## Sunday, May 18, 2014

### Making the central government more manageable and effective

by Ajay Shah.

For the government to work, cabinet meetings must work well. For a meeting to work well, it can't have more than 15 persons. That gives you a real meeting, a conversation, an argument. If big groups are assembled then people just do speeches at each other and nothing is accomplished.

Fragmentation of inter-related functions into separate ministries has hampered work. We have shiny electricity generation plants that haven't been switched on as there is no coal -- this is the failure of cooperation between the Ministry of Coal and the Ministry of Power.

The US Cabinet consists of 15 ministries. The UK Cabinet has 22 members in all. In India, we have 33 ministers and then we have a long list of others who are cabinet members. The failure of the bloated Cabinet to work as a mechanism for arguments and planning has given rise to the proliferation of GoMs, and mini-Cabinet structures like CCEA, where the actual work gets done. These coping mechanisms have their own problems.

Why did we get a bloated cabinet structure?

1. Operating a vast socialist State requires much more government. As we pull back the State from indiscriminate meddling to the narrow goal of addressing market failures, this requires fewer building blocks. As an example, when India's objective was to cut off trade integration into the world, we needed a big machinery in the Ministry of Commerce.
2. Coalition politics gave us the pressure to invent more ministries, more ministers of state, etc. With that compulsion behind us, we can now come back to a tight and simple design. There is no reason to have a single Minister of State.

Once you start questioning the status quo, we see numerous opportunities for change, with ministries that don't need to exist, as Ila Patnaik has argued.  In some cases, all that's going on is an ownership function of a PSU -- e.g. Steel (SAIL) or DFS (PSU finance companies). For these, all that's required is a mechanism with multiple holding companies that will perform the ownership/governance function. The British ran India from Raisina Hill and we don't require a whole lot more than that. A sensible compact design would consist of:

1. Finance
2. Home
3. External affairs
4. Defence
5. Transportation
6. Energy
7. Justice
8. Agriculture
9. Commerce
10. Labour
11. Health
12. Education
13. Urban development
14. Poverty alleviation

That would give a 15-man Cabinet including the Prime Minister. This would be a tight and coherent body that would be able to talk with each other in depth, coordinate and plan.

It would also generate improved leadership by the PM and accountability to the PM. In the field of management, we have a thumb rule: One person should not have more than 7 persons reporting to him. In similar fashion, if the Indian PM has an 80-person Cabinet, he almost surely knows nothing about what most of them are doing. In contrast, with this 14-person Cabinet sketched above, the PM would have the capacity to have a sense about what each minister is doing, which would generate enhanced accountability and thus performance.

Moving to such a compact structure requires carefully analysing all existing departments of government, shutting down some, placing PSUs into holding companies, and putting others under the above 14 heads.

1. Excellent idea I think. The million dollar question is how do we manage the transition? e.g. What happens to the ministries we'd have to close down. Staff, duties, assets etc.

2. Government is organised as a set of departments. Each ministry is a vector of departments. Reorganising the Cabinet into 14 ministries means placing all existing departments under these 14 ministers. After that, it would be up to those ministers to think about how they reorganise the components placed under them.

3. I think environment and tourism make more sense than the vague sounding "poverty alleviation". Apart from reorganizing ministries, the emphasis should be on streamlining and standardizing processes so that ministries are able to deliver efficiently.

1. Tourism: You don't need a tourism ministry.

Environment: you don't need a _ministry_. A National Park Service can fight for biodiversity, an Environmental Protection Agency can be an independent regulator on pollution. In addition the Ministry of Health should worry about contamination of air and water.

Yes, there is a very big agenda in building and running sound ministries. This blog post is about one narrow problem: How to make a compact Cabinet which can actually have conversations, make decisions, resolve problems, and be held accountable. The bloatware of coalition governments can now be reversed.

4. Duh. Yes, of course I get that. All I'm saying is:

(1) It's a decision that would get a lot of opposition from the bureaucrats who end up losing their fiefdoms & power in this. Trust the IAS cadres to oppose this move passionately.

(2) It's a difficult transition that cannot be made suddenly but must be a very gradual, planned affair.

Again, I say it's a good idea but you cannot wish away the implementation details. It'll be a brave idea needing lots of political capital to battle entrenched interests.

The devil, as they say, is in the details.

PS. The Brit. Yes Minister series is recommended watching for observing what happens when you try removing a department from a Babu.

1. A historic mandate -- a clear majority for one party -- and some pesky IAS officers can block this? :)

It's really not hard. There is a Department of Coal. There is a Department of Electricity. We fold both into one Ministry of Energy with one single minister. Nothing else changes on day 1. There will be a Secretary heading each department -- as is the case today.

Ministers of State do nothing and nobody will mourn their absence.

Here is one key insight: Officials are not a lobby commanding a significant number of votes. Also see: http://www.mayin.org/ajayshah/MEDIA/2013/bureaucrats_stakeholders.html

2. Good article. I agree mostly.

The only part you are wrong is if you think officials are weak because the lack votes. A pragmatic minister will never alienate his "pesky" IAS core. If you think the lack of votes somehow weakens the bureaucrats hands you really out to watch some Yes Minister episodes.

Again, I'm not questioning the wisdom of your goal just saying that you are making it sound a lot easier than it really is. What you are describing are some major changes that'll be nice but challenging to implement.

3. Ajay:

Ministry of Energy will also have to gobble the famour MoPNG and along with that the ever entertaining gas pricing issue!

Great idea though!
h

5. Your list is reasonable indeed but I'm wondering why you chose the last two items.i.e. Urban development
& Poverty alleviation kind of stick out.

Can't they be dropped too?

OTOH you are missing at least one key ministry (I think). Did you forget Environment or leave them out consciously? In the Indian context that's a function too critical to be ignored & also the huge conflict of interest makes it hard to delegate that work to any other ministry.

Who does the Indian equivalent of FCC, EPA, & BLM answer to in your proposed game plan?

6. It is true that fragmentation of inter-related functions into separate ministries has hampered work. OTOH, fragmentation isn't the root of the problem. In any large, complex system there's bound to be such fragmentation & also dependencies across sub-system boundaries.

The ingredient we were sorely missing was a strong leader. Ministries will disagree but the PMO needs to be assertive in sorting out boundary effects. If a shiny power plant lies idle it's up to an effective PM to thrash things out in the Cabinet.

7. I agree with the concept but have doubts with which ones. Like why cant we merge Labour and Commerce into one say Industry.
Each ministry can have sub babus to work together. And incase of clash btw babus minister can decide.
And we just need one budget aka Finance. Ministries can have internal budget but don't need to present it.

Also we should look at relieving pains like 6 page Saral forms for IT returns. He can come up with simple slabs like if one earns 10L he can submit 1L every year. simple one pager form and can deposit into any banks!

8. The first white elephant to be eliminated (not just merged) should be the planning commission. A handful of researchers, working under the PMO (fed by a better statistics department) is all that is needed.

9. Excellent idea sir i hope Modi govt. read your blog and incorporate tour idea because time has come to focus on govt functioning and delivery mechanism. And what you have pointed is one of the key reasons for delay in decision making and bad implementation .

10. Finance, external affairs and defense are the only portfolios that deserve cabinet ministers. Every other ministry or department primarily play the role of policy setting / coordination with state governments. Besides, I really do not see much of a difference in role between ministry of telecommunication and TRAI or civil aviation ministry and DGCA. There is definitely lot of scope for reorg of the central govt

11. Now that its finalised, what your take?

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