The document discusses reforms that the Seventh Central Pay Commission should recommend. It argues that the SCPC should open senior government posts to public applications on contract basis rather than relying on the civil service system. It also recommends introducing performance-based assessments, increasing accountability of senior officials, standardizing recruitment and promotion rules, and merging several financial services into a new Indian Financial Service to improve efficiency. The key aim of the proposed reforms is to reduce political patronage and rent-seeking in government and increase accountability and performance.

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Seventh Central Pay Commission:RoyalPatronage or Reform Agenda? - I
Shantanu Basu
The Seventh Central Pay Commission (SCPC) is slated to submit its report by Dec 31,
2015, on revising the salaries and other entitlements of central government employees.
Unconfirmed, often wild, conjectures have been populating the Internet while the SCPC itself
has been inundated with appeals, petitions, prayers and presentations. The bottom line of all
these memorials and blogs is that salaries and allowances need to be raised at least three-fold,
promotions fast-tracked with a guaranteed minimum number of promotions in a career, and a
myriad more allowances, as has been the case with all previous CPCs but without much gain
on governance with accountability. Needless to add, the SCPC’s outcome has become the site
of an unseemly battle for ‘supremacy’ between all-India and central services for a larger
share of the juicy pie. Should this rivalry wreck governance? What should be the structure of
the SCPC’s recommendations?
Political patronage has played havoc with each service. If the IAS and IPS have been tossed
around by their political bosses, punished without reason, banished into exile, suspended,
false vigilance cases filed against them for non-compliance, etc., the tale is not far different
for the central services. For instance, since 1978, India’s CAG has been an IAS officer as
have been Union & State Finance Secretaries, Financial Advisers in Union Ministries and
much more. In most cases, their compliance has become virtue, merit vice. Remember how
an ex-CAG and his senior management hijacked the entire national agenda with an entirely
questionable report on telecom spectrum? This has, in turn, flowed down to the senior level
managements of all departments that are again mostly selected/posted more by their ability to
unquestioningly comply with their supreme departmental boss imposed by the political
executive. Rent-seeking thus remains the most probable outcome by patron and beneficiary
alike.
The entirely opaque system of senior appointments is vitiated, even vile, as the political
executive arbitrarily plants their compliant followers in plum assignments for extraneous
considerations, a classic case of you-scratch my back-I scratch yours. Not just that, the
Annual Performance Appraisal Report (APAR) is the prostitute’s certificate of success.
Grading on a scale of 1-10 is entirely arbitrary, often contradictory, again entirely based upon
the assessed officer’s compliance ability and record and without much reference to the
officers’ actual achievements. Appeals against lower grades are decided by the same officer
that reviewed and accepted the original APAR. What is even more surprising is that
empanelment of senior management in the Central Secretariat for deputation follows such
grades. Individual prostitution thus metamorphoses into a national brothel. It is therefore not
surprising that several IAS and Central Service officers from whose quality government
would have benefitted have exited this brothel and scripted success stories on their own.
The system is so degenerate that the Apex Court’s orders to provide tenures up to two years
at least to officers has been violated, again with compliant Boards of Officers that sign on the
dotted line for all transfers and postings on unstated administrative grounds. Even Conduct
Rules are arbitrary in their definition of ‘behaviour unbecoming of a government servant’,
interpreted individually and selectively by departments to punish non-compliant officers
before being thrown out by courts.
Likewise, in disciplinary proceedings, while the department may bring in unlimited evidence
(much of its semi-cooked and misinterpreted), the accused officer’s evidence is seldom

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weighed in framing an inquiry report. This is because the Inquiry Officer is chosen for his/her
compliance comfort with the Disciplinary Authority. Staffed mostly by its own personnel and
compliant civil and military bureaucrats and university teachers, the UPSC’s pronounced
ability to distil the fact from fiction is very limited and, if rumours are to be believed, open to
canvassing both by the accuser and accused.
That many transfers and postings are decided by compliant heads of department on
extraneous considerations is an open secret. The recent case of a Railway Board Member
attempting to bribe the Union Railway Minister to shift from the obscurity of Member (Staff)
to Member (Electrical) of the Board bears out my point. There is an entire Delhi-based cadre
in every organized service with mirror branches in all metro cities that are retained there for
decades together, often in attractive posts in succession. For all these, a Jt. Secretary-
Secretary level officer costs the public exchequer at least Rs. 1-1.50 crore per annum
(including his pension, Lutyens’ housing, home telephones, captive staff vehicle, GPF,
LTC/HTC, CGHS, DCRG, etc.).
