Will Modi’s Minimum government phase out the Civil Service?

Madhu S at June 4, 2014

Categories

Will Modi’s Minimum government phase out the Civil Service? The context for this question lies in an attempt by the author to understand the concept of Minimum Government and the theory behind it. In nominal terms ‘Minimum Government’ is a facet of ‘Minimal state’ and the steps taken in reducing of cabinet size amounts to downsizing the government. The argument is whether Minimum Government means only downsizing or does it go to the extent of minimal role for the government or minimum state intervention. It is interesting to analyse this from the perspective of various other minimal government exercises undertaken in history, such as Margaret Thatcher in UK and Ronald Reagan in USA. Not to neglect the Chinese model of downsizing government, of course with an intention to centralise the Communist control. So has Modi’s visit to Beijing influenced his thoughts here? Ofcourse I would say Yes, but would say No to that model! Thankfully, given the statements and decisions taken by the Modi-led government; it seems he has chosen the Thatcher-Reagen model over Chinese Model (Premier Zhu Rongji was a major proponent). Before delving into these models, lets make it clear as to what a ‘Minimum Government’ means and ofcourse the larger question would be is- whether it will ensure ‘maximum governance’.

Minimum government largely means three things:- 1) A small government in size 2) Limited government in role and 3) a delegating government. All these factors induce cost cutting at various levels with focussed attention given on the core functions of the government ie. governance.

Downsizing Cabinet

The Modi Government has initiated downsizing successfully by reducing the cabinet size. A comparison of the erstwhile UPA government will give you the picture. UPA II had 71 council of Minister’s, while NDA has 46; a sizeable decrease of 35%. The decision to ban the practice of GOMS (Group of Ministers) and EGOMs (Empowered Group of Ministers) has been decisive for a shrinking government. Interestingly the average portfolios per minister has been kept constant at the cabinet level (1.5), while its 2.8 and 1.5 for Ministers of State (Independent Charge) and other Minister of State (MoS), a departure from earlier practices. It is said that PM Narendra Modi has saved Rs 125 Cr (INR 1.2 Billion) by this downsizing exercise, with savings in terms of salaries of the Ministers and his personal staff (15 for Cabinet Ministers and 13-14 for MoS), allowance, health benefits, travel and expense. One should read that the benefits for a Cabinet Minister = Family. Bigger the size bigger the benefit J The CEO style PM has already set things motion by fixing the working time, cutting on holidays and bringing accountability.

The question then is – Is there an optimal cabinet size? The 2009 Administrative Reforms Commission report envisaged a maximum of 20-25 super ministries. Kristoff De Witte and WimMoesen in their seminal paper “Sizing the Government” did an econometric analysis of cabinet sizes relying on ‘Armey Curve’ which estimates the relationship between government size and economic performance. Government intervention and size was tagged with the tax burden on the people and institutions imposed by the government. They conclude that a small size government brings in higher economic growth based on assessment of different countries (OECD Countries) and analysis on different factors (population, form of government,urbanization,openness, GDP).

Armey Curve

Limited government

What is the role of the state/government? I am not delving into the philosophical dimensions to this question and leave it to the experts to answer it. But what I believe (so also few others) is that state was important to develop a structured society, to ensure its sustained order and help in the progressive development of the people and society at large. However, the modern state needs to reinvent its functions and role, especially since the nature of governance and dependence on government has undergone significant changes with technology. The physical interface between state and its people have started to diminish with most of the services available online (from birth certificate to tax payment). There is a need to reinvent the state and it is here the relevance of e-governance initiatives attain importance which Mr Modi has emphasised. A transparent and accountable government will not just eradicate corruption, but will also increase trust of the people and enable swifter decision making and implementing process. A participatory approach is imminent and I would believe that the call of the PM to use social media platforms will go a long way in dissemination and engagement of the people. The fact that within 4 days of launch the Prime Minister Office (PMO) official Facebook page crossed 1 Million with around 0.3 million engagements (talking about) in addition to 1.4 Million twitter followers, supports this argument. As Arthur Sheldon has propounded that the “State Shall Roll Back” with emphasis on governance than running Air India like institutions.

It’s important to assess the ‘Cost of Government’ and its impact on the society and the economy. The Bureaucracy shall be made competitive and accountable; which has never been tried out in India. Its not about having a representative system, but more of engagement with the people that matters in governance. How many of the bureaucrats do we know whose face can be identified, and whose works can be appreciated or admonished? These are larger questions which can be made possible by restructuring the bureaucracy to a point where we might not need any bureaucrats to actually run or administer the institutions. If all the systems are in place, this will be in practice, where certificates are issued automatically, funds are disbursed progressively and tax collected systematically (not to forget about the warnings from IT Departments!!). From a liberal perspective, it is a case of shrinking government and expanding markets made possible in a free market economy. This would however envisage both political and economic freedom and cannot exist in isolation.

Suggestions

Minimum government need to be involved to a stage of minimal role for the government- from a welfare system to free market system. This means giving the control of decision making on the people themselves and the ability to make choices by their own. State/Government should be the facilitator than the dictator, with actions induced from the bottom to top than top to bottom. Private sector involvement will be crucial in the years to come. This does not by any mean intend that Corporate’s will be running the country; but would mean that policy paralysis shall not affect industries and institutions. Clarity of policy and stable government will enable better growth. Brennan and Buchanan (1980: 185) point out that “total government intrusion into economy should be smaller, ceteris paribus, the greater the extent to which taxes and expenditures are decentralized.”

Minimising the cost of government or governance shall be the focus for the present government. This requires a systematic understanding of the functions and roles played by each rungs of the government. A cost benefit analysis of each department will enable to decide on the fate of some departments. The collective decision of phasing out shall be based on such analysis and a futuristic system to track the activities of each department, from files to bins. This calls for rationalising within departments and even within Ministries, through integration and delegation. The cost of locally acting overweighs a centralised system and therefore maximum emphasis should be on strengthening local self governments and empowering them. Why does the Minister of Transport at the centre decide on which bus should run in the streets of Mumbai, Chennai or Vijayawada?

Impact evaluation with performance metrics for bureaucrats and score cards for government departments need to be introduced. Let it be an open system where the people can also rate the best and the worst department. This need not be very objective, but shall be based on various indicators that shall measure the competency of Ministers, their bureaucrats and the department overall. Inconsistencies and bad sector files shall be delegated in this process. If there is an entry route, let there be an exit route for bureaucrats. Of course, not based on the whims and fancies of the politicians, but purely based on the metrics and the overall quality coupled with trust of the people.

Lastly, but not the least is the integration of technology and adoption of e-governance which has already been mentioned earlier. Open Governance models shall be followed with decision making made transparent and subject to feedbacks from the people. Like open government, openness to trade is positively related to government size and therefore the decision by the government to allow 100% FDI need to be envisaged in an open and transparent manner. In this manner we can even outrun China.

Participatory budgets, origin and destination analysis of funds, Scheme Impact Assessment (SIA) and its evaluation and an open dissemination and interaction (let the Modi laser shows continue!) shall enable the full realization of a participatory democracy. If the people had voted democratically, let them be governed democratically. Through these measures PM Modi can effectively visualize maximum governance.