The Prime Minister’s Independence Day bonanza to our babus has put administrative reform back on the map. There is little argument that government salaries, particularly at the higher end of the scale, need to be made competitive with the expanding private sector if the government is to retain talent and improve performance. However, as many — including this newspaper — have argued, higher wages do not in themselves create conditions for better performance. In fact, government employees at the lower end of the scale have always earned far higher than their private sector counterparts — a factory worker in a central government owned establishment makes 2.5 times more than in a private sector establishment as do government teachers — and look what that’s done for performance! It is thus critical that these new pay packages are accompanied by radical restructuring that induces accountability and incentivises government employees to perform better. The question the country faces now is how this might be achieved.

Much of the debate and public push for reform is focused on the recommendations of the pay commission to introduce performance-related incentives. No doubt, performance incentives are an important mechanism for improving accountability as they create tangible, measurable indicators against which employee performance can be assessed. However, this system fails to address the most fundamental structural flaw with the Indian government system — that it is accountable internally — reporting up to its own hierarchy rather than externally to the public it serves.

Public accountability is crucial to improved governance because it ensures that citizens are made aware of government operations, can track performance and exert pressure for improved outcomes. As is well known, efforts to create internal accountability fail in the absence of external pressures. After all, it is only logical that employees will have a greater incentive to act if they know that people care and are pushing for change. Thus the performance incentive scheme will only achieve desired results if it is complemented by efforts to place information on performance in to the public domain and open this to public scrutiny.

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