For each Secretary’s (with an average of a Minister, 5 Joint and 2 Additional Secretaries
each) retinue varies from 200-300 at an average annual wage cost of at least Rs. 40-50 crore
per annum. This does not include office establishment, travel and other costs that would
easily add another Rs. 25-30 crore per annum. In effect a relatively small department may
end up costing Rs. 65-85 crore per annum. And these are dotted all across India, primarily to
fast-track promotions and run into several hundreds. When these run out there are compliant
consultants that are paid a hefty consolidated remuneration of Rs. 3 lakh per month and
mostly, also provided a captive staff vehicle, etc. in contravention of the rules, for old time’s
sake.
What should the SCPC do in such circumstances? Or has it already been told to do their
employer’s script and indulge in yet another royal pay out without much attendant benefit to
the nation?
First, the SCPC ought to take all posts at the level of Jt. Secretary and above in the Govt. of
India, outside the civil service system and open it to public application on contract basis, for a
maximum period of six years and not beyond the age of 60 years. Likewise, 50% posts at
levels below that level ought to be similarly earmarked. Remuneration ought to be capped in
the range of Rs. 2-5 lakh/month, all inclusive, with no long-term financial commitment.
Qualification requirements must be defined for each post and the ratio of existing civil
service posts to contract recruits should be capped at 2:1, reducing to 1.5:1.5 by 2020 ADE.
The UPSC’s jurisdiction for a never-ending process of cattle-type breeding that attracts
mostly mediocrity ought to be delegated to the line departments.
In turn, the recruitment exam could be a customized adaptation of the GRE-GMAT combine
with a TOEFL/IELTS component and carried out by service providers that run these exam
systems. MP Modi’s projection of India as a global power surely needs English more than a
regional language! This exam ought to be repeated at the end of every three-year contract. No
contract should run beyond three years at the point of origin and beyond 6-9 years in any
case. This exam combine must also be mandated at each stage of promotion at all levels for
the remaining civil servants at least at Group ‘A’ level. Fitness-cum-merit determined by
incestuous relationships is hardly the hallmark of a working democracy and functional
governance therein!
Second, SCPC should consider quantitative targets at each senior management level and post,
including for contract employees, culminating in an annual contract agreement between the
Minister and his Secretary and an achievements report card placed on the Ministry’s web site

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by June 30 of the year following the one to which the card relates. The pernicious and
entirely unprofessional APAR must be thrown out of the window and replaced by
professional and quantifiable achievement alone.
Third, many countries have civil liability insurance for their civil servants. However,
premium is reimbursable only if there is a claim ordered by courts against an employee.
Courts have all but collapsed under the pressure of administrative law cases and rampant
violations of the law by government agencies. The SCPC therefore ought to introduce civil
liability insurance at all levels of government. RTI has been successfully stonewalled. In any
case, RTI is not an end in itself. Why not have civil liability insurance reimbursements
instead? It would certainly raise the bar of accountability.
Fourth, norms for creation of new posts must be recast. The span of control of a Secretary
must be widened to cover at least 30 Joint Secretaries (JS), 120-150 Deputy Secretaries/
Directors and a maximum of 1000 support personnel. Posts of Additional and Special
Secretaries should be abolished and pay scales and delegation of financial and administrative
powers stretched to extend this benefit at JS level itself. This would pin accountability on the
senior management and also help reduce rent-seeking by numerous fragmented centres of
authority.
Fifth, when I approximated the costs of benefits of civil servants, I did not factor giant
expenses running into several thousand crore Rupees more incurred by the CPWD, MES,
DAE, Autonomous Bodies and CGHS, etc. in maintaining an all-India network in erecting
and maintaining residential pool accommodation, particularly MP and Ministers’ quarters.
Opulent office buildings like the MoEF’s Jor Bagh (New Delhi) spanking new HQ gives an
impression that environment preservation is only a Union subject and fit for entry in an
international architecture exhibition. Add gargantuan fleets of staff/hired/leased official
transport, and domestic travel bills (in an era of video conferencing), unlimited telephone
bills in offices (often used for share speculation). Factor in modifications of officers’ opulent
office rooms with each change of incumbent, customised comfort solutions for Lutyens’
bungalows, leasing Corollas and Honda City vehicles, the figure of non-Plan expenditure on
revenue account is nightmarish.
