Governance for UPSC, GS 2 Notes By UPSC Topper Ravisankar Sarma 

SEVOTTAM MODEL (SEVA + UTHAM)

Right of Citizens for Time bound Delivery of Goods and Services, Redressal of Grievances Bill, 2011

• Mandatory Citizen Charter: Every public authority is mandated to publish a citizens’ charter within 6 months of the commencement of the act
• Grievance Redressal: A citizen may file a complaint regarding any grievance related to
  • Citizens Charter
  • The functioning of Public Authority
  • Violation of law, scheme or policy

            Officers are to be appointed for grievance redressal that must be completed within 30 days. A state public grievance redressal commission is to be established.

Issues with the Bill

• Unitary Nature: Only state legislatures have jurisdiction over state public authorities as per 7^th schedule and thus an act of parliament alone may not suffice
• Overlapping Jurisdiction: Bill does not address grievances where more than 1 department is involved. Several grievance mechanisms already exist at the Union and State levels regarding public service delivery.
• Not available for foreign nationals

Role of Civil Services in Democracy

Articles 53 and 154 of the constitution states that the executive power of the Union or state vested with President or governor shall be executed directly through offices subordinate to them. These offices constitute permanent civil service/executive.

Civil servants are the bedrock of public administration as they are entrusted with the responsibility of carrying out developmental activities, maintaining law and order, ensuring effective citizen participation

Why Civil Services?

• Welfare State: The emergence of a welfare state has necessitated organized delivery of services to citizens that has made the bureaucratic machinery a necessity to enforce procedures and rules while delivering services
• Technological Development: The growth of science and technology in modern times has heightened the importance of civil services enabling a seamless integration of departments and efficient delivery of services
• Economic Policymaking: Civil services play a pivotal role in evaluating ground scenarios and formulating plans of action for socio-economic development in various sectors of the economy
• Disaster Management: In lieu of climate change and frequent calamities and disasters, the efficacy of civil services in mitigating disasters and initiating rapid response and recovery in its aftermath has attained greater importance
• Maintaining Law and Order: A state becomes anarchy of chaos unless the rule of law is upheld. Civil services are instrumental in upholding procedures established by law ensuring order in society
• Sustainable and Inclusive Development: Civil servants are engaged in developmental planning and implementation process and are hence entrusted with the responsibility of evaluating social and environmental costs of development
• Facilitators of Democracy: Maintaining rule of law, peace and order in society, conducting free and fair elections, preservation of the unity of the nation

Issues in Indian Civil Services

• Red-Tapism: Lack of coordination between departments, excessive focus on rules and procedures and culture of lethargy has caused the Indian bureaucracy to be snail-paced in the effectuation of services and implementation of schemes
• Corruption: Civil service in India has been plagued by an endemic challenge of corruption that has depleted the trust of citizens in accessing services
• Ritualism: Excessive focus on rules and procedures has caused organizational goals to be displaced. Civil services in India has little to show for the excesses of rules and procedures in terms of results.
• Complexity: Unwanted procedures and rules, Centralisation and systemic rigidity have led to complex nature of bureaucracy that has hindered citizenry from fulling achieving the fruits of civil service
• Non-Citizen Centric: Civil services, in its focus on rules, procedures and anonymity in the dissipation of services has lost much-needed empathy and approachability distancing it from the citizens
• Technology Adoption: Civil service in India have not adopted technology in proportion to its rapid evolution and taking over the lives of civil society. This has curbed potential efficiency and approachability to citizens
• Centralisation: Civil services often step into domains of local self-governing institutions undermining their authority and autonomy
• Political Interference: Absence of neutrality and politicization of bureaucracy has affected its impartial functioning and synergy with the government. Eg: Delhi bureaucracy and government at odds led to policy paralysis in the state

Reforms

• Rationalisation of Procedures: The multiplicity of rules and procedures, centralisation and overlapping jurisdictions should be rationalised to ensure simplicity and efficiency in the effectuation of civil services
• Behavioural Change: Training of civil servants and reforming civil service code of conduct to instil empathy and citizen-centric approach to civil servants
• Performance Incentives: Civil servants need to be outcome-oriented in their approach to governance and service delivery. Performance incentives can fuel their ambition and activity to achieving organizational goals that lie displaced in lieu of procedural complexity and concurrence
• Enforcement of Prevention of Corruption Act and the swift institutionalization of Lokpal and Lokayukta
• Lateral Entry: Civil service recruitment can be reformed to accommodate specialists in lieu of increasing evolution of technology and expertise in multiple domains. This can promote healthy competition within civil services.

