(Bihar Times): Sometime back administration was quite gung ho about the administrative reforms and accordingly ended up with formation of an administrative reforms panel.  However, there is not much difference reflected in the functioning of administration even today. Whether the panel has failed to think of any path breaking reform or has failed to submit the report, is also not known as there is not any discussion about the same anywhere. It could also be possible that panel has already submitted the report with some path breaking reform related suggestions but the government of the day has failed to appreciate and implement the same.

However a durable administrative and institutional reform is certainly called for if the long term independent governance and administration efficiency and efficacy are to be maintained. Most critical component in this exercise will be to identify the critical players involved in a much complex interaction leading to achievement of administrative and governance objective. A somewhat simplified model will lead to identification of three key players viz: 1. Provider (gets Paid), 2. Consumer (pays for or at least determines the worth of consumption made) and 3. Regulator (frames policies guidelines and monitors). Going by this model, there would be a key player which will be acting as provider of goods or services. These goods and services could very well be road, water, electricity, communication network, food grains (as in PDS), health system or for that matter even education. There could be many more tangible or intangible services, goods being provided which are either consumed by identifiable individual(s) or society (identifiable group (s)), or in some cases, by society which can be abstract. This brings us to the second key player that is consumer. However, we have quite a misnomer of consumer here due to the fact that even though the consumer is supposed to consume and hence should be paying for the same or at least determine what is the worth of goods and services consumed, most of the time he does not have any say in this matter at all. Perhaps failure to do so has resulted in such large-scale linkages from the system. Regulator who should be doing the work of setting the rules of game and seeing adherence to the same forms the third dimension in this exercise. Precisely for this purpose we also have the democratic set up of governance. The primary responsibility for setting up the rules and regulation lies with legislature, seeing adherence to the policies and rules lies with the executive and judiciary is there to adjudicate in any way ward action.

The thought process underlying the whole analysis is that consumer should be allowed to have some way of determining the payoffs to provider. But, what we see today is that all the three roles are merged together. Rules are framed by the legislature and there does not seem to be much issue with it, nor is there any issue with the judiciary. However, there seems to be a definite problem with executive as it is supposedly responsible for operationalising the policies and is also responsible for monitoring the same. However, it invariably ends other contradictory roles which can not be reconciled. It has been indulging in acting as provider and being consumer at the same time apart from being the regulator as warranted from it. Thus, at the moment all the three actions like monitoring, providing and consuming is vested in the executive.

Any attempt at reforming the administration will have to focus on these aspects. Right players have to be somehow identified, and should be entrusted with the right kind of responsibility. If this happens, even if we have the publicly funded entities indulging as provider, still we can have required efficiency and efficacy in the whole system. Consciously or unconsciously this is being adopted in certain aspects with a view to infuse efficiency. Coupon system, smart cards, payment through bank accounts of beneficiary etc reflect some of the progress made in this direction. However there is a need to do more and that too in a much more methodical and widespread manner. Banking system can play a big role and IT a big enabler in achieving the aforesaid objective.

Let us take some example to understand the same. Suppose we want to reform the PDS. We have an agency which basically frames and operationalizes the policy in form of government (ministry of food and civil supplies). Say this agency as 'regulator' which decides that all the BPL family as per the list provided by it would be entitled to food grains at certain specific price. This objective can be achieved in two ways. First the BPL family can obtain a food cheque from the bank (food coupons), and issue the same to any person providing him the grain. The person in turn can get this food cheque discounted at bank or with state governments' agency for goods that is food grains and also for his commission. Alternatively, SFC can be converted into a full fledged procurement and distribution agency entrusted to carry out procurement and disbursement of foods apart from offloading in open market. It should be entrusted with creating an appropriate organization for undertaking the same without state intervention. It can carry out distribution using either permanent employees or commission agents as it may deem fit. However, government as regulator would be laying down the rules for procurement and disbursement. It can also stipulate the price and the compensation which SFC will be entitled to. However, the payment of the compensation will be routed through customers by way of food cheque. These cheques can be then encashed by SFC against mandatory counter attestation by the government. Thus, delivery of the food grains to customer can be made against the food cheques, as issued by the banks. This way, operationally SFC should be allowed to function as fully autonomous organization in this entire exercise without any other intervention from state government than providing the difference of procurement and disbursement price, factoring in a margin for operational expenses. State executive can, from time to time, outline policy guidelines through a board of governance kind of structure. Though in this entire exercise a consumer gets the right to decide to consume and pay the goods on offer or not, but he can not misuse this facility as it is restricted to food cheques (specific purpose cheques). In an IT driven environment it could be electronic transfer of food credits with all these credits logged in for approval with government authorities.

In first stage same exercise can be repeated with education, health and individual level facilities like water and sanitation facilities. There also government can just set the criteria and ask banks to issue specific purpose cheques/ credit points (wherever government wishes to pay) on its account for specific purpose. These cheques can then be used to pay for the intended services and goods which the end user chooses to consume. It would be also a good strategy to allow the consumer to choose the provider to the extent possible. This option can be specifically given where government does not want to restrict the provider to some specific state agency (or even private agency for some strategic and economic viability related issues).

This exercise can be replicated in other cases using the three tier elected local authorities as consumers (excepting the cases where these authorities themselves are to act as either provider or regulator). Thus in case of PMGSY, School, Primary Care Centers etc we can have a panchayat as consumer where as in case of degree colleges, district hospitals, district roads etc we can have a district as a consumer. Provider in these cases could be either state government agencies or private agencies. Payment can be like wise structured in the form of a specific purpose cheque (or series of cheques) for reimbursing the providers claim. The same can be issued using the signatures of elected head and sub head of these bodies. This will be very effective, and in fact essential, wherever state agencies are acting as provider. This mechanism will work equally well in case of private players, but will call for a higher degree of monitoring by state administration ( it can be made mandatory that only against the approval of state authorities these cheques can be encashed) to avoid any collusion. This will introduce a functional and effective system of check and balances. As such it can be made mandatory in all the cases where cheques are issued by the consumer, that bank will reimburse the amount only against counter approval from appropriate government authority.

Only where state is the only identifiable customer (instances where district can not be identified as individual or even proportionate consumer either jointly or severely), state would be required to resolve this conundrum of consumer, provider and regulator. If sufficient autonomy is provided to the executing agency (so much so that operational controls on the executing agencies are restricted only to payment mechanism), the issue of separation of consumer and provider can be adequately resolved. However, the problem of regulator still remains. Best thing to do in such cases would be to make legislature the regulatory and monitoring authority and also approver for payment where the state is acting as the consumer and provider in an autonomous state agency. If the work is to be done by private authorities, an autonomous agency can be created,  which may be kept at arms length from the concerned ministry. It will act either as a state level consumer or as regulator (operationalising policies, monitoring) between state and the  private players. Specifically, AG can be the relevant regulator where state chooses to be consumer. Only where the state opts to act as regulator itself, it should consider creating an autonomous state level agency (authority) to act as consumer.

Thus the manna for effective and efficient administration is in achieving the mutually counteracting and balancing relationship between the Regulator, Provider and Consumer.

*A Financial Sector Professional with over 11 years of experience in various streams like Investment Banking, Financial Services and Debt Market Operations.

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