1INTRODUCTION

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1.1 Th e Second Administrative Reforms Commission was set up with a wide mandate to prepare a blue print for revamping the public administration system and to suggest measures to achieve a pro-active, responsive, accountable, sustainable and effi cient administration for the country at all levels of government.

1.2 Th ere is a growing realization that many agencies of government are functioning sub-optimally, and government programmes have not always yielded the desired results. While the achievements of the public services are praiseworthy in dealing with the vast expanded responsibilities since Independence and especially during diffi cult periods of crisis, they are often defi cient in crucial areas such as productivity, responsiveness, accountability and integrity. Authority frequently appears to be divorced from accountability, leading to a system of realistic and plausible alibis for non-performance. Ineffi ciency, corruption and delays have become, in public perception, the hallmarks of public administration in India.

1.3 Administration should be reformed to bring about improved transparency, greater accountability and streamlining of the structure of government, based on decentralization, civil services reform, an open and responsive government, rule of law, fi scal and environmental sustainability and elimination of all forms of corruption. Th ere is need to restructure our governance institutions and rejuvenate our administrative system so that it can respond to the growing challenges of governance. Th e State needs to reorient its focus on the core functions of government such as maintaining peace and stability in the country and the task of social investment and provision of public goods through investment in the social sectors like health and education, as these are critical to lifting people out of abject need, preventing inter-generational transmission of poverty, long term development of human capital, achievement of full human potential and promotion of rapid, sustainable and equitable economic growth.

1.4 Public servants today are at the helm of complex challenges of administration in critical sectors like policing, education, healthcare, transportation, land management, infrastructure, skill promotion, employment generation, rural development and urban management. All these are intricate issues, which call for domain expertise, long experience in the sector, and

PS21 Public Service for the 21st Century (Singapore)

PSC Public Service Commission

PSD Public Services Division (Singapore)

PSUs Public Sector Undertakings

RBSS Railway Board Secretariat Service

RTI Right to Information

SAG` Senior Administrative Grade

SC/STs Scheduled Castes/Scheduled Tribes

SCOS Special Committee of Secretaries

SCS Singapore Civil Service

SES Senior Executive Service

SHO Station House Offi cer

SPARC Second Provisional Administrative Reforms Commission (Japan)

SPIPA Sardar Patel Institute of Public Administration

SQIU Improvement Unit (Singapore)

SVPNPA Sardar Vallabhbhai Patel National Police Academy

TERI Th e Energy and Research Institute

UDCs Upper Division Clerks

UK United Kingdom

UPSC Union Public Service Commission

USA United States of America

UTs Union Territories

YASHADA Yashwantrao Chavan Academy of Development Administration

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deep insights into the social and economic realities, besides qualities of leadership and the capacity to manage and respond to change. Processes of civil service recruitment, periodic training, promotion and posting strategies and career management have to be reformed urgently to help the public servants develop such skills. Th ere is need to foster excellence in the public systems, and attract continuously the best talent and expertise while ensuring that they are citizen-centric.

1.5 Administration must become far more accountable and eff ective in delivering results with the same expenditure. In order to accomplish these goals, there should be conscious eff orts to establish the links and fuse authority with accountability. While compliance with processes is important to ensure objectivity and fairness, the processes themselves need to be simplifi ed and changed from time to time. Priority needs to be given to ensuring that the intended outcomes benefi t society. Th ere is need to redesign our delivery mechanisms in an innovative manner based on past experience and best practices and deploy the nation’s fi nest talent for this purpose.

1.6 Although several Commissions and Committees have been set up in the past to examine various aspects of public administration, a comprehensive review of the entire public administration system was last done by the First Administrative Reforms Commission, which was set-up in 1966. Since then, several important changes and developments have taken place driven by the pressing need to reform, rapid changes in technology including information technology and signifi cant institutional changes like the emergence of a constitutionally-mandated system of local government in our country. Th is has obviously necessitated the need for a comprehensive review of public administration as mandated for this Commission.

1.7 In any system the quality of public servants is the key determinant of outcomes. It is in this context that this Report of the Commission, on Refurbishing of Personnel Administration, is critical to its wider mandate. Specifi cally under this Term of Reference, the Commission is required to look into the following aspects of administration:-

(i) Review the policy relating to and all methods of recruitment, training and placement and suggest changes, if required.

(ii) Provide guidelines for enhancing performance of civil servants and its appraisal.

(iii) Improved methods of cadre management focusing on career progression, motivation and productivity enhancement.

(iv) Strategies for upgradation of skills and competencies of civil servants and administrative cadres and appropriate interventions for capacity building.

