01 January 2024 – The Indian Express

Role of Consultancy in the Government Sector

Context:

• Today, a lot of government projects depend on consulting support for things like corporatizing the Ordnance Factory Board, helping Uttar Pradesh reach its objective of growing its economy to $1 trillion, and cleaning up the Ganga River, Swachh Bharat, and Jal Jeevan Mission. The Centre has hired a multinational consulting firm to create a Vision 2047 paper that will outline the nation’s strategic priorities in line with an international trend.
• According to recent press reports, the Union government’s ministries have paid foreign consulting firms fees totaling about Rs 5,000 million over the past five years. The finance ministry has requested information on all of these consulting engagements.

Consultancy firms: What Are They?

• A consultant firm is a company that helps other organisations with issues they can’t handle on their own by offering expert counsel and solutions.
• Experts in a variety of industries, including management, engineering, finance, healthcare, and others, work for consulting businesses.
• They usually focus on specific projects or goals and charge a fee for their services.
• Indian consulting organisations include Tata Consultancy Services, Deloitte, McKinsey & Company, and others.
• What Advantages Do Consulting Firms Offer in the Creation of Public Policy?
• Specialised Knowledge and Experience: Consultants provide government agencies with domain-specific knowledge and experience that they may not otherwise have. In industries like banking services, transportation, energy, and agriculture, this is essential for developing programmes and providing services.
• Flexibility and On-Demand Skills: Because public policy problems are dynamic, particularly in the context of digitization, consultants must be able to deliver specialised technical skills on a flexible, on-call basis. This guarantees that the government will have access to the required knowledge when needed.
• Diversity of Views: Consultants provide outside viewpoints and a range of expertise, which helps to solve problems in a more thorough and creative way. This diversity can be especially helpful when tackling difficult problems that might not have obvious answers.
• Effectiveness with Project-Specific Engagements: Consultant assignments frequently have set deadlines and are project-specific. This is a practical and economical strategy that enables the government to handle certain issues without having to add to its institutional burden over time.

What Difficulties Do Consulting Firms Present?

• Hollowing out of Government Capabilities: A heavy reliance on consulting firms may cause the government’s internal resources to be depleted. The government may become unduly reliant on outside expertise as a result of civil servants losing important skills and knowledge over time.
• For instance, the local governments in several rural areas in China have contracted out a number of public services, including health care, education, and environmental protection, to non-governmental or private businesses. Social equality, quality control, and public accountability have all suffered as a result.
• Excessive Dependency and Mission Creep: Even for everyday duties, government officials run the risk of becoming overly dependent on consulting teams. The expansion of consulting engagements beyond their initial purpose, known as “mission creep,” might result from this reliance and possibly muddy the distinctions between the duties of consultants and public servants.
• The Ministry of Railways employed consultants who were discovered to be engaging in activities outside of their purview, as reported in the 2018 CAG report, raised concerns about their efficiency and accountability.
• Lobbying for Continued Work and Policy Influence: Consulting firms may take advantage of their existing contacts with government officials to win continuing work. Another worry is that consultants may try to go too far in trying to shape policy decisions and orientations, sometimes to their own advantage.
• India’s health policy was shaped by McKinsey & Company, according to a case study done in 2019 by the Centre for Policy Research (CPR). According to the report, McKinsey maintained strong relationships with stakeholders and government representatives, leveraging these relationships to win contracts and sway laws to its advantage.
• Distortion of Public Policy aims: Including consultants in the process of creating policies may cause such aims to become skewed. The long-term interests of the public may not always coincide with the priorities and recommendations of experts, which could affect the desired policy outcomes.
• A 2017 study by the Indian Institute of Management (IIM) looked at how consulting businesses affect the country’s educational policies. It was determined that these companies had a big influence on public policy goals of diversity, equity, and quality in education by pushing for policies that favoured marketization, privatisation, and standardisation.
• The concept of “consultocracy” refers to the diminishing role of public servants as consultants become more and more influential within government institutions. The historical roles and capacities of government institutions may be impacted by this phenomenon, which could lead to a reduced role for traditional public officials.
• Risk of Corruption: Opportunities for corruption may arise from the interaction of consulting businesses with government operations. Global concerns have been raised by cases of corruption scandals using consulting services, underscoring the importance of ethics and openness in business procedures.
• A few years ago, a state-owned corporation in India and a consulting firm were involved in a corruption scandal that was exposed by a CBI report. According to the investigation, the company conspired with enterprise officials to rig contracts, exaggerate project expenses, and syphon off money.

What is the best course of action?

• Regulatory Protections: A thorough regulatory framework is required for the engagements with consulting groups. This entails preventing rent-seeking behaviours and making sure the onboarding procedure is fair and transparent.
• Disclosure of Value Added: Procedures for consultants to reveal the value they provide to public policy projects should be established in order to allay worries about transparency. The public’s trust and accountability depend on this transparency.
• The performance, results, and effects of government projects and initiatives can be tracked and assessed by independent, unbiased monitoring agencies like ombudsmen, auditors, and watchdogs.
• Knowledge impart and Capacity Building: Clearly defined procedures should be put in place for consultants to impart knowledge to government personnel. To make sure that the knowledge acquired through consulting engagements contributes to the long-term growth of government capacities, there should also be an emphasis on internal capacity building.
• Stakeholder Involvement: Using forums, surveys, and participatory budgeting, government agencies can interact and engage with stakeholders and citizens to make sure that policies and programmes are inclusive, responsive, and open to the public.

Way Forward:

• Since it may be difficult to expect government workers to continuously refresh their abilities for modern governance and digital service delivery, consulting businesses will continue to support public policy. If private sector expertise is carefully calibrated and onboarded within a transparent regulatory framework, it can improve the quality and efficacy of public service delivery.