Generalist or Specialist?

Why Specialist?

Domain Expertise: Specialists bring with them expertise in their allocated fields that is much needed in a rapidly evolving 21st-century world. They are hence more adept at handling issues and suggesting policy measures to resolve the same.

No bureaucratic Lethargy: Since they have not been part of the bureaucracy, they bring with them renewed freshness and energy that can revive the slow-paced Indian bureaucracy

Commitment to the Cause: Specialists have been spending their whole careers working in the same field and hence they are likely to better committed to resolving issues that plague their expertise sector

Healthy Competition: Presence of generalists in civil services induces healthy competition that can rejuvenate the lethargic Indian bureaucracy thereby increasing its efficiency

Lesser Political Interference: Specialists are less susceptible to corruption and undue influence from the political executive as compared to generalists as they command greater respect and reputation

Why Generalist?

Approachability: As compared to specialists, they are more approachable to the citizenry

Language: The language of the generalist may be better comprehensible to the common man as compared to that of the specialist

Handling Bureaucracy: Generalists are more adept at handling bureaucracy while specialists may take impulsive decisions in lieu of frustration of the bureaucratic pace

Inter-Disciplinary: While a specialist offers expertise in one department alone, a generalist offers a valuable resource in multiple domains that can be effectively utilised by the state.

Corporate Governance

            Corporate Governance refers to the company’s accountability to the shareholders and other stakeholders such as employees, suppliers, clients and the local community. It refers to fair, efficient and transparent functioning of the corporate management system.

Objective

            To ensure a set of conditions whereby the organization, directors and managers act in the interest of the management and stakeholders to achieve the objectives of fair corporate governance

Why Corporate Governance?

1. Transparency: Conditions imposed upon companies reduce chances of scams and scandals
2. Societal Expectations: CSR and delivery social needs
3. Stakeholder Relationship: To provide a check on companies from adopting unethical practices that adversely affect all stakeholders of the company

Legislations of Corporate Governance Framework

Companies Act, 2013

            It contains provisions related to Board Constitution, meetings, independent directors, audit committees and disclosure requirements in financial statements. These are hence instruments of control on a company to protect stakeholder interest.

Features of the Act

• Independent Directors: Companies Act mandated that the board of the company have a fixed percentage of independent directors to exert control on proceedings and ensure all stakeholders interest are met
• Audit Committees: The companies act mandates an audit committee to monitor company expenditure and revenue and note any discrepancies in company accounts. This ensures that the company’s profits or losses do not disadvantageously affect all stakeholders
• CSR Committee: It provides a responsibility on companies to address the expectations of society by assisting them in multiple areas of education, health, environment and infrastructural development thus facilitating inclusive growth
• Stakeholder Relationship Committee: A company has multiple stakeholders that can have varied or conflicting demands. They need to be harmonized and met through this committee that acts as a bridge between the company and various stakeholders
• Nomination and Remuneration Committee: Wages of the employees and other aspects of employment are met by this committee.

Uday Kotak Committee Recommendations

The Kotak Committee has advocated both structural and functional reforms with regard to corporate governance.

Board Reforms

Strengthening Presence of Independent Directors:

• At least half of the board members should be independent directors
• No board meeting shall take place without the presence of an independent board member
• 1 independent director should be a woman
• Independent directors thus now in a much better position to protect the interest of all stakeholders 

Enhance decision making at the Board level:

• Board Strength: Increase the strength of the board and ensure a minimum strength of 6 directors 
• Board meetings: Increase the number of board meetings to 5 to discuss successions, strategy and board evaluation

Separation of executive and non-executive functions:

• 50% of Independent directors should possess non-executive functions
• Chairperson and managing directors should have contrasting functions. The chairperson shall have only non-executive functions.

Audit Reforms

• If the audit firm leaves the company, then it needs to explain the reason for the same
• SEBI to have requisite powers to act against auditors if the need arises

Dissemination of Information to Incentivize Investment

• Suo-motto Disclosure: Disclosure of information by companies on their own website and to the stock exchange to be as transparent as possible to facilitate easy investment for prospective investors
• Half-yearly cash statements: All listed companies should produce half-yearly cash flow statements

Read All notes by Ravisankar Sarma