(v) Linking of performance of Civil Servants and Government personnel to social and economic objectives and outcomes.

1.8 To get a deeper understanding and feedback on the issues pertaining to the civil services, the ARC formulated two comprehensive questionnaires [Annexures I(1) and I(2)]. Th e questionnaires also highlighted the Commission’s approach to the key principles of civil services reform which need to be particularly emphasized. Th ese are mentioned below:

• Setting right the asymmetry of power: It was noted that there is an imbalance in the exercise of power in governance. Often systemic rigidities, needless complexities and over-centralization make public servants ineff ective and helpless in achieving positive outcomes. On the other hand, negative power of abuse of authority through fl agrant violation of law, petty tyranny and nuisance value is virtually unchecked. Th is situation is further aggravated by the asymmetry of power in our society. Th e ‘privileged’ government position gives even the lower government functionaries, enormous power over most of the citizens given the abject poverty, illiteracy and a lingering feudal culture. Th is needs to be set right in any eff ort towards public services reforms.

• Insulating civil servants from undue political interference: In a democracy, the civil service has to be answerable to the elected government. Th ere is criticism, however, that increasingly partisan intervention and cronyism are undermining the Rule of Law, distorting incentives and condoning corruption. Th is is adversely aff ecting the morale of public servants. Th e relationship between the political executive and the civil services needs to be transformed on the basis of mutual understanding, respect and recognition of each other’s distinct roles and responsibilities.

• Professionalisation with stability of tenure and competition: Th ere is need to recognize the complex challenges of modern administration in various spheres of activities. Meeting such challenges require domain expertise and long experience in the sectors concerned. Th ere is also need to foster excellence in the public system. Existing procedures and practices do not adequately help in developing domain expertise, nor do they help in utilizing the available domain expertise.

• Citizen-centric administration: Th e fact that the functioning of the civil services has an impact on the quality of governance and thus on the well being of the citizen

IntroductionRefurbishing of Personnel Administation – Scaling New Heights

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deep insights into the social and economic realities, besides qualities of leadership and the capacity to manage and respond to change. Processes of civil service recruitment, periodic training, promotion and posting strategies and career management have to be reformed urgently to help the public servants develop such skills. Th ere is need to foster excellence in the public systems, and attract continuously the best talent and expertise while ensuring that they are citizen-centric.

1.5 Administration must become far more accountable and eff ective in delivering results with the same expenditure. In order to accomplish these goals, there should be conscious eff orts to establish the links and fuse authority with accountability. While compliance with processes is important to ensure objectivity and fairness, the processes themselves need to be simplifi ed and changed from time to time. Priority needs to be given to ensuring that the intended outcomes benefi t society. Th ere is need to redesign our delivery mechanisms in an innovative manner based on past experience and best practices and deploy the nation’s fi nest talent for this purpose.

1.6 Although several Commissions and Committees have been set up in the past to examine various aspects of public administration, a comprehensive review of the entire public administration system was last done by the First Administrative Reforms Commission, which was set-up in 1966. Since then, several important changes and developments have taken place driven by the pressing need to reform, rapid changes in technology including information technology and signifi cant institutional changes like the emergence of a constitutionally-mandated system of local government in our country. Th is has obviously necessitated the need for a comprehensive review of public administration as mandated for this Commission.

1.7 In any system the quality of public servants is the key determinant of outcomes. It is in this context that this Report of the Commission, on Refurbishing of Personnel Administration, is critical to its wider mandate. Specifi cally under this Term of Reference, the Commission is required to look into the following aspects of administration:-

(i) Review the policy relating to and all methods of recruitment, training and placement and suggest changes, if required.

(ii) Provide guidelines for enhancing performance of civil servants and its appraisal.

(iii) Improved methods of cadre management focusing on career progression, motivation and productivity enhancement.

(iv) Strategies for upgradation of skills and competencies of civil servants and administrative cadres and appropriate interventions for capacity building.

(v) Linking of performance of Civil Servants and Government personnel to social and economic objectives and outcomes.

1.8 To get a deeper understanding and feedback on the issues pertaining to the civil services, the ARC formulated two comprehensive questionnaires [Annexures I(1) and I(2)]. Th e questionnaires also highlighted the Commission’s approach to the key principles of civil services reform which need to be particularly emphasized. Th ese are mentioned below:

• Setting right the asymmetry of power: It was noted that there is an imbalance in the exercise of power in governance. Often systemic rigidities, needless complexities and over-centralization make public servants ineff ective and helpless in achieving positive outcomes. On the other hand, negative power of abuse of authority through fl agrant violation of law, petty tyranny and nuisance value is virtually unchecked. Th is situation is further aggravated by the asymmetry of power in our society. Th e ‘privileged’ government position gives even the lower government functionaries, enormous power over most of the citizens given the abject poverty, illiteracy and a lingering feudal culture. Th is needs to be set right in any eff ort towards public services reforms.

