2nd ARC Report - Organizational Structure

The 2nd ARC Report on the Organizational Structure of the Government of India provides insights and recommendations to optimize the administrative framework for enhanced governance efficiency.

Table of Contents

GOVERNMENT STRUCTURE REORGANIZATION OBJECTIVES

Public administration aims to achieve two core objectives: realizing human potential and fostering rapid growth.

The State’s indispensable role encompasses four key areas:

Upholding public order, justice, and the rule of law.
Advancing human development by providing access to high-quality education and healthcare for all citizens.
Promoting infrastructure development and sustainable utilization of natural resources.
Ensuring social security, particularly for workers in the unorganized sector.

GOVERNANCE-GROWTH INTERCONNECTION

Nations require governance that not only facilitates high economic growth but also enhances the overall quality of life and equity. The policy framework for achieving these goals in emerging market economies, especially for disadvantaged populations, involves liberalization, democratization, a robust private sector, a well-managed state-led developmental and poverty alleviation effort, and effective governance.

WORLD BANK’S GUIDELINES FOR ENHANCING GOVERNANCE CAPACITY

In response to the shortcomings observed in public administration, particularly in economically challenged states, the World Bank has proposed several measures to strengthen governance capacity:

Adopting a two-part strategy to enhance the State’s effectiveness. The first part involves narrowing the gap between the State’s demands and its capabilities by prioritizing key areas, while the rest are delegated to civil society and the private sector. The second part focuses on bolstering the State’s ability to efficiently manage collective actions by revitalizing public institutions.
Although there is no one-size-fits-all formula for successful reform, certain lessons can be gleaned from the experiences of other nations.

Political commitment is crucial for effective reform.
Streamlining Core Government Functions: Right-sizing and Outsourcing
Introducing Competition in Public Service Delivery: Breaking Monopolies
Adoption of Identification
Embracing Decentralization, Delegation, and Devolution
Encouraging Public-Private Partnerships
Simplifying Processes through Deregulation
Enhancing Accountability Mechanisms
Implementing E-Governance Initiatives
Instituting a Performance Management System (PMS)
Empowering Citizens as Customers
Promoting and Disseminating Good Governance Practices
Conducting Policy Evaluation and Regulatory Impact Assessment
Utilizing Benchmarking for Continuous Improvement
Employing Governance Indices

Overview of the Current Government Structure in India

The Indian Constitution outlines a comprehensive framework for governance. Part V, Chapter 1 covers the Union Executive, Chapter II addresses the Parliament, and Chapter IV pertains to the Union Judiciary. The President holds the Executive Power of the Union and exercises it directly or through appointed officers (Article 53). Article 74 establishes a Council of Ministers headed by the Prime Minister to advise the President. Article 75 outlines the appointment process for the Prime Minister and other Ministers. Article 77 details the Conduct of Government Business, and the President, through powers vested in Article 77, has established “The Government of India (Allocation of Business) Rules.”
According to these rules, government business is conducted in Ministries, Departments, Secretariats, and Offices. Departments handle assigned business, with the Minister-in-charge overseeing its disposal, subject to certain consultations and limitations. Standing Committees of the Cabinet, ad hoc Committees of Ministers, and the Departmental Secretary play crucial roles in ensuring adherence to these rules and reporting to the Cabinet or making decisions as needed.

DEPARTMENTAL STRUCTURE

A department assumes the pivotal role of formulating and executing government policies related to its assigned business, requiring an organized structure for efficient business disposal. Typically led by a Secretary to the Government of India, who serves as the administrative head and principal policy adviser to the Minister, a department is segmented into wings, divisions, branches, and sections.
The departmental hierarchy usually includes a Special Secretary/Additional Secretary/Joint Secretary overseeing each wing, empowered with a significant degree of autonomy within their respective areas of responsibility. Each wing is further compartmentalized into divisions, each led by an officer at the Director/Joint Director/Deputy Secretary level. Divisions may house multiple branches, each supervised by an Under Secretary or equivalent officer. At the lowest organizational level, a section, delineated by specific work areas, comprises assistants and clerks under the supervision of a Section Officer. Initial case handling, including noting and drafting, is typically carried out by these assistants and clerks, known as dealing hands.
While the above organizational pattern is common, certain variations exist, such as the desk officer system. In this system, a department’s work at the lowest level is organized into distinct functional desks, each staffed by two desk functionaries, often Under Secretaries or Section Officers. Each desk functionary independently manages cases with ample stenographic and clerical support.

