Banish the fear of the four Cs

The induction of nine experts as joint secretaries in important line ministries of the government of India is a significant step forward in the context of administrative reform. It will bring fresh ideas and domain expertise. However, in addition to personnel, administrative reform also needs to address the process of decision making. As it stands, the system is not conducive to a bold, risk-taking approach to decision making. At its stretched limit, it can perhaps sustain a 7 per cent growth trajectory, but will certainly not enable a quantum leap to a double-digit pathway.
 
For the economy to reach its true potential, decisions of the bureaucracy must enable the rapid expansion of the private sector. The default mode of the bureaucracy is to do the opposite or at best maintain status quo. For some it may be a matter of socialist hangover but for many more it is simply a matter of watching their backs. The dreaded ‘four Cs’ – CBI, CVC, CAG and Courts – continue to constrain the actions and even the imagination of the average bureaucrat. One of the corollaries of this is the obsession with maximisation of government revenue as an objective of certain policy decisions as if that it the only way to prove beyond doubt the bonafides of the decision maker. At any rate, the overall public interest, which ought to be the guiding principle of policymaking, has receded to the background.
 

Illustration by Binay Sinha

The Prevention of Corruption Act, 1988, until its most recent amendment in 2018 was a major culprit in inducing over-caution, even policy paralysis by making a bureaucrat liable for prosecution in the event her or his decision led to pecuniary advantage for any person (precisely the outcome of any reformist policy) with the qualification that there is no involvement of public interest. The Modi government’s amendment of the Act in 2018 was critical because it now requires proof of misappropriation of assets/disproportionate assets/money trail in order for a bureaucrat to be liable for prosecution.
 
But the fear has not gone away. That a former secretary to the government is behind bars for his role in the coal scam but not his political bosses leaves the bureaucracy feeling vulnerable. It is not surprising that the government’s ambitious strategic disinvestment programme, restarted after a decade in limbo, has failed to achieve even one successful sale because nobody would want to sign off on the sale of a government asset to a private party even if carried out through transparent processes. It isn’t surprising that auctions, which are in principle a good way to allocate resources, have not been deployed optimally. Most auctions are designed to obtain maximisation of revenue for the government, which means that an artificial scarcity is often introduced which in turn leads to over bidding. The end result may satisfy the “four Cs” but it may come at the loss of efficiency in the economy with over-burdened private companies and consumers.
 
It is time for a serious rethink on the role of the “four Cs” beginning with the CBI, CVC and CAG. These institutions have existed for long but have hardly deterred corruption if India’s ranking on global indices is any indicator. Yet they have succeeded in putting the brakes on bold decision making. Interestingly, all three are usually headed and staffed by career bureaucrats (not politicians or experts). So, there ought to be some professional camaraderie with the rest of the system of government and a willingness to rebuild trust.
 
As a start, these agencies must voluntarily study the larger impact of their actions. They must ask themselves; have they been able to seriously curb corruption or leakages in government? Or have they merely curbed the risk appetite of honest officers? How many corruption cases have the CBI and CVC actually carried through to convictions? What is the quantum of funds that CAG has saved for the government of India via its audit inputs? Someone needs to quantify these in the interest of accountability. After all, there may be alternative processes available for achieving their goals without nasty side effects. The next government could order a performance audit of these agencies but there is a risk of any such exercise getting tainted as government-interference in independent/autonomous agencies.
 
The fourth “C”, namely, courts, must also consider the wider implications of their decisions, particularly on bureaucratic decision making and the economy. In some countries, judges must fully analyse any spillover effects of their judgements on the health of the economy before pronouncement.
 
For India to meet the aspirations of its young population, the administrative system has to be oriented towards bold decision making. Of course, no system should give a free pass to corruption. Over time India’s bureaucracy has achieved the worst equilibrium: corruption and timid decision making. For rapid economic progress that needs to change.
 

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The author is chief economist, Vedanta