• Insulating civil servants from undue political interference: In a democracy, the civil service has to be answerable to the elected government. Th ere is criticism, however, that increasingly partisan intervention and cronyism are undermining the Rule of Law, distorting incentives and condoning corruption. Th is is adversely aff ecting the morale of public servants. Th e relationship between the political executive and the civil services needs to be transformed on the basis of mutual understanding, respect and recognition of each other’s distinct roles and responsibilities.

• Professionalisation with stability of tenure and competition: Th ere is need to recognize the complex challenges of modern administration in various spheres of activities. Meeting such challenges require domain expertise and long experience in the sectors concerned. Th ere is also need to foster excellence in the public system. Existing procedures and practices do not adequately help in developing domain expertise, nor do they help in utilizing the available domain expertise.

• Citizen-centric administration: Th e fact that the functioning of the civil services has an impact on the quality of governance and thus on the well being of the citizen

IntroductionRefurbishing of Personnel Administation – Scaling New Heights

and the welfare of the community as a whole is often forgotten. Th e perception of the civil services today is of a vast impersonal organization without commitment to human needs and values. It is necessary to redress the situation particularly in this era of participative democracy by making the governance apparatus an instrument of service to the people.

• Accountability: Th ere is a general feeling that existing mechanisms of accountability are inadequate. On the one hand, there are alibis for non-performance and on the other, competence and integrity are not adequately recognized or rewarded. Th erefore, innovative and eff ective mechanisms need to be put in place to protect public money, guarantee intended outcomes and enforce accountability.

• Outcome orientation: Monitoring in government is primarily through measurement of expenditure against outlays and at best through defi ned outputs. Clearly, there is need to move towards measurement of outcomes. A change in this direction has already started with the initial outcome budgeting exercises. In order to engineer this shift to outcomes, major changes in attitudes, monitoring and evaluation systems, incentives and accountability measures are necessary.

• Promoting public service values and ethics: Apart from the traditional civil service values of effi ciency, integrity, accountability and patriotism, it is necessary for civil servants to inculcate and adopt ethical and moral values including probity in public life, respect for human rights and compassion for the downtrodden and commitment to their welfare.

Th ese core principles and the issues emanating from them have been analyzed in detail in various chapters of this Report.

1.9 During its visit to the States, the Commission held detailed discussions with the Governors and Chief Ministers, retired civil servants, eminent public personalities, offi cers of State Governments and members of the public and the media. Th e Commission also organized a series of consultations with the Central and All India Services. Th e Commission held two workshops organized jointly with the Management Development Institute (MDI), Gurgaon and the Indian Institute of Public Administration (IIPA), New Delhi respectively. Discussions were also held with the Secretaries to the Government of India and Heads of Departments. In addition, the Commission took assistance of several experts to get a deeper understanding of the diff erent aspects of administration. Th e Commission had discussions with heads of the Confederation of Indian Industry (CII), Federation of Indian Chambers

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of Commerce and Industry (FICCI) and several corporate leaders. Th e Commission also visited Singapore, Australia, Th ailand, France and the United Kingdom and had extensive discussions with the authorities there in order to understand the process of reform of public administration in those countries.

