The document discusses the significance of 'process reforms' in public policy, which focus on streamlining operational processes to enhance system efficiency, complementing larger structural reforms in India. It outlines various types of process reforms, including administrative streamlining, regulatory changes, and increasing state capacity, while emphasizing the need for continual reevaluation of processes to eliminate inefficiencies. The author argues that such reforms, although often overlooked, are crucial for substantial economic improvement and should be integrated into policy-making as a standard practice.

1. Process Reforms as Public Policy:
Big Impact from Small Changes
Sanjeev Sanyal
Member, Economic Advisory Council to the Prime Minister
February 2024

2. What are process reforms?
• Discussions about economic reforms tend to focus almost entirely on large-scale structural reforms aimed at
reshaping the fundamental framework of an economy.
• Structural reforms in India began with economic liberalization in 1991. Over the years, various other structural
reforms were undertaken including opening of sectors to private investment, establishment of regulators,
introduction of GST, an inflation-targeting framework, implementation of IBC, among others.
• But there are another type of reforms- that largely go unnoticed- “Process Reforms”.
• Process reforms are the nuts-and-bolts reforms, often microeconomic in nature, with a specific focus on
an individual sector or issue.
• Objective of the process reforms is to simplify and streamline operational processes to enhance the efficiency
of an existing system or governance architecture.
• In fact, in several cases, they prove essential for the success of structural reforms- for instance, GST and IBC.
• However, very little is covered in academic literature or policy discussions on government process reforms, not
only in India but across the world.

3. Business Process Re-engineering
• Lot of literature available on business process re-engineering for corporates.
• Business Process re-engineering was a business management strategy originally pioneered in the early 1990s.-
Hammer (1990) and Hammer & Champy (1993)
• Hammer in his paper in 1990 argued that ‘It is time to stop paving the cow paths. Instead of embedding outdated processes in
silicon and software, we should obliterate them and start over. We should “reengineer” our businesses.’
• The strategy is that the businesses need to go into detail of the processes and remove the inefficiencies at
each step.
• The principles of this re-engineering can be applied to public policy as well.

4. Steps for process reforms in Government
Why is there a need for process reform?
Documentation of "As-is" process
or Process Mapping
Process analysis to identify the exact issues
Reforms in the process
Monioring of the new process
• The Government Accountability
Office of US has a guide on
business process reengineering for
federal agencies.
• Hong Kong has an Efficiency
Office, to help government
agencies undertake process re-
engineering.
• Taking learnings from these guides,
from process re-engineering
literature for corporate sector and
most importantly, from India’s own
recent experiences, we have created
a broad framework to think about
process reforms.

5. The mechanics of process reform can vary depending on the specific circumstances. It can be at least of the
following six types:
I. Streamlining of the existing administrative processes
II. Changes in regulations within the given law
III. Changes in the legislation to change the law
IV. Adding capacity in some level of government to remove bottlenecks
V. Removing requirement or a state-mandated activity, also to remove bottlenecks
VI. Merge/close/restructure outdated government agencies
The illustrations used here are all based on recent experiences from India, though the lessons are applicable in general.
Types of process reforms

6. Type I. Administrative Streamlining (a)
The simplest kind of process reforms can be carried out by merely streamlining of administrative processes. It does not require any changes in
the legislation. This is done in cases where the hurdle in the process is not due to the rules or law does not pose any, rather due to administrative
reason(s).
 One such example for India is the use of Direct Benefit transfers for providing subsidies directly to the
beneficiaries.
 Prior to implementation of DBT, the benefits used to transferred to beneficiaries via various intermediaries. A report by
Planning Commission in 2005 found that
 About 58% of the subsidized food grains issued from the Central Pool do not reach the targeted beneficiaries because
of identification errors, non-transparent operation.
 Out of the Rs 1 worth of income transfer, only Rs 0.27 reaches to the poor.
 This was a clearly inefficient system with leakages, pilferage, delays in payments etc.
 Then, DBT was launched. It was made possible because of triangulation of the following three components- Jan Dhan
which are no-frills savings account , Aadhar which is a a unique identification number for the citizens and Mobile linking to
the firs two components.
 DBT through its direct and time-bound transfer system enabled the governments to transfer benefits using just an
individual's bank account number.

7. Type I. Administrative Streamlining (b)
Direct Benefit Transfer System
 Since the launch of DBT up to March 2022, it is estimated that Rs 2.7 trillion was saved on account of various schemes.
• Weeding out of 42 million fake ration cards under the public distribution system for food grains helped in saving
Rs 1.35 trillion (50% of the total)
• Removal of 41.1 million fake beneficiaries under LPG-PAHAL scheme helped in savings to the tune of Rs 729
billion (27%)
• Deletion of duplicate beneficiaries under MGNREGA saved Rs 410 billion.
 This is an underestimate as is the savings only to the government, that too on account of some schemes. It does not
include the savings to the beneficiaries on account of avoiding any cuts to be paid to the middlemen.
 In addition, the entire process is very efficient now. Prior to implementation of DBT, beneficiaries had to identified
separately each time leading to massive duplication of efforts.
 Whereas under DBT, the process of identification has become a one-time effort making the process much more efficient.
 India managed to provide food or cash support to 85 % of rural households and 69 % of urban households during the
time of COVID because of availability of DBT.
 This is an example of a process reform where use of technology to change the administrative process completely
overhauled the on-ground delivery of public services.

