Lateral entry, blind alley

Far from infusing energy, it could further enfeeble the bureaucracy.

Written by Gulzar Natarajan | Published: April 13, 2015 12:00 am
Government could contemplate hiring outside talent to head certain pre-identified projects. (Source: AP) Government could contemplate hiring outside talent to head certain pre-identified projects. (Source: AP)

As the Seventh Pay Commission prepares its recommendations, the debate on lateral entry into the civil services has restarted. Supporters have long argued in favour of lateral entrants being recruited at the levels of joint secretary, additional secretary and secretary to the government of India.

The conventional wisdom on lateral entry is that it infuses fresh energy and thinking into an insular, complacent and often archaic bureaucracy. It enables the entry of right-minded professionals and the adoption of best practices for improving governance. However, this belief should be weighed against our country’s sociopolitical context, as well as the complex nature of our public policy challenges.

Mainstream arguments in favour of lateral entry underestimate these realities and are informed by the belief that its success in mature presidential democracies like the United States can be readily replicated here. They underestimate the recruitment, functional and operational difficulties associated with lateral entry.

For a start, a generalised system of lateral entry poses formidable recruitment challenges. Given the erosion of state capability and institutional credibility at all levels, it runs the risk of degenerating into an uncontrollable “spoils” system. This, coupled with the inherent problems of revolving-door personnel management, raises concerns about accountability. There is a strong likelihood that, far from infusing fresh energy, lateral entry could further enfeeble the bureaucracy.

Functionally, the cutting edge of implementation of the policies formulated in the vast majority of such postings is at the subnational level, most often at the level of local government. These policies are implemented in a complex and dynamic ecosystem, involving negotiations between multiple interest groups, several bureaucratic and political layers, as well as numerous resource and state-capability constraints. In the absence of adequate field experience, lateral entrants entrusted with policy formulation are likely to have only a limited appreciation of these challenges. A few sanitised visits to primary health centres or cursory interactions with field nurses do not equip you with the skills to formulate healthcare policies for a vast and diverse country like India.

Then there are the operational challenges associated with lateral entry. Any infusion of cherry-picked external talent into only high-profile posts, apart from adversely affecting the morale of incumbents, is also likely to distort the incentives of entrants. How do we mitigate the incentive distortions that are likely with a revolving-door approach, by which market talent moves back and forth between the government and corporate world? Restrictions imposed to address these distortions are only likely to turn away the best and brightest, precisely those sought to be attracted through lateral entry.

Further, will the best market talent be attracted by a lateral entry process that offers a mix of high-profile posts and unglamorous, even drudgery-filled, ones? Would such talent be willing to rough it out in a complex and uncertain, sometimes frustrating, work environment for a 10 to 15-year tenure at a fraction of their market remunerations? If it fails to attract the best and brightest and only crowds-in the also-rans from the market, as is likely, then we end up with the worst of both worlds — a demoralised bureaucracy and lateral entrants of less-than-desired quality. Finally, there is the issue of its impact on the civil service. If the limited high-profile and critical posts get earmarked for lateral entrants, who are more likely to effectively bargain in a “spoils” system, it would adversely affect career-progression opportunities. The consequent deterrent effect on civil service aspirants, leave aside the morale of the incumbents, could be significant. These are just a few of the operational challenges associated with lateral entry.

Given all this, far from rectifying the current failings of the Indian bureaucracy and improving governance, generalised lateral entry could potentially deepen the fissures in the bureaucracy and weaken governance as well as public service delivery.

Under these circumstances, a prudent approach is required. There are already precedents for lateral entry of professionals into the higher echelons of policymaking. The ministry of finance has institutionalised the practice of appointing advisors to the government from the world of academia and the corporate sector. The Reserve Bank of India and the erstwhile Planning Commission, as well as its successor, the Niti Aayog, all have a history of lateral entry. The government has already decided to open up the posts of public-sector bank heads to market competition. A carefully calibrated expansion of its scope would be an appropriate strategy to infuse fresh talent into the country’s bureaucratic system.

The government could contemplate hiring outside talent to head certain pre-identified mission-mode projects and public-sector entities where private-sector expertise could be invaluable — like in the case of Nandan Nilekani and Aadhaar. Similarly, leadership positions in large infrastructure projects could be filled through open competition between civil servants and market talent.

The recruitment and service rules for such posts have to be clearly defined and made incentive-compatible, and the processes managed transparently. A credible statutory agency like the Union Public Service Commission or an autonomous agency like the Bank Board Bureau, established to hire heads of public-sector banks, should be entrusted with the responsibility of recruitment. All this, coupled with competition among both serving bureaucrats and market participants, would help avoid many of the aforementioned pitfalls associated with general lateral entry. Further, this would be in line with the lateral entry strategy adopted by more developed parliamentary democracies like the UK.

Such an approach would have to be complemented with liberalised norms that allow civil servants to work outside government — with multilateral agencies, nonprofits and corporations — for short periods. By enabling exposure to market practices and fresh ideas, this, as much as infusing outside talent into government, is likely to help achieve the objectives of lateral entry itself.

In conclusion, rather than a headlong plunge into an uncertainty-filled process of generalised lateral entry, a more nuanced strategy stands a greater likelihood of success. Else, lateral entry risks becoming just a bandaid on gangrene.

The writer is director in the prime minister’s office. Views are personal.

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