1.10 Th e Commission would like to thank Shri S.K. Das, Consultant of the ARC for providing very important inputs in drafting this Report. Th e Commission is grateful to Prof D.P. Agarwal, Chairman, UPSC, Shri Subir Dutta, Former Chairman, UPSC and Shri K. Roy Paul, Member, UPSC for sharing their views on civil services reforms. Th e Commission acknowledges the valuable suggestions of Dr. N.R. Madhava Menon on the subject of post-school grooming for civil servants. Th e Commission would also like to thank Shri Rajeev Chandrasekhar, Member of Parliament and President FICCI and other members of FICCI for their valuable suggestions; the Commission would like to thank Shri K.V. Kamath, Managing Director and Chief Executive Offi cer of ICICI Bank Limited and President CII and Shri K Ram Kumar, Group Chief Human Resources Offi cer, ICICI Bank, for presenting the human resources management practices in the corporate sector. Th e Commission is grateful to Shri T.V. Rao for his contribution to the section on the performance management systems and to Prof. Pradip Khandwalla for preparing a Report on the Organisational Structure of Government. Th e Commission acknowledges its gratitude for the very useful suggestions made by eminent retired civil servants, including former Cabinet Secretaries, former Secretaries to Government and former Heads of Central Police Organisations, at a meeting held in Delhi. Th e Commission expresses its gratitude to the World Bank, India offi ce and Shri Vikram Chand, Senior Public Sector Management Specialist, Dr. Prajapati Trivedi, Senior Economist World Bank and Shri K. Sarwar Lateef, Governance Specialist, for giving a global perspective on public services reforms and good governance. Th e Commission would also like to thank Shri J.C. Pant, Chairman, Administrative Reforms Commission, Uttarakhand and the Chairman and Members of the Tamil Nadu State Administrative Reforms Commission and Bihar Administrative Reforms Committee for sharing their views on various reform measures proposed bythem. Th e Commission acknowledges the contribution of a large number of offi cers and experts including Shri Naved Masood, Additional Secretary and Financial Adviser, Ministry of Health and Family Welfare, Shri K.P. Krishnan, Joint Secretary, Ministry of Finance, Shri O.P. Agarwal, Former Joint Secretary, Department of Personnel and Training, Shri Rakesh Hooja, Additional Chief Secretary (Training) and Director, HCM, RIPA and Shri Hasmukh Adhia, Director General, SPIPA. Th e Commission is grateful to the Chairman and Members of the Sixth Central Pay Commission, with whom the Commission had very useful discussions. Th e Commission is thankful to DFID India offi ce for a very useful

IntroductionRefurbishing of Personnel Administation – Scaling New Heights

and the welfare of the community as a whole is often forgotten. Th e perception of the civil services today is of a vast impersonal organization without commitment to human needs and values. It is necessary to redress the situation particularly in this era of participative democracy by making the governance apparatus an instrument of service to the people.

• Accountability: Th ere is a general feeling that existing mechanisms of accountability are inadequate. On the one hand, there are alibis for non-performance and on the other, competence and integrity are not adequately recognized or rewarded. Th erefore, innovative and eff ective mechanisms need to be put in place to protect public money, guarantee intended outcomes and enforce accountability.

• Outcome orientation: Monitoring in government is primarily through measurement of expenditure against outlays and at best through defi ned outputs. Clearly, there is need to move towards measurement of outcomes. A change in this direction has already started with the initial outcome budgeting exercises. In order to engineer this shift to outcomes, major changes in attitudes, monitoring and evaluation systems, incentives and accountability measures are necessary.

• Promoting public service values and ethics: Apart from the traditional civil service values of effi ciency, integrity, accountability and patriotism, it is necessary for civil servants to inculcate and adopt ethical and moral values including probity in public life, respect for human rights and compassion for the downtrodden and commitment to their welfare.

Th ese core principles and the issues emanating from them have been analyzed in detail in various chapters of this Report.

1.9 During its visit to the States, the Commission held detailed discussions with the Governors and Chief Ministers, retired civil servants, eminent public personalities, offi cers of State Governments and members of the public and the media. Th e Commission also organized a series of consultations with the Central and All India Services. Th e Commission held two workshops organized jointly with the Management Development Institute (MDI), Gurgaon and the Indian Institute of Public Administration (IIPA), New Delhi respectively. Discussions were also held with the Secretaries to the Government of India and Heads of Departments. In addition, the Commission took assistance of several experts to get a deeper understanding of the diff erent aspects of administration. Th e Commission had discussions with heads of the Confederation of Indian Industry (CII), Federation of Indian Chambers

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of Commerce and Industry (FICCI) and several corporate leaders. Th e Commission also visited Singapore, Australia, Th ailand, France and the United Kingdom and had extensive discussions with the authorities there in order to understand the process of reform of public administration in those countries.