Departments may also oversee one or more attached or subordinate offices, each serving a distinct purpose:

Attached offices play a crucial role in providing executive direction needed for policy implementation, serving as repositories of technical information and offering technical advice to the overseeing department.
Subordinate offices operate either as field establishments or agencies responsible for executing government policies in detail. They function under the direction of an attached office or, in cases with limited executive direction, directly under a department. In the latter scenario, they assist the relevant departments in managing technical aspects within their specialized fields.
Beyond attached and subordinate offices, numerous organizations carry out assigned functions, broadly categorized as follows:
Constitutional Bodies: These entities are established under the provisions of the Constitution of India.
Statutory Bodies: These bodies are formed under specific statutes or Acts of Parliament.
Autonomous Bodies: Entities established by the government to handle activities related to governmental functions. While they operate in accordance with certain regulations, they remain under government control, with autonomy specified in their discharge memorandum.
Public Sector Undertakings: This category includes industries wholly or partially owned by the government, organized as companies or corporations. The President or their nominees hold shares, and a Board of Directors, comprising both officials and non-officials, manages these undertakings.

STRENGTHS AND WEAKNESSES OF THE CURRENT STRUCTURE

The existing structure of the Government of India has developed over an extended period, demonstrating both strengths and weaknesses.

Strengths:

Time-Tested System and Adherence to Rules: The government has established an intricate structure, rules, and procedures contributing to nation-building, ensuring stability during crises and normal times.
Stability: The presence of a permanent civil service staff provides continuity and stability during the transition of power between elected governments, contributing to the maturation of democracy.
Commitment to the Constitution and Political Neutrality: Well-defined government rules and procedures uphold civil service neutrality, preventing the politicization of government programs and services. This adherence to principles aids the evolution of institutions based on constitutional values.
Link between Policy-making and Implementation: The government’s staffing pattern promotes a direct link between policy formulation and execution, fostering cooperative federalism at both the central and state levels.
National Outlook among Public Functionaries: Public servants working within the Government of India, its attached offices, and subordinate offices have developed a national perspective, transcending regional boundaries and contributing to national integration.

Weaknesses:

Overemphasis on Routine Functions: Ministries of the Government of India often struggle to prioritize policy analysis and policymaking amid a heavy workload of routine tasks, leading to a lack of attention to national priorities. Functions that could be efficiently handled by State or Local Governments or outsourced are sometimes retained at the Union Government level.
Proliferation of Ministries/Departments and Weak Integration: The creation of numerous Ministries and Departments, driven at times by coalition politics, results in illogical division of work and a lack of integrated approaches to closely related subjects. Ministries/Departments tend to operate in isolated silos, detracting from a comprehensive national perspective.
Extended Hierarchy with Excessive Levels: The extended vertical structure of the Government of India leads to issues being examined at numerous levels, causing delays in decision-making and a lack of accountability. Redundant levels contribute to inefficiency and do not significantly contribute to the decision-making process.
Risk Avoidance and Emphasis on Consultations: The multi-layered structure fosters a tendency towards reverse delegation and risk avoidance in decision-making. Excessive reliance on file movement for consultations rather than decisive actions leads to increased workload, delays, and inefficiency.
Absence of Teamwork: The rigid hierarchical structure hinders teamwork, crucial in today’s context where an interdisciplinary approach is often necessary to effectively address emerging challenges.
Fragmentation of Functions: At the operational level, there is a prevailing trend of dividing and subdividing functions, resulting in inefficient and time-consuming service delivery. This fragmentation was humorously depicted in a Shankar Cartoon depicting an official appointed as “Deputy Assistant Director General, Envelopes (Glue).”
Issue of Autonomy Erosion: Apart from a few committees and boards, there has been a significant erosion of autonomy originally conceived during their formation.

Core Principles Governing Restructuring of the Government of India:

The Union Government should primarily focus on core areas, including Defense, International Relations, National Security, Justice, and the rule of law.
Human development through providing high-quality education and healthcare to every citizen.
Infrastructure and sustainable natural resource development.
Social security and social justice.
Macroeconomic management and national economic planning.
Formulating national policies for various sectors.

