Wednesday, July 05, 2006

Curse of seniority July 2, 2006

Two weeks ago I was invited to a glamorous event in Manhattan celebrating the launch of a special issue of the prestigious Foreign Affairs magazine titled The Rise of India to which I had also contributed. A knowledgeable and well heeled audience heard our moderator begin with Jim Rogers’ famous line that he wouldn’t invest in India because “it had the worst bureaucracy in the world”. An odd note to begin an event honouring India’s rise! It soon became apparent, however, that we must be celebrating the rise of a “private” India. A worrisome question hung over the whole evening--is India rising economically despite the state?

During our socialist days we worried about economic growth but we were proud of our world class judiciary, bureaucracy and the police. Now we are ashamed of these very institutions while we take growth for granted. The brightest human beings on the earth reside in India’s public services, but their fibre has been destroyed by the system’s inability to nurture the good and punish the bad. This is, in part, due to the insidious seniority system run by small and safe men. When a person is promoted regardless of performance he loses his will to excel. And so, what was once called the best civil service in the world has been “dumbed down”. In 1938, 81 civil servants ran the central government and a thousand ICS officers ruled undivided India of 300 million people far more efficiently because they had not succumbed to the disease of seniority.

It is also democracy’s fault. It creates the illusion that if we are equal in one respect we must be equal in every way. As citizens we are equal before the law with equal rights, but this sensible idea is subverted into a belief that if we are equal legally then we must be equal in other ways. Thus, we are shy to reward talented persons and punish non-performers. When institutions stop nurturing talent then one falls into a sick world of “rishwat and sifarish” where lakhs of cases remain pending in the courts, where drinking water doesn’t reach the poor, where electricity board engineers connive to steal power and universities promote unsuitable professors.

Great nations are built by talented persons. Anyone who has run an institution or a business knows the 80:20 rule—80 percent of the results are delivered by 20 percent of the people. Hence, smart managers reward the talented without de-motivating the rest. Talent is, of course, widely dispersed--it exists among dalits, brahmins and OBCs--and successful nations are able to spot and nurture it. Just as one wouldn’t select a World Cup football team based on reservations, so one must never bend the rules of entry into any institution. Doing so sends a wrong signal to the young, telling them, “chalta hai”. If the entry exam doesn’t evaluate talent properly then we should change the exam but not sacrifice the principle of merit.

Indian companies are becoming world class because they respect this principle. Veerappa Moily, who is now picking up the pieces after Arjun Singh, could similarly give birth to world class private universities in India if he got rid of the Licence Raj in education. What a wonderful way to expand seats! And if Manmohan Singh is serious about governance, he should attack the accursed principle of seniority. Great nations somehow manage to strike the right balance between the claims of talent and equity. Others are cursed to be mediocre.

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