Bhagwan Chowdhry and Prachi Deuskar
One hundred and eighty bright, idealistic young men and women are selected every year in the Indian Administrative Service – arguably the most selective career choice in India. The prestige of being selected for IAS is so high that parents even boast of their sons’ and daughters’ mere attempt to appear for the IAS examination as a quality worth announcing with pride in marriage proposals.
What is so attractive about being an IAS officer? It is certainly not the official compensation package. Is it the intrinsic motivation of wanting to ‘make a difference’? Or, is it the power one enjoys? Perhaps it is both. Indeed, many officers remain dedicated and true to the mission for their entire lives. But many others get disenchanted and falter.
When IAS officers are appointed they are well-educated, young and idealistic. The human capital they begin with is extremely high. But unfortunately, in spite of some training opportunities, the human capital begins to depreciate and idealism begins to wane when they face the realities of raising a family, less than ideal working conditions, being subject to the capriciousness of ministers and power brokers.
This sometimes results in officers becoming corrupt, and the power they command is often misused in obstructing rather than enhancing good ideas. Over the years, the bureaucrats may also fall short of skills needed for the job in dynamic, challenging times. Lack of competition from talented outsiders exacerbates these problems. The system that was instituted by our colonial rulers to rule over us has now shackled us.
We offer some ideas on how we can reform it by creating the right incentives to (1) enhance human capital; (2) provide an attractive exit path to overcome entrenchment; and (3) compete with talented outsiders.
We propose that after finishing the year-plus long IAS training, each officer be appointed for a period of seven years. At the end of year six, there will be an evaluation after which the officer will be offered three attractive options, two of which would lead to an exit from service.
l Continuation in the service at a prestigious senior position for which the officer may have to compete with other experts from outside the service who could be inducted laterally (something that Prime Minister Narendra Modi has espoused).
l A fully paid scholarship to any PhD, MBA, or other top professional programmes in the world (eg Harvard MBA, Princeton Masters in Public Policy, or a PhD at the University of Chicago) into which the officer can get admission based on his or her merit.
l A Rs 1 crore seed capital from a capital fund run by professional venture capitalists to begin an entrepreneurial startup venture.
The officer could also choose other paths independently, for example, getting a private sector job. Such evaluations could be repeated periodically (say every 7 years) with similar exit paths at the end of each evaluation. An exit option of voluntary retirement could also be added.
Some aspects of these recommendations such as lateral entry of professionals and the opportunity to go for advanced degrees are already in place. However, the key aspect we emphasise is a systematic opening of both the entry of professionals and the exit of unsuitable officers in case of a lack of fit.
The attractive exit options will ensure that the young IAS officers see their IAS journey as dynamic and rewarding, giving them an opportunity to reinvent themselves after experiencing the service. They will not feel stuck if after a few years they realise that administrative service is not what they want to do all their lives.
Moreover, those who continue will still need to compete with qualified outsiders who did not begin as an IAS officer. This provides incentives to the officers to keep upgrading their human capital. This will also ensure that the country will keep in the administrative service only those who remain fit for those jobs and yet provide an attractive and safe exit option to others who will flourish elsewhere.
The government can choose to recruit, even at entry level, graduates from professional courses in addition to selecting candidates based on the UPSC exam. The structure would allow for the selection of a much larger set of candidates each year with many anticipated exits down the road. This would enhance the pool of candidates who would want to give administrative services a try without making a lifetime commitment to it.
We believe that the exit options our proposal offers are so attractive that they will likely be supported even by incumbents whose buy-in would be critical for such a radical reform to succeed. In the corporate governance field that we have studied, the entrenched managers are rewarded with attractive severance packages, known as “golden parachutes” that make exits attractive to them. There is strong empirical evidence these have worked well.
This gives us reason to believe that these may work in the IAS reform as well. One may protest that this is different. But we think that people are people and as a world-renowned economist Steven Landsburg quipped: “People respond to incentives. All else is commentary.”
The writers are professors at the Indian School of Business (ISB)