Saturday, July 18, 2009

India is short of effective managers

Last Saturday’s accident on New Delhi’s metro site is not remarkable. Such accidents will occur, and have occurred, in infrastructure projects with lamentable regularity all over the world. What is remarkable, however, is the amount of hand-wringing over whether the 71-year-old E Sridharan, the director of the metro project, should resign or stay. Sridharan has had a wonderful innings as a manager of mega-projects and received some of the highest honours the state can bestow him.

He, perhaps, may actually want to retire and grow roses or whatever. But the overwhelming, almost hysterical, opinion that he should stay, points at the extreme paucity of managerial talent in the country, if not real live role models like him. Actually given India’s state of development, there ought to be no shortage of Sridharans. But there is. And that’s the rub.
Nowhere is the shortage of talent and experience more obvious than in the power sector. Every year, the sector falls short of its target for capacity addition. The 11th Plan target is 78,700 MW but, so far in two years of the plan, only 15,000 MW have been added. Contrast this with the 50 or so power plants of 2,000MW each that China adds every year — roughly one 2,000 MW plant a week. Indian power projects are perpetually stuck in some kind of a maze.


Some years ago, 1997, to be exact, a person who is a top economic bureaucrat today, told me that lack of experience was the main reason why most of the eight power-plants, that were okayed with a sovereign counter-guarantee in the 1990s by the reform-minded federal government, failed to come up.
“We simply did not understand the complexity of funding and constructing large power plants,” the official lamely acknowledged. The worst example of official incompetence, and perhaps venality, turned out to be the prized Dabhol power project in Maharashtra. Everyone messed up everything in the project, from the original choice of LNG as the fuel for the power plant to the ridiculously high interest rates of the rupee and dollar loans for the project. It would seem that we have learnt some of the lessons, but simply not fast enough to meet the needs of a growing economy.
For the present, however, the government seems to be placing all its bets on the private sector. In UPA-I the government launched four ultra mega power projects (UMPPs) of which Reliance Power has bagged three and the Tatas one. UPA II is so far talking about another seven projects which would require investments of roughly Rs 20,000 crore each. The UMPPs are a giant step ahead of the counter-guarantee phase. They are based on competitive bidding and there are no sweet-heart deals that poisoned the Dabhol project. However, there are reports that the country may have saturated its ability to process these private-sector power plants. In the recent bidding, there has been a marked reluctance of the big global players to participate. As for the Indian bidders, they are obviously limited to Reliance and Tata and one or two other players who are yet to show their hand.
In these circumstances how can we meet the demand for power, especially the projections that have the country’s GDP growing at 8 or 9 per cent per annum ? Well, as of now, India is still lacking something, a fact that is becoming painfully manifest every summer. Indeed, with the demand for infrastructure projects increasing the shortage of skills — from the very top managers, to the lowly skilled workers — the ones who mix the concrete and set up the scaffoldings — is becoming apparent.
The answer is not the caricature response that “privatisation is the best”. Indeed, so severe is the problem that we need the best of all — private sector managers, as well as the technocrat-bureaucrat of the Sridharan or Mantosh Sondhi variety. Given the sheer size of power projects it is not surprising that some of the top private sector managers are those who have retired from the public sector. These are people who understand the ethos of government, but can also make it work for them and their projects. Indeed, this is yet another reason why deep reform is required in the country’s civil service, notably the premier Indian Administrative Service.


Power and infrastructure are not the only sectors that are starved of truly skilled administrative cadre. There is, for example, the need for a national security cadre.
National security management — from managing the borders, to the intelligence services, paramilitary, armed forces — all require skilled administrators, ones who have ground-up experience and are skilled in getting things done. As of now the government simply does not recognise this as a skilled job.
Take the job of the Defence Secretary who has to manage India’s vast defence apparatus. The current incumbent, Vijay Singh is no doubt a seasoned and skilled administrator, but he had little or no experience in the massive job he was given. Prior to his appointment as Defence Secretary, he headed the department of Road Transport and Highways in the Ministry of Shipping, Road Transport and Highways. And before that he was, Secretary, Department of Ayurveda, Yoga & Naturopathy, Unani, Siddha and Homoeopathy in the Ministry of Health & Family Welfare. His fleeting brush with security was a brief stint as Home Secretary to the Madhya Pradesh government. The Defence Secretary’s job was recognition for his long years in the service, but was it fair on him, or on the country?
The lack of a specialised security cadre affects the functioning of virtually every department of the government. It poisons the relations between the specialised cadre — doctors in AIIMS, engineers of the NTPC, police and intelligence officers, the army, navy and air force, scientists of the various government establishments — and the IAS officers who almost invariably head the departments these specialists are involved with.
The irony is that with its varied intake which ranges from humanities graduates to IIT-trained engineers, medical professionals and others, the IAS has a ready-made pool of top-class people who can be channeled into specialised cadres.
Instead, as the government reluctantly realises its shortcomings in critical areas, some departments, mainly the scientific ones, are often being reclaimed by specialists. But in other cases we see a relentless expansion of the IAS into other domains — aviation management, vice-chancellors, broadcasters, and seven store managers.


The task of creating specialised cadres within the larger civil service cadres cannot be done by anyone other than the political class. The civil servants are simply too powerful to be handled in any other way.
The Prime Minister has often spoken of the need for civil service reform. But the steps the government has taken so far are a bit of a joke. By the time he ends his second term, by 2014, Manmohan Singh will have been in office for 10 years.
No one will accept the excuse that he did not have the time or mandate to deliver what he had promised. Aware of this, he has set up a new Cabinet Committee on Infrastructure to monitor all projects above Rs 150 crore in value.
But monitoring is not the same thing as doing. And for that the government has to come up with answers to the basic problem — the lack of good managers.
It needs people who can direct massive projects to meet India’s vast infrastructure requirements, deal with the challenging national security needs of the country, and to run the ambitious social welfare programmes with the levels of efficiency that our situation demands.
This article appeared in Mail Today July 15, 2009

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