The SCPC therefore ought to recommend raising house rent allowance (HRA) to 50% of the
revised basic pay (and vacate govt. accommodation for redevelopment), quadruple the
transport allowance paid to staff-car entitled officers (and disentitle the staff car and driver)
and double the rest. Finally, a lump sum grant equal to a month’s basic pay + DA per annum
may be recommended to defray expenses on home/mobile phones and Internet, children’s
education allowance, customised health insurance for employees and their dependents via
PSIs, club membership, life insurance premium for the employee, etc. As a logical corollary,
all CGHS doctors ought to be reverted to state-run hospitals that suffer severe shortage of
medical staff. Likewise, CPWD ought to be hived off as composite divisions to each Ministry
or a group of Ministries/Depts.
The author is a senior public policy analyst and commentator

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Seventh Central Pay Commission: Royal Patronage or Reform Agenda? - II
Shantanu Basu
Sixth, Group ‘C’ employees today constitute nearly two-thirds of central employees. I
have myself been saddled with stenographers that were unable to distinguish between a
vowel and consonant, singular and plural and male and female, forget the ability to correct
minor mistakes in a quick dictation and their usual growl while receiving a phone call.
Ministries and Departments have used govt. orders to outsource to only augment this
category of employees. Multi-skilled employees, former Group ‘D’, mostly neither know
how to drive, nor are willing to dust or clean office premises (which has been conveniently
outsourced), diarise mail received and many other functions that the Sixth CPC envisaged.
Yet few, if any, have been stopped for want of skills and promoted to higher pay scales. In
similar vein, most personnel, including those directly recruited by the UPSC, are unable to
draft a cogent and coherent paragraph on file, much less a proposed law or public policy,
Cabinet notes, replies to Parliament questions, etc. My civil service colleagues bear me out.
This is when English is the unstated lingua franca of the Central Govt. Even the Rajbhasha
Rules accept the supremacy of the Queen’s lingo if there are doubts about an outrageous
translation/transliteration!
Technology has remained in the backwaters of government. Web sites are seldom updated,
are opaque and incomplete, hide critical information (even when not confidential/secret) and
have little credibility. Mail receipt and dispatch are mostly still manual as are processing and
approval processes while desktops are used primarily for word processing and rarely for
Excel worksheets. Neither is there any real time monitoring of movement of files using
commercially available hardware nor has ever any responsibility been fixed for inordinate
delays.
Therefore it is imperative that the SCPC recommends a compulsory premature exit option for
all Group ‘C’ employees at age 55 of years and create cooperative societies comprising them
for hiring back as outsourced data centre, office equipment, fleet operators (staff cars can be
given to them as part of the retirement benefits), security, sanitation and messenger services
providers. They should also be given the autonomy to draft private partners to upgrade their
skills or bring in new technology in such services. The Coffee Board had over two decades
hived off its large coffee shops and sale counters with a liberal one-time package and a
recurring biennial/triennial renewal of assets grant. The system has worked quite well and
their coffee and keema dosas remain as tasty as ever before.
Seventh, socialist principles espoused by successive CPCs have caused the ratio of the lowest
paid to the highest paid employee to contract substantially. While this has been politically
convenient and a vote-catcher on a large scale, the costs of non-compliance have only risen
manifold without much attendant gain on quality and promptness of output. With contraction
of government employees as proposed in the preceding paragraphs, it should not be difficult
to maintain 1:12-15 ratios between the lowest and highest-paid employee. Such ratios would
also make public service more attractive for non-civil servant contract recruits.
Eighth, the SCPC ought to lay down clear-cut parameters for transfers and postings of all
employees in all Union Ministries/Departments/ Subordinate and Attached offices.
Classification of stations for HRA cannot be the criterion for posting. For central services, all
Group ‘A’ officers must be mandated to serve two three-year tenures in N-S-E-W India and a
two-year tenure either in NE India or J&K or ANI, etc. each, including to state govts. on

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deputation basis. In effect, of an average 35-year career, an officer ought to spend at least 25
in states where all governance is delivered, the remaining on secondment to Union
Ministries/Departments.
Likewise, if the SCPC caps the jurisdiction of a Union Secretary as stated in a preceding
paragraph, all surplus officers must be reverted to their respective state cadres for the same
reasons and norms like those the central services be applied to them in equal measure. In fact,
inter-State deputation of IAS officers needs to be institutionalized and widened than as a
measure of present-day patronage. With more AIS officers states may not be averse to
concurring inter-State deputations.
Ninth, SCPC would have to reckon with the huge fragmentation of employee service
recruitment and promotion rules. Much of these rules were made to break up large militant
staff associations. CAG’s department has over thirty sets of such rules governing about 40000
employees, some of which cover less than 100 employees. Times have changed and the need
for standardization is back. The SCPC needs to closely examine this key issue, close the gaps
and standardize rules by pay scale/group with department specific provisions, if any. This
would also cause lesser heartburn among similarly placed cadres.