8. Type II. Changes in Regulations (a)
Some processes get complicated due to the complex regulations governing them, in which case the regulations need to be simplified.
 One such process reform has happened in the case of IT-BPO sector.
 IT-BPO sector was regulated by ‘Revised Terms and Conditions- Other Service Provider 2008’ which lead to cumbersome
and onerous compliance requirements such as:
 No clear definition of OSPs: OSP regulation defines, ‘Applications Services’ as providing services like tele-banking,
tele medicine, tele-education, tele-trading, e-commerce, call centre, network operation centre and other IT Enabled
Services, by using Telecom Resources provided by Authorized Telecom Service Providers.
 Local infrastructure requirement: Regulations insisted on use of a local Electronic Private Automatic Branch
Exchange (EPABX), thus disallowing global cloud based systems whereas most BPOs/ international logistics
companies/ airlines etc. have moved to cloud based systems. India was the only major country placing such a
requirement on companies.
 Separate Registration for each OSP: The regulation stated that, “The registration is location specific, so a Company
may have more than one registration. Any change in the location of OSP Centre shall require amendment in the
original registration.” This was a completely outdated regulation in the age of Work from Home.
 Restrictive infrastructure sharing: Infrastructure sharing between domestic and international OSPs was not
allowed and international OSP operations could not service domestic customers.

9. Type II. Changes in Regulations (b)
Other Service Provider reforms in IT-BPO sector
 After identifying this issues, Government liberalized the Telecom regulations for these Other Service
Providers. New revised and simplified OSP guidelines were first issued in November 2020 and further in June
2021.
 The key changes were:
 Clear definition of OSP: The applicability of new guidelines is limited to entities that provide "Voice
based BPO services" to its customers. Voice based BPO services is now defined to mean call center
services.
 Interconnectivity and infrastructure sharing between OSPs allowed: Interconnection between two or
more OSP centres of the same or unrelated company is now permitted. Infrastructure sharing among OSPs
is also allowed. The guidelines allow the use of EPABX at foreign locations.
 Work from home and remote locations allowed: The agents at home/anywhere shall be treated as
remote agents of the OSP centre. The remote agent can now directly connect to customer EPABX
/centralised EPABX without the need to connect with the OSP centre.
 Removal of distinction between domestic and international OSPs: The categorization of OSPs has
been done away with and one single OSP category has been introduced regardless of their domestic/
international business operations.

10. Type II. Changes in Regulations (c)
Other Service Provider reforms in IT-BPO sector
Source: NASSCOM Study December 2021
27%
15%
20%
28%
10%
How much is the reduction in
compliance burden?
Less than 20% 30-40% 40-50%
Over 50% No Change

11. Type III. Legislative changes (a)
This relates to process reforms where underlying laws need to be changed
• The Legal Metrology Act 2009 has long been subjected to criticism for the provision of imprisonment as
a punishment for offences under it.
• Sections 25-47 in Chapter V of the 2009 Act enumerate various offenses related to weights and measures.
• As per this Act, the first violation of any of the offences under Chapter V by an enterprise entails a monetary
penalty. However, upon a second/subsequent offence committed under the same provision, the Act provides for
imprisonment along with a possible fine.
• Given the hardship imposed by the criminalisation of second and subsequent offences under this Act, the balance
between empowering the legal metrology inspector and protection of legitimate entrepreneurs had got distorted.
• The data shows very high number of first offences and hardly any second!
Cases/Years 2018-19 2019-20 2020-21 2021-22
1st Offence
No of cases booked 1,13,745 1,26,409 82,279 74,721
No of cases compounded 97,690 1,24,902 74,230 55,779
2nd Offence
No of cases booked 12 5 3 11
No of cases filed in the court of law 4 3 3 7

12. Type III. Legislative changes (b)
Excessive criminalization of offences under the Legal Meteorology Act 2009
 Recognising the severity of the problems, the government decriminalized several provisions of the 2009 Act under the
Jan Vishwas Bill 2022 which was recently passed by the parliament.
 Since the Act itself had criminal penalty, in this case, legislation itself had to be changed.
 While this is a good beginning, this only solves part of the problem.
 Sections (30, 33, 36) that account for around 80% of cases are still criminalized.
 Need to re-examine these.