It is imperative to structure the government into Ministries and Departments with a focus on functional specialization and an integrated approach. This involves grouping government functions into key categories, linking them to Ministries, and emphasizing the need for in-depth specialization.

To enhance efficient management, there should be a clear separation of policy-making functions from execution. Higher echelons should concentrate on decisions and policy-making, delegating implementation functions to operational units or independent agencies. Policy-making requires a broader perspective, conceptual understanding, and appreciation of the external environment, while implementation demands in-depth subject knowledge and managerial skills.
Coordinated implementation is crucial, necessitating interdisciplinary bodies in important sectors to replace the proliferation of vertical departments. Empowered commissions, statutory bodies, and autonomous societies should be encouraged, and their autonomy preserved.
Adopting flatter organizational structures with fewer levels and promoting teamwork is essential. The government’s conventional approach of uniform vertical hierarchies should shift towards more flexible structures that align with specific objectives.
Establishing well-defined accountability is critical. The current multi-layered structure with fragmented decision-making fosters a culture of alibis and diffused accountability. Clear demarcation of organizational responsibilities would facilitate the development of a performance management system for individual functionaries.
Appropriate delegation is necessary to counter the tendency to centralize power, reducing delays, inefficiency, and demoralization among subordinate staff. Following the principle of subsidiarity, authority should be located closer to citizens.
Recognizing the criticality of operational units, a rationalization of government staff patterns is crucial. This involves addressing top heaviness, fragmentation, and the lack of authority, manpower, and resources at operational levels impacting citizens’ lives.
Important recommendations include optimizing the size of the government workforce and reorganizing Ministries and Departments by forming new departments.
Establishing new departments for specific subjects offers the advantage of directing more attention and resources to that particular field. However, it comes with drawbacks such as a lack of coordination and the inability to adopt an integrated approach to national priorities and problems. For instance, the subject of ‘Transport’ involves various aspects that are handled by different Ministries, leading to fragmentation and hindering a cohesive national approach.
Similarly, ‘Energy’ is managed by multiple departments, including the Ministries of Power, Coal, Non-conventional Energy Sources, Petroleum, and Atomic Energy. In contrast, countries like the UK have achieved a balance by having a single Secretary of State for Transport and Energy, demonstrating the potential for functional specialization alongside a holistic approach to key issues.
To implement this concept, the definition of a Ministry needs to be redefined. A Ministry should consist of departments with closely related functions, assigned to a First or Coordinating Minister for overall leadership and coordination. Adequate delegation among the Ministers should be explicitly outlined in the Allocation of Business Rules. This may necessitate the rationalization of Secretary-level posts, with the Coordinating Minister, other Cabinet Ministers, or Ministers of State heading individual departments or combinations.
Creating effective executive agencies becomes crucial to separate policy and implementation. These agencies should be restructured to have greater operational autonomy and flexibility while maintaining responsibility and accountability for their actions. The establishment of autonomous organizations, such as executive agencies, is advisable for carrying out operational responsibilities, without engaging in policy-making.
In India, certain agencies are structured as government departments, while others are registered as autonomous entities. The predominant nature of government line departments, due to their overwhelming focus on inputs and centralized controls, hinders operational autonomy and flexibility. The existing culture in ministries tends towards micro-management, emphasizing detailed central controls.
To address this issue, there is a need to replace detailed central controls with guidelines and standards. While maintaining necessary standards, the culture should shift towards facilitation rather than undue intervention. Implementing agencies and civil servants should be granted autonomy, greater flexibility, and incentives to achieve results. Agencification, seen in other countries and in India, refers to a continuum ranging from departmental undertakings to autonomous agencies, offices, and corporatized units.
The Commission recommends that each Union Government Ministry scrutinizes its activities and special-purpose bodies, questioning their necessity and relevance. Activities and bodies lacking utility in the present context should be identified for closure, with staff redeployed accordingly.
Regarding the internal structure of the Ministry, the Commission acknowledges the hierarchical strength but points out weaknesses, such as delays, diluted accountability, hindrance to interdisciplinary approaches, and stifled creativity. For routine matters, a hierarchical structure may be appropriate, but for functions like policy formulation and problem-solving, a flatter structure with a team-based orientation is essential. Ministries, as currently organized, are centralized, hierarchical, and compartmentalized, necessitating a shift towards more streamlined and collaborative structures to enhance efficiency and effectiveness.
In government ministries, the current organizational structure adheres to traditional lines of authority, meticulously regulated to minimize errors. However, this approach often results in staff prioritizing internal processes over actual results. The existing policy-making structures suffer from systemic rigidities, unnecessary complexities, and excessive centralization. The numerous decision points and veto points within the hierarchies contribute to prolonged delays, diverting attention from the ultimate goal of delivering results. To address these challenges, it is imperative to dismantle the hierarchical structures and introduce team-based frameworks.
Simplification of Governmental Processes is crucial. The current bureaucratic nature of government organizations, often associated with red tape, insensitivity, and rule-bound behavior, needs reevaluation. Max Weber’s original concept of bureaucracy aimed for rational organization, emphasizing hierarchical office placement, operations governed by impersonal rules, specific duties and responsibilities for officials, and appointments based on qualifications and merit.

