The Hindu Business Line : Prefer performance, not procedure

If the Prime Minister truly wants a diligent and efficient bureaucracy, he should withdraw the Financial Advisors who breathe down the necks of hard-pressed officials making nitpicking objections, and replace them with assessors who evaluate results, not steps. For, if you check every step, the steps will be as you wish but not the result; if you check the result, the steps may not be what you like but the result will be, says P. V. Indiresan.

IN THE previous article, I had advocated devolution of financial powers from the Finance Ministry to operational units of the government. I also commented on the current stop-go system by which all financial approvals terminate on March 31 each year and are reissued in the new financial year.

Finalising on such financial sanctions can take anywhere from a few weeks to several months during which period government operations are in limbo. Instead, I suggested, that financial sanctions should have time overlaps so that at no time government work is either held up or delayed due to absence of budgetary sanction. Purists have objected to these suggestions on the ground that they breach constitutional requirements.

The current procedure follows from the Constitutional requirement that all expenditures of the government should have parliamentary approval. There is a long history of struggle in Britain on this issue between the Crown and Parliament. Kings used to be autocratic; they taxed at will and spent as they liked.

After a tussle that lasted more than a hundred years, the British Parliament won the right to determine how taxes are collected and how they are spent. Thereby, it acquired the power to protect the interests of its constituents.

These days, the bureaucracy of the operational divisions of the government performs the functions of the Crown. Ministries (particularly, Finance) are the operational arms of Parliament and keep a watch over the operating units and check constantly that they abide by the wishes of the Parliament.

Thus, this policy of tight budgetary control has a long historical legacy and an important purpose behind it. Unfortunately, this system of check has now turned into a sacred ritual like the pujas performed by priests. The primary purpose behind the ritual is forgotten; the procedure rather than the purpose has become sacrosanct. Pomp takes precedence over piety.

There is a concern that if the strict oversight currently exercised by the Finance ministry is relaxed, officials will go haywire, and the government will lose a sense of direction. On the other hand, however hoary the prevailing system of budgetary control may be, the fact remains that it has made India one of the most corrupt and least competitive countries of the world.

Even ardent supporters of the status quo must agree that the government is not efficient, that corruption dominates in many cases. At least for that reason, we should debate what changes would help improve matters.

Primarily, the problem starts with physical limits of any one's ability to function. However, high and mighty one may be, nobody has more than 24 hours a day, and even of those 24 hours, only a fraction is usable. When the US got its independence from Britain, President George Washington himself signed and authorised the first patent issued for a new invention. He could do so because, in those days, a patent application was a rare event. Now, patents are so many that a lowly official performs the same function that once the US President himself used to do.

Whether it is Parliament or the Ministry, physically, it has time to perform only a limited number of tasks. When numbers increase, as is the case in the number of tasks undertaken by the government, it is a physical imperative that authority be handed down to lower echelons.

There is an understandable fear that delegation of authority will result in loss of control. That is the reason why many family businesses do not expand. However, as many large organisations have demonstrated, it is possible to retain control even after delegating authority. In that case, individual decisions are not checked; only the consequences of the innumerable decisions taken by lower level functionaries are checked. In other words, the type of decisions taken is so changed that the number of decisions taken any one day is manageable.

There is another dimension to this issue of control. When individual decisions are checked, the presumption is that no individual decision will be made wrongly. The fact that each individual decision was taken strictly according to rules does not mean that the overall result is optimum.

There is a well-known saying that one is not able to see the forest because of the trees. Similarly, a Finance Ministry, which checks every item of expenditure, will not be able to optimise the overall result. Conversely, if the Finance Ministry wishes to optimise the outcome, it should cease checking every detail of expenditure.

There are sound mathematical reasons behind these statements. Even without such complex theorisation, we can still appreciate why tight control is harmful.

Suppose you employ a supervisor to check that your housemaid cleans every nook and corner of the room properly and in the prescribed manner. With the supervisor at her back all the time, the maid will work so slowly that little gets done.

What is more, she will never innovate; will never improve; will never undertake any task outside her prescribed functions. If by chance, an accident happens and the sofa catches fire, she will continue to do whatever she was doing because putting out fires is not her job! In a system of precise control, unforeseen events are nobody's job. That is, more or less, the way government operates.

The Prime Minister, Dr Manmohan Singh, has asked in great anguish what should be done to make officials more committed to their work. The answer is simple: Using the jargon of his own specialisation of economics, ceteris paribus (all other things being equal), officials who enjoy autonomy are more committed to their duties than those who do not enjoy autonomy. If the Prime Minister wants officials to be more committed to their responsibilities, he should give them more and more autonomy.

The present system entertains zero tolerance; not a single lapse is acceptable. Officials can be punished for a single lapse however good their overall performance. In such a system, no official optimises the outcome. With nose to the wheel, oblivious of the consequences, officials do not cooperate; they look after their own narrow interests. That is well known in bureaucratic circles; it is called "protecting one's patch".

It is human to err. Only dead persons commit no mistakes. Insisting that persons commit no mistakes is no different from making them lifeless automatons. Commitment implies devotion beyond the call of duty. It is no accident that no act of heroism has been performed by persons who are monitored.

If the Prime Minister truly wants a diligent, efficient bureaucracy committed to its responsibilities, he should replace, as far as possible, the system of "deficit financing" by block grants. He should withdraw the Financial Advisors who breathing down the necks of hard-pressed officials making nitpicking objections day in and day out, and replace them with assessors who evaluate results, not steps; that is, institute performance audit in place of procedure audit.

The rule is clear; you get what you value. If you check every step, the steps will be as you wish but not the result; if you check the result, the steps may not be what you like but the result will be good.

Committed officials undertake responsibilities beyond the call of duty. They innovate more than imitate. Making rules sacred will produce only imitators and no innovators. It is no accident that "working to rule" is synonymous with slowing down all work to a crawl.

As time is money, nitpicking on rules is the same as wasting money. If the Prime Minister wants committed officials, he should give them the autonomy to interpret rules their own way, encourage them to experiment, strike new paths, even make mistakes. Charge them if they fail to reach the goal and not if they stumble on the way, not even if they follow a route other than the one you prescribe.

A fable

Once upon a time, there was a calf. One evening, it walked home through a thick jungle. The distance to its home was only one mile but it walked three since, like all calves, it wandered here and there, left and right, up and down. The next morning, a shepherd dog passed that way and saw the calf's hoof marks, and followed the path of the calf through the woods. Shortly after, the first sheep of a flock followed the path and behind it so did all other sheep. Thus, a path through the woods was made.

Men began to use that path, cursing its twists and turns as they did but doing nothing about it. The path gradually became a lane, and the lane became a road and horses and bullock carts followed the steps of the wandering calf. A century later, the road became a street and then, a city's crowded thoroughfare with thousands following the footsteps of the wobbly calf. Three centuries later, the road became the main street of a very large city. Buses, lorries, trams and cars followed the zigzag path of the calf cursing the authorities and wasting precious time and money. But, they all followed the same path.

(The author is former Director, IIT Madras. Response may be sent to: indresan@vsnl.com)