Governance and the Seventh Pay Commission

Governance and the Seventh Pay Commission
The report of the Seventh Pay Commission has yet again lost a massive reform opportunity
Pay commissions are appointed to reform government as a delivery system, not just to hike salary scales of government employees.

Pay commissions have over time become trivialized into vehicles for raising the salary scales of serving and retired government employees, justified by citing the need to raise the calibre of aspirants to government service. Pay commission reports also do some minor tweaking of service conditions such as leave and medical entitlements, but neither these nor the salary hikes will by themselves transform the civil services into a functioning delivery system. It will happen only if the structure of government is reformed so that it is shaped to deliver.

The report of the Seventh Pay Commission has yet again lost a massive opportunity for effecting such reform. Surprisingly, for a salary hike that is justified on the grounds that it will raise the calibre of future entrants, no surveys of aspirants are ever performed to get what they are looking for. Are they just looking at salaries?

The terms of reference given to the Seventh Pay Commission were well drawn and explicitly directed them to “...foster excellence in the public governance system to respond to the complex challenges of modern administration and the rapid political, social, economic and technological changes, with due regard to expectations of stakeholders...” Although so empowered, the commission refrains at several points in the report from encroaching on administrative issues. They would have been applauded for doing so by a nation fed up with the bureaucratic gridlock.

The first deep reform needed was to mark a date—say 15 years into the future— beyond which posts at central ministries, including at the highest level, would be filled exclusively from services executing the function required in each. There is a Central Engineering Service (Roads), yet you would never find them occupying top posts in the ministry of road transport at secretary or additional secretary level, or in the National Highways Authority of India. Is it any wonder that an IIT graduate prefers to sit for the civil services exam for entrance into the Indian Administrative Service (IAS) rather than the Indian Engineering Services (IES) exam? The prospect of rising to secretary rank has to be advertised at the time of IES entrance for it to have an impact on the aspirant pool. Structural reforms need to be made today with that kind of forward delivery date.

The service parity issue has indeed been addressed in the report, but in terms of promotion intervals and pay disparities. The more serious consequence of the hierarchy between services has to do with disruption to functioning when a ministry with a particular deliverable is manned at the top by officials with no specialist knowledge or experience in delivering that service at the ground level.

What is technical? The report falls into the common trap of classifying the Indian Audit and Accounts Service (IA&AS) and all other accounts services as non-technical (para 7.4.5). But accounting and auditing are as technical as engineering, in the sense of requiring a specialized course of study. And how does the Indian Railway Store Service get into the technical list? These are all inherited categorizations which need to be done away with. The fundamental distinction is specialist versus general. Specialist services alone should fill posts delivering that specialized service. Simple.

The second failing of the system which the commission accepts as given is that there will be elite Group A services (including the IES inductees), accounting for as little as 2.8% of the total number of central employees (which itself, at 3.3 million, is small by international standards relative to the size of the population). The major task of delivering governance rests with Groups B and C, who are rewarded by being shut out from decision-making posts. This segmentation even within each deliverable has shattered internal cohesion within government.

The thin sliver entitled to key posts together with seniority issues makes for the continued shuffling of senior bureaucrats between ministries. Add to this the absurdity of certain ministries carrying more prestige than others, and you have the elite services themselves more disgruntled than pleased by the rigidities in the present structure. With constant movement at the top, the stable and stagnant base which actually executes the function within each ministry develops resentments and disrespect translating into dysfunction, enough to thwart even the most well-meaning and able IAS officers appointed to head them.

Therefore, the second deep reform that the pay commission needed to do was to define verticals for each of the major functions listed in part 7, and look at induction and progression through the vertical as a whole. IES service cadres constitute 15% of all engineers in government service. The vast majority of engineers are appointed not to a service, but to a subordinate post, with quotas governing the proportions of vacancies that can be filled through mobility from lower to higher posts. The pay commission tweaks these proportions, but quotas with floors for compulsory filling from lower levels are as damaging as ceilings to mobility. What is needed is a deeper reform of engineering into a single common service, with functional specializations, cadres within each graded A to E, and entrance to every grade and every level within every grade open to in-service applicants. A diploma holder who enters the service in Grade E should in principle be able to rise through talent and hard work all the way to Grade A.

The third reform needed is non-uniform retirement ages within each functional service. This nettle has been grasped in the armed forces, for example, where it is understood that combat troops have to retire earlier than those in desk jobs. Equivalently, there are jobs like that of linesman in electricity companies, where the rules prescribe an age ceiling for the work of line repair at 45, but where the individuals remain on the payroll up to the uniform retirement age of 60. In an upwardly mobile vertical, these employees can graduate up to higher levels, but for those who do not, the retirement age has to be equated to the performance limit for the function.

IES inductees at least take a separate engineering entrance examination. But a whole host of other services share a common entrance examination with the IAS. We then have the self-reinforcing system whereby, in a structure where higher posts are routinely filled by the IAS, the top ranking candidates in the common examination naturally choose the IAS, which then perpetuates the assignment of top posts to the IAS on the grounds that they got a higher rank in the common exam. The system constantly loops back into itself.

An example is the IA&AS, a Group A service. The post of Comptroller and Auditor General (CAG) as a constitutional position cannot be assigned to any service, so the highest post the IA&AS can aspire to is that of deputy CAG. In practice, the post of CAG is filled by retired IAS officers. Given that, clearly even applicants with excellent prior education in commerce and accounting would prefer the IAS, because among other advantages they get included in the pool from which the national auditor will eventually be drawn. Senior posts in ministries of financial adviser are also typically not filled from any of the accounts services.

The entire accounting and auditing vertical needs to merged, both horizontally across the several services into which it is splintered at the elite level (defence accounts, railway accounts and other such), and also merged vertically with posts into which accountants are inducted on the strength of prior degrees without an entrance test. With full merger, and unobstructed access to senior posts requiring accounting skills, we would begin to see the strength and confidence needed for ensuring that government expenditure is effective, without the obstructionism born of resentment.

The final paradox is that as salaries are regularly winched up for employees on the permanent payroll of government, the salary bill is sought to be held down in practice by either not filling vacancies, or filling them with temporary staff. The data on vacancies show one in five positions vacant as on 1 January 2014 on average across all departments, ranging up to nearly one in two positions in some ministries (the finance ministry among them). This is the single most important indicator of dysfunctionality of government in India, since elsewhere in the world, vacancies either address a functional need (in which case they are immediately filled), or not (in which case the post is axed). The report says nothing about either that or related issues such as the protection (not) accorded to contractual workers in outsourced services for the running of office canteens, security services, and maintenance of buildings and grounds, other than a feeble injunction (para 3.80) against exploitation of such employees.

Every commission is a reform opportunity. That is why the failure of the Seventh Pay Commission to look more deeply at the structure of government is something of such profound consequence. A pulpit like that happens only once in 10 years.