Last, but not the least, SCPC needs to consider merging all Group ‘A’ central economic,
statistical, finance, accounting and internal audit services (excluding the Indian Audit &
Accounts Service and the CAG) into a new all-India Indian Financial Service (IFIN).
Separate streams could be maintained in such service so that serving officers are not
adversely affected till their severance from service. New recruits from Apr 1, 2016 however,
would form a consolidated cadre. This service would staff all financial advice, expenditure,
budget, accounting, internal audit and project financial appraisal and monitoring posts at the
Centre and finance, accounting, treasury and internal Audit posts in all states and UTs. They
would be allocated to State cadres akin to the existing AISs and enjoy all other facilities of
the AISs.
Specialist officers from the IRS-CE, IRS-IT, IES, ISS, CPWD, MES, DGQA, DGS&D, etc.
could be drafted on fixed-term deputation basis to the IFIN. Contract appointments from
CAs, CS, economists, lawyers, statisticians, public policy experts, academics, and other
external expertise would pitch the IFIN as a critical professionally-staffed accountability
institution. This step would consolidate the fragmented services of the central govt., induce
experience and knowledge-sharing across several domains and may assure greater vigil over
public finances and their final utilization.
Simultaneously, CAG and his officers must be necessarily confined only to external audit and
not be permitted to staff positions earmarked for IFIN or any other post under central or state
govts. in order to eliminate existing and often controversial and questionable conflicts of
interest. This step will also reduce the financial and HR outgo on CAG’s overstretched
department. However, CAG’s exclusion from the accounting function would require
amendment of CAG’s (DPC Act), 1971 and Art. 150 of the Constitution. Since audit is a
Union List subject, Rajya Sabha majority for the NDA may not be relevant for such
amendment.
In order to preserve IFIN from political interference, an independent full-time Board of the
present Controller General of Accounts (CGA), Financial Commissioner Railways, Secretary
(Defence-Finance), Members (Finance) Telecom Commission and Postal Board will take
charge and function as a Collegium and also have the right to audit CAG and his dept. The
senior most member of this Board shall function as the Chair for a two-year term and be
delegated the powers of a Cabinet Minister of the Union, on par with the RBI’s Governor

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while the other members shall exercise powers of a State Minister. The Union Finance
Ministry/Minister or any other Ministry/Minister would have no control, direct or indirect,
whatsoever on this Board, as is the case for the RBI, for obvious conflict of interest.
In fine, what the SCPC ought to be looking at is downsizing the sheer size of the central
government, use existing resources to maximize governance with accountability, reduce the
cost of government by 25-40%, remove rent-seeking speed breakers in government, add
value and wealth to indigent junior employees, give due regard to specialist services and
utilise AIS officers more in states that manage 5-6 portfolios with a single AIS officer.
Ministers and senior civil servants must be held accountable and responsibilities indisputably
demarcated.
The SCPC’s report may be PM Modi’s last window of opportunity for effecting sweeping
reforms in his government that may enable his govt. to win a second mandate in 2019 for
good governance. Violent protest is inevitable in such implementation as it was for Maggie
Thatcher in the 1980s. The public will bear all such disruption without much demur if the PM
is seen acting for the long-term public good such is the popular animus against the civil
services for sheer non-performance. Therefore, the massive legislative majority and popular
support that Mr Modi enjoys must be harnessed to overcome all protest and the NDA’s
reform agenda furthered, the same way Maggie creditably undertook British civil service
reforms as part of the then prevailing new public management academic debate.
Ungracious and irresponsible royal pay outs camouflaged by high decibel sloganeering
without any gain on governance and state finances, would only portray the NDA govt. and its
PM in no better light than its predecessor UPA govt. The earlier the central govt. realizes that
governance is delivered in the states from where votes will be cast, instead of imposing
governance from Delhi, greater the chances of a renewed mandate in 2019. Since state and
autonomous body employees would also demand pay revisions, affordability for states, after
a decade of sapping Sixth CPC recommendations (mainly retrospective arrears) is of critical
concern. My preceding suggestions may just make the recommendations of SCPC affordable
apart from gains on the quality of governance.
A Secretary to a Union Ministry who was my boss, and later on became the Lieutenant
Governor of a key Union Territory, smilingly reminded me that government was the biggest
single brothel in India. Things that was possible here were beyond the imagination of a
traditional Marwari or Gujarati family business! Reform or perish therefore is the clear and
final message from increasingly disillusioned electors even if this means holding up
implementation of the SCPC’s recommendations for an extra fiscal or two.
The author is a senior public policy analyst and commentator