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Compulsory retirement of 12 tax officials: Govt should come up with structural reforms for radical change in bureaucracy

Karthik Subbaraman
Compulsory retirement of 12 tax officials: Govt should come up with structural reforms for radical change in bureaucracy

Earlier this week, the government 'compulsorily retired' a dozen senior officers of the Income-Tax Department by invoking a rule which was dreaded during the 1975-77 Emergency but is rarely used. The finance ministry resorted to Rule 56 (j) under the fundamental rules of government to force retirement upon officers deemed to be corrupt or ineffective. While such action against senior employees is unprecedented, does it mean that the long-suffering public can look forward to bold steps towards a reformed administration and cleaner governance?

On the face of it, one sign is very clear €" the government, at the very top, is frustrated with the I-T Department, which missed its revenue collection target for the fiscal 2018-19 and is lobbying to have its target for 2019-20 lowered. For a government struggling to meet its fiscal deficit target and reward taxpayers who returned Prime Minister Narendra Modi to power, the anger is evident. But do the recent pre-Budget sackings mean more than just a sign of frustration?

Limitations of compulsory retirement

One thing it could possibly presage is wider use of Rule 56(j) to remove the worst elements from the system and thereby warn the wider community of government employees about corruption and performance. In the early years of the National Democratic Alliance I (NDA), it was anticipated that such a course would be adopted but it did not come to pass. This time, Modi may be more determined about a cleanup. This will be welcomed, but he and his government should look beyond Rule 56 (j) and come up with structural reforms to fundamentally alter the bureaucracy. It can be Modi's legacy.

One of the drawbacks of the compulsory retirement rules is that they apply to those who have crossed the age of 50 or completed 30 years of service. Which means that the younger lot of corrupt or inefficient civil servants cannot be touched under Rule 56 (j). Therefore, as a signalling mechanism, the rule is fine, but it cannot ensure a wider cleanup.

Another problem is that many of those who have been removed under the rule have returned after appealing against the orders in tribunals or in courts. What this exposes is a flawed system of performance appraisal and a lack of application of mind in enforcing rules. This is a government-wide problem, and, therefore, we should not be surprised if many of those who were sacked this week make a comeback and thumb their noses at Finance Minister Nirmala Sitharaman.

Institutional response

The problem of corruption can be tackled with existing mechanisms, but there has to be seriousness and ownership. The Central Vigilance Commission (CVC) and the various vigilance departments are tasked with detecting and preventing corruption across the government. But how effective are they? Why is there so much corruption despite a wide-ranging vigilance setup? If the vigilance authorities are made accountable for pervasive corruption (especially within the vigilance department), the government will have taken a huge step forward.

The other related institution is the Lokpal, which came into existence only in March this year after much prodding by the Supreme Court and more than five years after a law to create anti-corruption ombudsmen was passed. If the NDA government is genuinely interested in tackling corruption, it will ensure that the Lokpal law is implemented in letter and spirit. It will also free investigating agencies from political or other control and ensure that they function independently and professionally. It is too much to expect the government officers to be honest when agencies such as the Central Bureau of Investigation (CBI) and Enforcement Directorate (ED) are manipulated.

Arresting and prosecuting criminals within the government requires a judicial system that is clean. This is an area, which deserves particular attention because good governance is impossible without an honest and efficient judiciary. The judicial branch must cooperate fully in a national endeavor for a corruption-free India.

Prime minister's task force on corruption

One way to lend urgency to the issue is for the prime minister himself to head an anti-corruption task force which will also include the Lokpal and the Chief Justice of India. The task force should be assisted by a crack team of hand-picked individuals reputed for their integrity and efficiency. This team, consisting of investigating officers, prosecutors and judges, should pursue high-level corruption cases and operate with tight and sacrosanct deadlines. This need not be a permanent arrangement but last only until the message has gone out about the seriousness of the government's anti-corruption intent. A template for how corruption can be rooted out has to be established. Institutional mechanisms, including the vigilance setup and investigating agencies, should be ultimately responsible.

Changing the rules

Government is a costly business and the ones footing the bill are the taxpayers. According to the latest expenditure estimate sent to the Lok Sabha, the salary bill of the central government (consisting of nearly 50 lakh employees) is expected to be Rs 1.66 lakh crore in 2019-20. The pension bill will be an additional Rs 1.79 lakh crore. Just these two heads add up to Rs 3.45 lakh of spending by taxpayers. For comparison, Goods and Services Tax (GST) collections in the whole of May 2019 totalled a little more than Rs 1 lakh crore. And then the salary and pension bills of the various state governments and their employees. No wonder taxpayers are mad as hell.

The government can immediately change some rules to signal that it cares about good governance. The first is to reconsider its policy on transfers. Although the stated objective is to "harmonise" institutional memory and avoid developing vested interests, the result is a wasteful jamboree. Every year, thousands of government employees and their families move from one place to another with no real purpose served.

Influential coteries determine who is transferred where, and corruption is rife as there is a mad scramble for 'lucrative' posts. All this while sticking the taxpayer with a bill. There is no need for the annual transfer tamasha €" is there one self-respecting private organistaion which moves people around in musical chairs with extra seats that no-one wants? The rules must be changed to make transfers the exception and not the norm. It is not that difficult.

One other rule which is glaringly wrong pertains to the 'general entitlement of leave.' Employees' "absence from duty, with or without leave, for a continuous period exceeding 5 years €¦ implies that such a government servant has deemed to have resigned from the government service." What this means is that a government employee can go absent without official leave (AWOL) for four years and 364 days. A 'joining report' is good enough to re-admit the prodigal. There are several cases where government employees have worked abroad for years using this loophole. It's actually a gaping hole and must be closed forthwith.

Changing the game

An urgent rewriting of rules is important, but so is changing the game. It took 10 months to appoint nine professionals as joint secretaries under a lateral entry programme. Taxpayers must pray for the success of these brave souls, who will become part of a hierarchy that is implacably opposed to the above and below. The pervasive lack of expertise and accountability in government cannot be remedied by a few individuals. The structure of government €" largely inherited from the British who wanted revenue 'collectors' and record-keepers €" must be radically reformed for a modern India. The systems and hierarchies of the present will just not do.

A new architecture for a government must be created, comprising recruitment, training, promotions and performance appraisal €" all based on merit. Quotas will inevitably have to be accommodated but not at the expense of merit. The government must be downsized substantially, decision-making processes simplified, and technology must be at the centre of the transformation. The culture and structure of the government must resemble the best private sector organisations.

The prime minister should not hesitate to appoint top-notch professionals as cabinet ministers. A group of experts from outside the government should create a new structure of government for a new India. Experts who have a demonstrated track record of institution building and disruptive thinking in their areas of endeavour. We have isolated examples of this approach working. Aadhaar is a fine example. Could it have been possible in such a short time had Nandan Nilekani, a founder of Infosys and the author of Imagining India, not been in charge?

As philosopher Jiddu Krishamurti used to say, "Let us not be like the prisoners who ask for better food or better clothes. Let us ask for freedom instead."

Modi has the mandate for that and he must free our citizens from the prison of bad government.

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