THE WORLD BANK’S RECOMMENDATIONS FOR IMPROVING THE GOVERNANCE CAPACITY

The World Bank recognizes the need for improving governance capacity, especially in states facing developmental challenges. Their recommendations include a two-part strategy. Firstly, there should be a narrowing of the gap between the state’s demands and its capabilities by prioritizing tasks. The state should focus on essential priorities and delegate non-essential tasks to civil society and the private sector. Secondly, there should be an increase in the state’s capability to efficiently manage collective actions by revitalizing public institutions.

Redefining of Priorities for State Action

To achieve this, the World Bank suggests redefining priorities for state action, emphasizing five main tasks at the core of every government’s mission. These include establishing a foundation of law and preventing lawlessness, ensuring macro-economic stability, and creating a non-distortionary policy environment. Additionally, investments in basic social services such as health and education, along with infrastructure development, are deemed essential for sustainable, shared, and poverty-reducing development.
The safeguarding of vulnerable segments of society, such as women and ethnic minorities, is paramount. Similarly, protecting the environment involves harnessing public opinion, implementing flexible self-regulation mechanisms, and establishing financial incentives for eco-friendly activities.
In terms of providing infrastructure and social services, sharing the burden among various stakeholders is essential. Instead of the state solely shouldering responsibilities like health insurance or unemployment benefits, collaboration with business, labor, and community groups can distribute the load. Introducing outsourcing to enhance competition and innovation, eliminating unnecessary regulations to unleash market forces, and considering privatization with transparency, broad-based ownership, and appropriate regulatory structures are crucial aspects.
In countries with weak institutions, self-restricting rules defining policy boundaries and making reversals costly can curb arbitrary state actions. Collaborating with the corporate sector for consensus-based policies, rather than administrative fiat, is another strategy. Strengthening the state’s institutional capability involves providing incentives to officials, separating powers, creating checks and balances, ensuring an independent judiciary, reducing corruption opportunities, offering competitive remuneration, meritocratic recruitment, stringent punishment for wrongdoing, and setting up independent agencies for detection.
To enhance public services, subjecting them to competition both within and outside the state, creating focused, performance-based agencies with autonomy, and involving the public in decision-making through ballots and advisory councils are vital. Devolving authority to regional and local governments is crucial, but mechanisms to monitor and prevent capture by vested interests or profligacy are necessary. Ensuring broad-based public discussion, providing public access to information, and creating consultative forums are key strategies for transparent and inclusive governance.

Practice Questions

By analyzing the link between governance and growth, explain the broad objectives for reorganizing the structures of governance in India.
Discuss the World Bank’s Recommendations for Improving Governance Capacity.
Explain the structure of a Ministry in the Government of India. What is the role of attached and subordinate offices in governance?
Discuss the strengths and weaknesses of the existing structure of governance in India.
“It is therefore necessary that while structuring the Government into Ministries and Departments, a golden mean between the need for functional specialization and the adoption of an integrated approach be adopted.” Analyze

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2nd ARC Report – Organizational Structure of the Government of India