November 23, 2023
Good morning. In today’s either/view, we discuss whether governments should rely on consulting firms for policymaking. We also look at the Heritage Fest in Tripura, among other news.
📰 FEATURE STORY
Should governments rely on consulting firms for policymaking?
From the outside, it’s probably a little hard to understand what exactly a consultant does. Consultancy is a big business. Consulting firms are hired regularly by some of the world’s biggest companies to solve all sorts of problems and help them strategise for the future.
Sometimes, these consultants are also hired by governments to help them formulate and implement public policy. Private consultants are now engaged across most central ministries and departments of state governments. While they can prove helpful for complex issues, particularly in a country with over a billion people, is it a good move? Would they be held accountable if things don’t go to plan?
Context
When you think of consulting, the first thing that would come to mind is Fortune 500 companies. A company hires a consulting firm and poses several issues to them. It can be anything from methods to increase efficiency and profits to help implement a marketing strategy. The consulting firm then puts together a team of consultants to undertake a detailed study of the client, competitors, industry landscape, finances, etc, and provide recommended solutions.
If you look at some of the biggest consulting firms today – McKinsey, Bain & Co, Boston Consulting Group (BCG), etc; they all have a public sector and government department or something akin to that. Take Bain, for example. Under their public sector and government tab, it states they work with national and regional governments, city municipalities, etc, to realise their economic and social goals.
Many of these consulting firms are popular and in demand. They also don’t come cheap. Given how much they operate in India, business is booming. According to Euromonitor, turnovers at consulting firms increased by an average of 10.8% in the five years till 2018. Industry revenues were $64.8 billion that year. A decent portion of this was from the public sector.
The big firms like the ones mentioned earlier are popular and carry a lot of cachet. They now compete with smaller firms that are more specialised. They’ve sort of cornered the market with specialisations in areas like data collection and performance tracking. This is especially useful in a country where policymakers have struggled to gather and assemble reliable data.
Things have evolved slowly in India in how consulting firms are used by government agencies. Let’s travel back to 2008 when the Union government hired Tata Consultancy Services (TCS) to help them overhaul India’s passport system and operate a network of passport issuance centres. It’s now about providing strategic advice to governments and being involved in policymaking. As researcher Yamini Aiyar wrote, you couldn’t walk into a government building without bumping into a consultant.
As the government takes up more projects across various sectors like infrastructure, healthcare access, and skill development, to name a few, more consultants are brought in at various stages. The reasoning is simple – what’s the best way to make the government efficient and work around all the red tape? Here are a couple of examples. Punjab has hired the Boston Consulting Group to diversify agriculture. Uttar Pradesh has brought in Deloitte to help it become a trillion-dollar economy in five years.
Consulting firms effectively advertise themselves by presenting business models packaged as solutions for formulating and implementing policies. All this begs the question, if the involvement of these consultants helps bring about positive change in policymaking and the costs are worth it, is it such a bad thing?
VIEW: They can be helpful
The TCS example from 2008 is probably a classic example of where getting some outside help was a good thing and necessary. Why not simplify the process of getting a passport? Getting one today is certainly easier than it was in 2008. It’s an excellent example of how the private sector can quickly and easily step into the shoes of roles usually filled by the state bureaucracy.
That term, state bureaucracy, is emblematic of the Indian state. In any complex policy environment, there needs to be expertise with an understanding of societal realities and room for experimentation. That’s rarely the case in the public sector. What consulting firms provide is evidence and rigour for policy. Broadly speaking, most would agree that private sector efficiency is better than government capabilities.
Policymaking, in some ways, should be a democratic process since it involves dialogue with stakeholders. In this way, consultants matter. They play a legitimate role in bringing ideas, expertise, and evidence to the table. This isn’t restricted to the big firms. Smaller ones, too, have a role to play. Together, they’ve helped formulate some of the country’s recent successful government initiatives, like Digital India and Clean India, to help improve economic growth and increase living standards.
COUNTERVIEW: Is it good in the long run?
The question to ask when the government involves many consultants in policymaking is whether they’re prioritising short-term gains over long-term sustainability. The short answer is yes. There are a few different components to that answer. Consultants are brought in to work irrespective of the red tape and bureaucracy but this often leads to the creation of a parallel bureaucracy. They’re also not the ones who are accountable to citizens. This can hallow out the State.
If government departments outsource a lot of their work to consultants, who’s keeping an eye on them? Who are they accountable to? Several firms incentivise partners and would-be partners to win as many clients as possible, even if it means compromising on quality and upselling new ideas and innovations regardless of whether it’ll have any impact. It’s a flawed model. There’s also the risk of these firms essentially becoming supply chains to do basic functions that were once done by government officials.
