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Monday, August 1, 2011

KRAS FOR GOVERNMENT A Glimmer Of Glasnost The ministerial performance appraisal system is a step in the right direction. But it will need a lot of finetuning to succeed. KANDULA SUBRAMANIAM

JITENDER GUPTA
KRAS FOR GOVERNMENT
A Glimmer Of Glasnost
The ministerial performance appraisal system is a step in the right direction. But it will need a lot of finetuning to succeed.


Bottom Line

  • Administrative Reforms Commission highlights the need for a new performance management system in government. In July 2009 UPA II makes this a priority.
  • 6th Pay Commission recommends performance related incentive scheme for government officials.
  • Exercise for performance kicks off, in 2009, with 59 ministries drawing out their objectives and results. 80 ministries are now participating.
  • Joint targets to be set in 2011. Soon, bonuses to be given for achieving targets.

***

Do the citizens of a democracy have the right to know how their government functions? "No. They have a right to be ignorant. Knowledge only means complicity in guilt; ignorance has a certain dignity". That's what Sir Humphrey Appleby, the crafty bureaucrat in 'Yes Minister', the British television series of the 80s, had to say on the matter. Of course, no bureaucrat would ever admit to harbouring such beliefs, but deep down, many may very well agree with Sir Humphrey.

And some may be actively subscribing to that philosophy—even though the Right to Information (RTI) Act was passed in 2005, getting all the information you want from the government continues to be a challenging task to this day.

Now, imagine having a system where the performance of ministries—populated and run by bureaucrats—is assessed and published each year. It's the sort of thing that would have given Sir Humphrey an apoplectic fit. But, in an effort to make governance transparent, that's exactly what the UPA II regime is aiming to do for each of its nearly 100 ministries and departments. The idea is to show the public the direction in which the government is headed and enable corrective action where needed.

This exercise was launched in 2009 and involved around 59 ministries. A performance management department was created in the cabinet secretariat to implement the plan. Today, as many as 80 ministries and departments are participating in the appraisal exercise.

"The concept is very simple," says Prajapati Trivedi, Secretary of the performance management unit. Keeping the overall objectives of the government in view, each ministry outlines its objectives, action points and quantifiable deliverables for the year, with the approval of the concerned minister. These are spelt out clearly in a Result framework Document (RfD). The targets are frozen after approval by the Finance Ministry and the Planning Commission—for matters such as fund allocation—and in consultation with an independent panel of experts consisting of retired officials and eminent professionals. At the end of the year, the ministry's performance is assessed on the basis of outcomes vis-à-vis the targets set during the year.

Challenges In Execution

Conceptually, the system is similar to the annual performance appraisals corporates have to assess employees in key result areas. However, with the exception of entities such as PSUs, governmental appraisals are largely not bottom line driven, and it is therefore difficult to quantify them.

Arun Maira, Member, Planning Commission, who brought his corporate experience to bear in the design of the performance management system, says it is not easy to have quantifiable targets in government. In other words, while it is possible to set tangible targets for the roads ministry, doing so for ministries such as, say, home, won't be easy.

Economist Bibek Debroy, is skeptical about how the new system would work. Debroy says nothing much has come out of the entire outcome budget exercise started during the previous stint of the UPA regime. He believes that the success of the entire system hinges on how states implement the centre's schemes. After all most central schemes are social schemes that are expenditure driven. And if that is taken as the yardstick for success, then the new system won't work.

A former bureaucrat from the Defence Ministry has raised another very pertinent point: what exactly constitutes "performance?" As a custodian of national interest, a bureaucrat can come across instances where he is asked to clear proposals that may not be needed in the first place. "Does sitting on such proposals amount to non-performance?" he asks.

For instance, a few years ago, a defence establishment in Bangalore wanted to set up huge, expensive gensets in its facility when there were cheaper alternatives available. The proposal was stuck after a bureaucrat didn't agree to this expenditure. Much later, the PSU was able to use a far more economical alternative. The bureaucrat's calculated intransigence thus helped the defence unit save a great deal of money. But in an appraisal, the PSU could very well be labelled a non-performer for not implementing its initial plan. On the other hand, it could also be considered a performer if it had gone ahead with the genset plan. This is just one kind of complication that could arise during evaluation. And even more difficult to assess are outcomes that can't be achieved by a ministry or department singularly.

For instance, the performance of the Power Ministry is incumbent on cooperation from the coal and environment ministries. The ministry may add capacity but may not have fuel to run the plants. Would it therefore be a non-performer? We looked at the RfDs of the Power and Coal ministries and found that their targets were not in sync. For instance, the Power Ministry's RfD says it needs "supply of 366 million tons of coal" during the year (2010-11) from CIL to meet its objectives. The Coal Ministry, on the other hand, has listed its supply target as 335 Million Tonnes in its RfD. Such variations need to be eliminated if these inter-dependent ministries are to work well together. This is particularly important for the Labour Department, whose RfD states that all the welfare schemes of the Rural Development, Urban Affairs and Poverty Alleviation, Railways, Women & Child Development ministries need to converge if child labour is to be eliminated. That's Sir Humphrey emerging from the rubble. Compounding the matter, bureaucrats already have an existing assessment system in the form of their annual confidential report (ACR). Simply put, the ACR decides if their careers advance or stall, as the case may be. Understandably perhaps, a bureaucrat may be more concerned about his individual performance rather than that of the department as a whole.

Former Cabinet Secretary KM Chandrasekhar (see interview on page 28), who has played a key role in implementing the performance management system, allays such fears. He says that while the ACR system needs an overhaul, the new system will be an "adjunct" to it. Meaning, an official's efforts to lift his department's performance will reflect in the ACR as is the usual system.

Top To Bottom

That's not all; the government is also planning to encourage performance by offering incentives to every single employee of the department, from the secretary right down to the driver, says Trivedi. However, the incentive can only be availed when the department makes a saving after achieving its annual targets, explains Chandrasekhar. Incentives, along with ACRs reflecting an official's contribution to a department, will help make the performance exercise acceptable. Trivedi adds that a transparent target-setting mechanism would make it hard to include any schemes or proposals that are not in the interest of the department or the nation. The entire mechanism is geared towards ensuring that targets are scaled up and in sync with the overall goals of the government. Starting this year, the performance management cell is launching a concept of team targets to resolve the problem of inter-ministerial cooperation. So, for example, the Power, Coal, Railways, and Environment Ministry will have to sit down and collectively agree on targets. Non-achievement will mean no points for all concerned. While this is an important step forward, setting targets is the last step in this exercise, says Maira. According to him, ascertaining the views of all the stakeholders, right down to citizens' groups, is crucial to developing a good model of performance assessment. If not, he explains, there are bound to be gaps. Citing the example of a car manufacturer, he says all the components going into a car may have an "OK' certificate, but this may not be the view of the final buyer.

To be fair, the entire performance management process is still at a nascent stage. It is for this reason that performance results in the years 2009 and 2010 were not made public. If all goes well, the results will be made public from 2011, and, hopefully, usher in a new era in governance.

INTERVIEW
The government has started a performance management system to make functioning result oriented. Former cabinet secretary KM Chandrasekhar spoke to Kandula Subramaniam on the new system.
KANDULA SUBRAMANIAM

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