Government Decision on Appraisal of Autonomous Bodies – Rationale and Methodology

Government Decision on Appraisal of Autonomous Bodies – Rationale and Methodology


The government has decided has decided to ask Niti Aayog to review the performance of autonomous bodies that have mushroomed over the years with little oversight. These include more than 500 autonomous bodies such as University Grants Commission (UGC), Jawahar Lal Nehru University (JNU), Delhi Development Authority (DDA), Prasar Bharati and many more.

Expenditure Management Commission (EMC)
Expenditure Management Commission (EMC) headed by former Reserve Bank of India (RBI) governor Bimal Jalan had observed that these agencies were incurring expenditure to the tone of over Rs 60,000 Crores annually. The Prime Minister’s Office (PMO) has set up a high-powered committee headed by Niti Aayog vice-chairman Arvind Panagariya to look into the EMC’s recommendations. A few recommendations made by the EMC were:
Streamlining of expenditure,
Review of grants made to autonomous bodies, and
Linking a part of the grants to the performance of the bodies.

The United Kingdom (UK) had undertaken review of its 900 odd autonomous bodies. On the basis of the review, the number was pruned by 285 institutions, resulting in annual savings of around $2 billion.
Atal Bihari Vajpayee government had also set up Expenditure Reforms Commission for similar reforms. However, the bureaucracy has in most instances come up with arguments justifying continuation of the system.

This move can also be seen as an opening for unwarranted, unwelcome, targeted interference in the matter of autonomous public institutions. However, this could be an important and constructive initiative due to the following reasons:
Lack of oversight over the years
Increasing number of such autonomous bodies which has risen from a mere 35 in 1955 to 691 in 2016
Increasing and wasteful expenditure incurred by these bodies
Growing irrelevance in the current socio-economic set up
Owing to the specific significance of these autonomous bodies:
These are critical interface between the state and the market or the state and the public.
They include some of the key channels for publicly funded scientific and industrial research and innovation, teaching and training institutions.
Responsible for sectoral initiatives to develop and deepen market infrastructure in areas that will be important for creating more geographically dispersed employment.

Dos and Don’ts – What not to do
Avoid misuse of power: It has to be ensured that the reviews are carried out in a manner convenient to the agencies. Review of finances and information requests should not provide the reviewer with powers to harass and annoy.
Rigidity in approach: The span of such institutions is very widespread and hence the range of institutions and their mandates will require discretion to be used in reviews. Further, there cannot be a universally applicable approach to review all the bodies or all sectors.
Benchmarking/ Criterion: The criterion to select and review the agencies cannot be fixed. Much of the review for potential savings will have to be done on a case-by-case basis, both in terms of choices of entities to focus on and criteria for separating waste from performance in the ones that are chosen.

Dos and Don’ts – What to do
Clarity of terms of review: Stating the terms of the review up front and sticking to them. It will add clarity and avoid a feeling of harassment and animosity.
Clarity of principles: Clarifying the principles used as basis to identify institutions for closer scrutiny, the definition of poor performance and performance criteria that will be used.
Sharing of Workload: Sharing the workload and the power to identify poor performance with Union ministries that autonomous bodies are attached to, with peer institutions to identify potential savings, and with the institutions themselves will improve the outcomes. This will also reduce the workload of Niti Aayog and ensure the completion of the task in a timely and effective manner.
Voluntary change of status: Allow institutions to opt out from being an autonomous body to operate at a more fiscal and administrative arms-length distance from the state. This could help in narrowing down the review exercise and also increase the public sector savings.