to border demarcation are among the contentious issues still dogging the bilateral ties.

However, a development, noticed recently as worth recalling and deserving some close attention for the very implications and ramifications the same entail for the Indo-Bangladesh relations. An Islamist Arsenal-cum-Madarsa, masquerading as a British charity organization, has been unearthed in Bangladesh’s Bhola town. It only confirms the level of fundamentalist penetration in that country, more so when we have a supposedly tolerant, liberal and pro-India dispensation. Such a discovery contains very ominous portents for India’s internal security management as this may only be a tip of the proverbial ice-berg.

The very fact that the constituent articles seized from the said religious Seminary included a speedboat gives tell-tale indications of ominous intentions of the operatives there. Had the same not been discovered, many more destructive and disruptive activities must have been in store for India. It also reminds us of the Karachi to Mumbai voyage of another group of militants finally eventuating in the terrorist incursions of Mumbai on 26th November last year. It is quite obvious that the said Seminary as much as the arsenal, arguably covering the dispensation of the military-backed interim administration, were built over time, with clandestine support from the anti-India forces in that country.

Such a development also raises important questions about the role of the UK-based charity organization in this bizarre and senseless export of terror. The involvement becomes still more suspect as the arrested financier of what has functioned under the label of a Madarsa-cum-Orphanage is based in London. What is surprising is the fact that notwithstanding all the hot air regarding curbing terrorist and cognate incendiary activities and infrastructures in the West, one could still find such agencies operating with impunity right under the nose of the British government.

One can very well argue that Faisal, the said Bangladeshi tycoon, fits into Britain’s ethnic profiling of terror, a perception formulated after London’s 7/7 (2006), something which has been rightly resented in the sub-continent for the racist overtones of the same. Still, the unearthing of such activities by the people from the sub-continent, particularly from Pakistan and Bangladesh, does compel one to do a rethink over this ethicizing of terror. The Seminary, with its lucrative offshore connections along with incoming resources and expertise, used the same to run a training centre for the terrorists with evil designs against this country.

It is really quite tragic that even after 38 years of its independence, Bangladesh still stands in unsplendid isolation in terms of geography. Myanmar, the only other country aside from India with whom it shares a land border, has lately reinforced its troops to fence a portion of 270-km border which is just a fraction of India’s over 4000 kilemetre-long frontier with Bangladesh. But given the recent noises emanating from Bangladesh soil, it is increasingly being favoured as a strong-hold for different militant organizations including as a proxy for Pakistan’s Inter Services Intelligence (ISI) to carry out disruptive activities against neighbouring countries. It is in view of this development that the Mynmarese authorities have pulled out all stops to complete the task of border fencing.

This is in sharp contrast to the Border Security Force’s (BSF) partial border fencing because of strong reservations and protestations from across the border. Unlike the Western flank, India is yet to install the state-of-the-art anti-infiltration obstacle system, fitted with sophisticated alarm gadgets to check illegal infiltration by militants and economic migrants into this country. In absence of the same, guarding and securing our borders would remain quite a tall order as it is just not possible for our security men to guard every point of the difficult terrain along the 4000-kilemetre long Indo-Bangla borders.

We not only need to complete the border fencing immediately notwithstanding objections from our eastern neighbour, we also need to resolve the long-festering problem of the 225 enclaves, in each-others’ adverse possession, still subsisting within the borders of both the countries. The latter would make our borders more manageable and secure. It would significantly reduce, if not totally eliminate the infiltration from across the borders into this country.

It is believed that more than one crore Bangladeshis have entered this country illegally over the years, something which Bangladesh Government stoutly refuses to accept. The Hasina administration, if earnestly committed to its agenda, should not only open multi-level dialogue with India to resolve all the outstanding issues with this country, but ought to make honest effort to discourage illegal emigration into this country. It should also take the British government into confidence to get to the bottom of the sinister operations behind the façade of religious instructions as unearthed recently. The same should be done in right earnest with all seriousness it deserves if Bangladesh really wishes to come out of the trap-door of under-development to promise a better future to its populace. A happy and prosperous neighbour is always a better bet for India’s security.