RETHINKING THE LATERAL ENTRY SCHEME
The government has withdrawn the lateral entry scheme under pressure from political forces complaining that it will reduce opportunities for “backward classes” to serve in higher levels of government. In its defense, the government’s supporters point out that lateral entry had been proposed by the 2ndAdministrative Reforms Commission in the UPA era. Also, the Congress has been appointing lateral entrants on an ad hoc basis at very high levels whenever it was in power. The aim of the lateral entry scheme of the 2ndAdministrative Reforms Commission, which the present government has followed, was to inject new competencies at the level of joint secretaries of the government.
The suitability of the lateral entry scheme cannot be judged by who came up with this idea. It must be evaluated by whether it is the right solution for improving the governance of the country and well-being of its citizens. Governments of all countries must solve many societal, environmental, and economic problems. These are listed in the 17 Sustainable Development Goals that all governments have agreed to achieve by 2030. Fundamentally, the goals are to increase the pace of inclusion in the benefits in economic growth of people who are being left further behind by the free market juggernaut, and to reverse the damage to the environment the juggernaut is causing.
The Indian economy has become one of the most unequal in the world. Citizens from all religions and castes are demanding reservations of opportunities. A majority is being left behind: the numbers wanting protection of their rights for education and employment have crossed 50%. India is also one of the most environmentally stressed countries in the world, with depleting sources of fresh water, the most polluted cities, and deteriorating soil in its most productive agricultural areas.
The challenge for governance in the 21st century is a misalignment of institutions of the Bazaar, the Samaj, and the Sarkar. Societal, environmental, and economic problems have become complex because they must be solved simultaneously. Specialists aiming to solve only environmental problems can cause social and economic harm. Economists aiming to solve only economic problems of slow growth and balanced budgets, with economic models in which social and environmental conditions are externalities, cannot solve the combination of problems listed in the 17 Sustainable Development Goals.
100 years ago, between the two World Wars, an unbridled Bazaar, insufficiently regulated by Sarkar, created a crisis for Samaj in Western countries. The Sarkar had to step in to improve ease of living by providing social security and public services to Samaj, and by reducing the ease of doing business and breaking up monopolies in the Bazaar. 50 years later, inflation and stagnation of economic growth, caused by the disruption of global oil supplies, required a readjustment of the relationship between Bazaar and Sarkar. President Ronald Reagan declared that government is not the solution: it is the problem. The history of ideological conflict finally ended, according to Fukuyama, with the victory of the Washington Consensus and collapse of the Soviet Union in 1991. Socialism declined; capitalism surged.
Heads of governments in all countries are given the freedom to choose senior functionaries who they trust, whether the US or French Presidents or the British or Indian Prime Ministers. Mitu Sengupta has explained (From “Hard Sell” to “Soft Sell”: The IMF, World Bank and Indian Liberalisation”; World Affairs, Vol. 14 No.1, Spring 2010) how the Washington ideology of pro-market economic reforms was embedded into the Indian polity through lateral placements of economists who had served in the World Bank and IMF, and Ph.Ds. in economics from Western universities, in high level positions in finance and economic institutions in the country: chief economic advisors, chiefs of the national planning institution, governors of the Reserve Bank, etc. This practice has continued through UPA and NDA regimes. The ideologies of Bazaar have been guiding India’s Sarkars since the 1980s. The present government has also appointed lateral entrants in high level positions to guide its economic policies, such as chief economic advisor, vice chairman of the NITI Aayog, deputy governors of the Reserve Bank, and the Chairman of the Finance Commission, who advocate the same economics.
The Washington Consensus’ ideology of “minimum government” has caused societal and environmental problems which require urgent reforms. A realignment is necessary amongst the institutions of Bazaar, Sarkar, and Samaj. The Sarkar (the government) is required to regulate the animal spirits of the Bazaar (market) and to harness its power to increase the ease of living of all citizens (Samaj), especially the poorest and least powerful. The Sarkar should not keep pumping up economic growth with the same approach that has caused environmental and social problems and hope that an invisible hand will solve them. The Sarkar needs new competencies to manage multi-faceted systems’ improvements, to improve the health of society, the environment, and the economy simultaneously
Since the European Enlightenment in the seventeenth century, science and industry has advanced by breaking complexity into components with specialists in each. Domain specialists know more but about less of the whole. None can see the whole picture. Therefore, solutions by specialists in one domain backfire in other domains. Designers of governance reforms should go back to the drawing board and rethink the lateral entry scheme. The government needs policymakers and implementors who are not intimidated by complexity, but who understand and embrace it, and produce multi-disciplinary solutions. The government needs systems thinkers in higher levels of government, not more domain experts. All functionaries in higher level positions in government should be trained in systems thinking.
Finally, the business of business must no longer be only business. Even managers of private enterprises, who are trained to focus on the growth and profits of their enterprises, should be trained in systems thinking and systems acting to improve the well-being of society and the environment. The time has come for a paradigm shift. The fifty-year cycle of the Washington Consensus’ free market ideology in the governance of economies is ending, even in the USA.
(Published in Business Standard August 26 2028 https://www.business-standard.com/opinion/columns/bazaar-sarkar-and-samaj-it-s-time-to-rethink-the-lateral-entry-scheme-124082601030_1.html )