Wednesday, April 2, 2014

India's "bloated" bureaucracy?

Critics reflexively blame India's "bloated bureaucracy" for governance failures. So how "bloated" is it?

As on 2011, India had 18.5 million governments employees - 3.4 million with central government, 7.2 million with state governments, 5.8 million with PSUs, and 2.1 million with local governments. As a share of total employment (around 400 million) it was just 4.6%. However, as a share of organized sector employment, it stood at 62.2% in 2010. In contrast, in the US, governments now employed 15.9% of all Americans with jobs. The relevant statistical comparisons are 4.6% and 15.9%, which is itself a deceptively favorable comparison and with wide variations across states and departments. Consider this excellent analysis reported in Hindu, 
Data compiled from multiple sources, including a 2008 official survey, Right to Information applications, media reports and the 2011 census show, India has 1,622.8 government servants for every 100,000 residents. In stark contrast, the U.S. has 7,681. The Central government, with 3.1 million employees, thus has 257 serving every 100,000 population, against the U.S. federal government's 840. This figure dips further if the 1,394,418 people working for the Railways, accounting for 44.81 per cent of the entire Central government workforce, are removed. Then, there are only about 125 central employees serving every 100,000 people. Information technology and communications services account for another 7.25 per cent of the Central government's staff...
For the most part though, India's relatively backward States have low numbers of public servants... Bihar has just 457.60 per 100,000, Madhya Pradesh 826.47, Uttar Pradesh has 801.67, Orissa 1,191.97 and Chhattisgarh 1,174.62. This is not to suggest there is a causal link between poverty and low levels of public servants: Gujarat has just 826.47 per 100,000 and Punjab 1,263.34. The data could explain, though, why even well-off States like these have found it tough to ensure universal primary education and eradicating poverty.
I have always considered this alarming deficiency as an important contributor to our state capability deficit. An illustration of this deficit is that New York with 3500 eateries has 180 food inspectors whereas Hyderabad with atleast a few times more eateries has just 4! Much the same is common across cutting edge activities - school inspectors, outreach nurses, agriculture extension officers, town planning inspectors, engineering supervisors, and so on. It is impossible to systemically deliver effective outcomes when the jurisdiction of the official is massively stretched functionally, geographically, and population-wise. Even a cursory matching of time and task to responsibilities would reveal that we would need to have a few times more functionaries.

And, as the report highlights, these deficiencies span across all levels. It is as much incorrect to say that Indian bureaucracy is top heavy as it is to say it bottom heavy. Or overstaffed at the center and understaffed at the states. It is understaffed at all levels. 

None of this should be taken to presume that once we have them in place, state capability will improve. Far from it. Personnel deployments have to be complemented with other administrative reforms that increase transparency and local accountability, improve supervision and monitoring capacity, build capacity, and prevent the politicization of bureaucratic functioning. None of these are easy. But to mindlessly blame "bloated" bureaucracy for our governance failures will not get us anywhere.

Update 1 (17.06.2015)

From Business Standard,
Total government sector employment declined by two million to 17.6 million during the period 1995-2011. Today, close to half or 43 per cent of government employees are temporary and as many as 3.5 million government jobs have been outsourced to the private sector during 2000-12. The government sector accounts for 58 per cent of formal sector jobs, but a good 44 per cent (for the private sector this figure is 75 per cent) of these are temporary in nature.
Update 2 (15.08.2015)
From Livemint, an excellent description of how programs are launched with limited acknowledgement of state capability constraints.  


Shilp Verma said...

Very interesting numbers, thanks! I wonder why this is so; and more importantly, what is the trend? Have the number of government employees per 100,000 capita been rising or falling over the years? Is it merely a question of resources (money to hire more people) or are there more complex factors?

Anonymous said...

The US has over 5 million employed in public schools and colleges. I suspect this is likely to inflate the US public employment density.

Also, local govts in the US raise their own money by means of local taxes and are fully autonomous.. meaning that given the funding and need, full employment is always realized. The state and local govts do not compete for a common pool of funding.

Anonymous said...

I think the word "bloated" has connotations of a slow decision-making process, more than anything else. In this regard, it is important to note that India has too many "vertical" levels through which every decision has to pass before it is finalized, while too few men on the ground to actually implement it.

Anonymous said...

Its not the number of dogs in the fight that matters, its the fight that the given number of dogs put up that matters. Its delusional to compare the organizational efficiency of the US inspectors to the operational incapacities of their india counterparts.