13. Type IV. Increasing state capacity (a)
This relates to expanding capacity where a bottle-neck is developing in a necessary government activity.
 One such area is the Intellectual Property rights (IPR) ecosystem, specifically patents.
 Number of patents filed and granted has increased in India, but we still lag far behind the peers.
 Secondly, the time taken for processing a patent application in India is much higher as compared to its global peers.
 The major reason for this is the shortage of manpower in patent office. Manpower employed in Indian patent
office is only around 900, as compared to 13704 of China and 8132 of US.
Year China USA India
Filing Grants Filing Grants Filing Grants
2016 13,38,503 4,04,208 6,05,571 3,03,049 45,444 9,847
2017 13,81,594 4,20,144 6,06,956 3,19,829 47,854 13,045
2018 15,42,002 4,32,147 5,97,141 3,07,759 50,659 15,283
2019 14,00,661 4,52,804 6,21,453 3,54,430 56,284 24,936
2020 14,97,159 5,30,127 5,97,172 3,51,993 56,771 26,361
2021 15,85,663 6,95,946 5,91,473 3,27,307 66,440 30,074
2022 16,19, 000 7,98,000 5,89,155 3,25,445 82,805P 34,153P
Note: P: Provisional

14. Type IV. Increasing state capacity (b)
Patenting activity in India
The bottleneck has shifted from Examiner to Controller after some manpower was added at examiner level.
Hence, manpower needs to be added in patent office, process for which has already begun.
14
Source: Office of CGPDTM
Note: Pendency means unexamined applications
Source: Office of CGPDTM
Note: Pendency at this stage means Preliminary Examined but pending for final examination
and disposal
167402
17235
0
20000
40000
60000
80000
100000
120000
140000
160000
180000
2017-18 2018-19 2019-20 2020-21 2021-22 2022-23
(provisional)
At Examiner level
First Examination Level
Filed Examined Pendency
57533
0
20000
40000
60000
80000
100000
120000
140000
160000
180000
200000
2017-18 2018-19 2019-20 2020-21 2021-22 2022-23
(provisional)
At Controller level
Final Examination (Disposal) Level
Disposal Pendency
167452

15. Type V. Remove State Mandated Requirements (a)
This involves getting rid of a requirement or mandatory activity that is not adding enough value to a process.
 Process reforms in some cases require addition of capacity, but elsewhere it may require simple removal of one or more
requirements, for example in the case of mandatory mediation before litigation.
 Currently, pre-litigation mediation in India for commercial disputes (as mandated under Section 12A of the Commercial Courts Act 2015) is still
compulsory. Even though the evidence clearly shows that mediation has not worked for 99% of cases but adds time and cost for everyone.
 Hence, there is a need to make mediation voluntary under Section 12A of the Commercial Courts Act 2015 as well, as has been
done in civil cases to simplify the process of grievance redressal in the country.
 This is an example of how process reforms may sometimes lead to unintended consequences and need to be rectified using
feedback. Indeed, this should be done as a matter of routine so that processes can be continuously upgraded.

16. Type V. Remove State Mandated Requirement (b)
Mandatory mediation required before going for commercial litigation
 When the original Mediation bill 2021 was introduced, Section 6 had a statutory mandate to compulsorily use mediation
for dispute resolution before going to court even in cases where the parties chose not to have a mediation clause in their
agreement.
 However, the Parliamentary Standing Committee on Personnel, Public Grievances, Law and Justice in its report submitted
July 2022, noted that making pre-litigation mediation mandatory may actually result in delaying of cases and recommended
that the pre-litigation mediation should not be made compulsory.
 Taking into account the feedback of Committee and stakeholders, Mediation Act 2023 has made mediation voluntary for
civil cases.
 There is a need to do the same for commercial cases now.

17. Type VI. Merge/close/restructure outdated government agencies
 Bodies are created by government at different times for a variety of reasons.
 However, many of them outlive their utility but there is no system of closing them. Similarly, there are many bodies that
do similar work and should be merged.
 This is a particularly a problem for autonomous bodies which tend to self perpetuate.
 For the first time, an effort has been in the last few years to study in detail and rationalize these autonomous bodies.
 Examples of autonomous bodies that were shut down in the recent years include Tariff Commission, All India
Handloom Board, All India Handicraft Board, Central Organization for modernization of workshops (COFMOW),
Rashtriya Mahila Kosh.
 Further, in some cases, the mandate of some bodies was merged wither within a body or a department. For example,
Films Division, Directorate of Film Festivals, National Film Archives of India and Children’s Film Society were merged
with National Film Development Corporation.

18. Conclusion
 Everyone focuses on the large picture structural reforms. Process reforms are an important part of the
policy tool-kit. Unfortunately, economic literature has long ignored this type of reform.
 Initiating process reforms in any area require a detailed mapping out of existing process and then
removing inefficiencies at each step.
 A large part of these process reforms involve series of small incremental changes, which have significant
impact on efficiency of economy, ease of doing business etc.
 There has been a concerted effort by the Government of India to systematically look at sectors and
undertake process reforms wherever necessary. It is being included as a part of training of government
officials as well.
 It is important to make these a routine part of the policy tool-kit.
 Even though the examples illustrated here are from India, its lessons are applicable worldwide.

19. Thank You