1.10 Th e Commission would like to thank Shri S.K. Das, Consultant of the ARC for providing very important inputs in drafting this Report. Th e Commission is grateful to Prof D.P. Agarwal, Chairman, UPSC, Shri Subir Dutta, Former Chairman, UPSC and Shri K. Roy Paul, Member, UPSC for sharing their views on civil services reforms. Th e Commission acknowledges the valuable suggestions of Dr. N.R. Madhava Menon on the subject of post-school grooming for civil servants. Th e Commission would also like to thank Shri Rajeev Chandrasekhar, Member of Parliament and President FICCI and other members of FICCI for their valuable suggestions; the Commission would like to thank Shri K.V. Kamath, Managing Director and Chief Executive Offi cer of ICICI Bank Limited and President CII and Shri K Ram Kumar, Group Chief Human Resources Offi cer, ICICI Bank, for presenting the human resources management practices in the corporate sector. Th e Commission is grateful to Shri T.V. Rao for his contribution to the section on the performance management systems and to Prof. Pradip Khandwalla for preparing a Report on the Organisational Structure of Government. Th e Commission acknowledges its gratitude for the very useful suggestions made by eminent retired civil servants, including former Cabinet Secretaries, former Secretaries to Government and former Heads of Central Police Organisations, at a meeting held in Delhi. Th e Commission expresses its gratitude to the World Bank, India offi ce and Shri Vikram Chand, Senior Public Sector Management Specialist, Dr. Prajapati Trivedi, Senior Economist World Bank and Shri K. Sarwar Lateef, Governance Specialist, for giving a global perspective on public services reforms and good governance. Th e Commission would also like to thank Shri J.C. Pant, Chairman, Administrative Reforms Commission, Uttarakhand and the Chairman and Members of the Tamil Nadu State Administrative Reforms Commission and Bihar Administrative Reforms Committee for sharing their views on various reform measures proposed bythem. Th e Commission acknowledges the contribution of a large number of offi cers and experts including Shri Naved Masood, Additional Secretary and Financial Adviser, Ministry of Health and Family Welfare, Shri K.P. Krishnan, Joint Secretary, Ministry of Finance, Shri O.P. Agarwal, Former Joint Secretary, Department of Personnel and Training, Shri Rakesh Hooja, Additional Chief Secretary (Training) and Director, HCM, RIPA and Shri Hasmukh Adhia, Director General, SPIPA. Th e Commission is grateful to the Chairman and Members of the Sixth Central Pay Commission, with whom the Commission had very useful discussions. Th e Commission is thankful to DFID India offi ce for a very useful

IntroductionRefurbishing of Personnel Administation – Scaling New Heights

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presentation made about reforms in the UK. Th e Commission is grateful to the offi cers of the Ministry of Defence and the three Services for their comprehensive presentation on the performance appraisal systems in the Armed Forces. Th e Commission acknowledges with thanks several important suggestion on civil services reforms, received from the representatives of the media. Th e Commission is particularly grateful to the dignitaries and offi cers of the countries visited, for sharing their experiences of reforms undertaken in their respective countries.

2HISTORY OF CIVIL SERVICES IN INDIA AND REFORMS

2.1. History

2.1.1 Th e Macaulay Committee which gave India its fi rst modern civil service in 1854 recommended that the patronage based system of the East India Company should be replaced by a permanent civil service based on a merit based system through competitive entry examinations. As Macaulay’s Report said, “Henceforth, an appointment to the civil service of the Company will not be a matter of favour but a matter of right. He who obtains such an appointment will owe it solely to his own abilities and industry”.1 Th e Report made it clear that only the best and the brightest would do for the Indian Civil Service (ICS). Th e Report stated, “It is undoubtedly desirable that the civil servants of the Company should have received the best, the most fi nished education that the native country aff ords”.2 Th e Report insisted that the civil servants of the Company should have taken the fi rst degree in arts at Oxford or Cambridge Universities.

2.1.2 After 1855, recruitment to the ICS came to be based totally on merit. Th e report of the Civil Service Commissioners pointed out that of those who entered the ICS between 1855 and 1878, more than two-thirds were university men, equipped with a liberal and fi nished education.3 Initially, the ICS sought its recruits from Oxford and Cambridge. It was thus an elite service. Subsequently, it opened its doors to Indians and from 1922 onwards the Indian Civil Service Examination began to be held in India.

2.2 Th e Design of the Civil Service at Independence

2.2.1 While designing a successor civil service, the Indian political leaders chose to retain elements of the British structure of a unifi ed administrative system such as an open-entry system based on academic achievements, elaborate training arrangements, permanency of tenure, important posts at Union, State and district levels reserved for the civil service, a regular graduated scale of pay with pension and other benefi ts and a system of promotions and transfers based predominantly on seniority.4 Th e civil services in India can be grouped into three broad categories. Services whose members serve both the Union and the State Governments are termed as All India Services. Services whose members serve only the Union Government are termed Central Civil Services. Apart from these, the State Governments

1Macaulay Committee Report on the Civil Service (Fulton Committee Report), Vol.1, HMSO, London (1975)2Macaulay Committee Report3B B Mishra, Th e Bureaucracy in India, Oxford University Press, 19774R B Jain and O P Dwivedi, Bureaucracy in India: Th e Developmental Context, in R B Jain (ed.), Bureaucratic Politics in the Th ird World, Gitanjali Publishing House, 1989

Refurbishing of Personnel Administation – Scaling New Heights