There’s no regulation to check if the consulting firms have any conflicts of interest. Who’s to say whether these firms, with deep pockets and access, have any influence over particular policy with a pre-set agenda? Of course, since they’re consulting firms, they’re not obliged to reveal who they’re working for. Some consultancies offer their services for free or for a cost that’s cheap to the government since it might help them secure contracts in the future.
Reference Links:
- Government use of consultants soars in India – Financial Times
- Consultancies benefiting from Modi government’s push on projects like Digital India, Swachh Bharat – The Economic Times
- More on management consultants in government – Urbanomics
- The dangers of outsourcing government planning to global consulting firms – The Leaflet
- Government by ‘Consultant’ can hollow out the State – Deccan Herald
- Consultants to governments shouldn’t be yes people. Must push back with alternative views – The Print
What is your opinion on this?
(Only subscribers can participate in polls)
a) Governments should rely on consulting firms for policymaking.
b) Governments shouldn’t rely on consulting firms for policymaking.
🕵️ BEYOND ECHO CHAMBERS
For the Right:
India’s World Cup defeat conveys a message to all those “warriors” who seek to reduce cricket to a surgical strike
For the Left:
A caste war is raging in America, and Hindus are the target
🇮🇳 STATE OF THE STATES
Service terminations (Jammu and Kashmir) – The Jammu and Kashmir government terminated the services of four employees due to their alleged involvement in activities against the state. These terminations, sanctioned under Article 311(2)(C) of the Constitution, were executed without holding an inquiry, as deemed unnecessary by the lieutenant governor for state security reasons.
Why it matters: The employees dismissed include individuals from various departments, including education and police. Since the formation of a Special Task Force in April 2021, 59 such dismissals have occurred, sparking concerns and criticism from the Jammu and Kashmir Employees Joint Action Committee for the lack of due process.
Green hydrogen hub (Tamil Nadu) – The state is progressing towards establishing a green hydrogen hub, as announced by Industries Minister TRB Rajaa. This initiative is part of the state’s broader green energy transition revolution, aiming to increase its green energy capacity from the current 50% to 75%.
Why it matters: The state’s commitment to green energy was recently recognized with the ‘UN Promotion Award 2023 for Excellence in Scaling Up Energy Transition Investments’ at the World Investment Forum in the UAE. The development of the green hydrogen hub, alongside a robust electric vehicle charging infrastructure, is expected to facilitate a shift from fossil fuels to renewable energy sources.
Legislative delay (Chhattisgarh) – Nine bills, including key legislation on increasing reservations in government jobs and educational institution admissions, have been pending for the Governor’s assent since early 2020 in Chhattisgarh. This delay has gained attention following the Supreme Court’s questioning of a similar situation in Tamil Nadu.
Why it matters: The pending bills cover various domains, including university amendments and public service quotas. The Governor’s requests for clarifications have led to a confrontation with the Congress-led state government, which has taken the matter to the high court. The court initially sought a response from Raj Bhawan but later stayed the order following an application by the Governor’s secretary.
Pricey state fish (Gujarat) – Chief Minister Bhupendra Patel recently declared Ghol fish, also known as ‘Sea Gold’, as the state fish of Gujarat. This announcement was made at the Global Fisheries Conference India 2023 in Ahmedabad. The Ghol fish, scientifically named ‘Protonibea Diacanthus’, is renowned for its high market value and its parts are widely used in pharmaceuticals, cosmetics, wine, and beer production.
Why it matters: Despite being found in the Indian and Pacific Oceans, overfishing and pollution have driven its population into deeper waters, making it rare and hard to catch. It is so valuable that a full Ghol fish can fetch up to ₹5 lakh, with even its air bladder being a coveted item in wine manufacturing.
Heritage Festival (Tripura) – The Tripura Heritage Fest, organized by Yuva Vikas Kendra, a youth organization in Tripura, is set to begin today. This weeklong festival, aiming to promote national integration and heritage, will feature participation from 25 Indian states, showcasing their cultural and traditional heritage. Additionally, representatives from neighbouring countries such as Bhutan, Nepal, Bangladesh, and Indonesia are expected to participate.
Why it matters: The festival, to be inaugurated by Chief Minister Dr Manik Saha, will serve as a platform for cultural exchanges and will include traditional cuisine, handlooms, handicrafts, and products from various regions.
🔢 KEY NUMBER
$7 billion – RMZ Corp., a real estate developer based in Bengaluru, aims to invest around $7 billion in equity while diversifying into four new asset categories: industrial and logistics, hospitality, mixed-use, and luxury residential development.