Problems of Autonomy, Accountability and Control | Public Administration Optional for UPSC (Notes) PDF Download

Introduction

In this section, we will explore the concept of accountability, methods of securing accountability, elements of autonomy, and objectives of accountability. We will examine the importance of accountability in various contexts and discuss how it can be effectively implemented. By the end of this section, we will have a comprehensive understanding of accountability and its significance in fostering responsible behavior and ensuring desired outcomes.

Concept of Accountability

Accountability is a fundamental principle in public administration that ensures individuals and institutions are responsible for their actions and decisions. It refers to the obligation of public officials to be answerable for their conduct and performance. Accountability promotes transparency, integrity, and trust in government, and it is essential for effective governance. The concept of accountability encompasses both individual and institutional responsibilities, aiming to prevent corruption, abuse of power, and negligence.

Methods of Securing Accountability

Securing accountability in public administration involves various methods and mechanisms. These include:

• Legal Frameworks: Establishing laws, regulations, and codes of conduct that define the responsibilities, obligations, and standards of behavior for public officials. These legal frameworks provide a basis for holding individuals accountable for their actions.
• Performance Evaluation: Implementing performance evaluation systems that assess the performance of public officials against predetermined objectives and standards. Performance evaluations help identify areas of improvement, reward exemplary performance, and hold individuals accountable for their performance.
• Oversight and Monitoring: Establishing oversight mechanisms such as audit institutions, ombudsman offices, and parliamentary committees to monitor the activities of public officials and ensure compliance with laws and regulations. These oversight bodies play a crucial role in detecting and addressing instances of misconduct or maladministration.
• Whistleblower Protection: Creating mechanisms to protect whistleblowers who report wrongdoing or misconduct in public administration. Whistleblower protection encourages individuals to come forward with information without fear of retaliation, thus enhancing accountability by exposing and addressing corrupt practices.
• Citizen Engagement: Promoting citizen participation and engagement in decision-making processes through mechanisms such as public consultations, citizen feedback mechanisms, and social audits. Citizen engagement holds public officials accountable by ensuring their actions align with the needs and expectations of the people they serve.

Elements of Autonomy

Autonomy is another important aspect of public administration that complements accountability. Autonomy refers to the independence and discretion granted to public officials and institutions to make decisions and implement policies without undue external influence. The elements of autonomy in public administration include:

• Decision-making Authority: Public officials should have the authority to make decisions within the scope of their responsibilities without external interference. This enables them to exercise professional judgment and act in the best interest of the public.
• Budgetary Autonomy: Granting autonomy in financial matters allows public officials to allocate resources effectively and efficiently, ensuring optimal utilization for public services. Budgetary autonomy reduces dependency on political influences and promotes financial accountability.
• Functional Independence: Public institutions should be structurally and functionally independent to perform their roles effectively. This independence protects them from undue pressure or influence from external actors, allowing them to carry out their duties impartially and without bias.
• Professionalism and Expertise: Autonomy in public administration requires recruiting and promoting professionals based on merit and expertise. Public officials should have the necessary qualifications, skills, and knowledge to perform their duties independently and with integrity.

Objectives of Accountability

The objectives of accountability in public administration include:

• Transparency: Ensuring openness and disclosure of information to the public, promoting trust, and preventing corruption and misuse of power.
• Efficiency and Effectiveness: Holding public officials accountable for the efficient and effective use of resources, ensuring optimal service delivery to citizens.
• Rule of Law: Upholding the principles of the rule of law by holding public officials accountable for their actions and decisions, ensuring they comply with legal and ethical standards.
• Public Trust: Building public trust in government institutions and officials by demonstrating transparency, integrity, and responsiveness to public concerns.

Summary

The concept and policy of accountability and autonomy are crucial for effective public administration. Accountability ensures that public officials are answerable for their actions and decisions, promoting transparency and integrity. Various methods such as legal frameworks, performance evaluation, oversight mechanisms, whistleblower protection, and citizen engagement help secure accountability. Autonomy, on the other hand, grants independence and discretion to public officials and institutions to make decisions and implement policies, fostering professionalism and expertise. The elements of autonomy include decision-making authority, budgetary autonomy, functional independence, and professionalism. The objectives of accountability encompass transparency, efficiency, effectiveness, rule of law, and public trust, which are essential for good governance.

Problems of Autonomy in Public Sector Undertakings in India

• The absence of fixed tenures for chief executives in public sector undertakings (PSUs) hampers policy stability and continuity in a significant manner.
• The minister assigned to the PSU holds complete authority to dismiss the Chairman, Director, or Chief Executive.
• The Chief Executive, due to their short tenure (as per the Standing Conference on Public Enterprise, the average tenure is only 2 years), faces constant pressure to deliver short-term results at the expense of long-term disadvantages.
• Several committees have recommended that the procedure for terminating a CEO's contract should mirror the appointment procedure, which involves an appointment committee's recommendation to the cabinet. The central government has partially implemented this recommendation, but with certain conditions.
• Government-appointed directors on PSU boards often attempt to influence the decision-making process without assuming responsibility, leading to significant interference in their independent functioning and impeding their economic initiatives.
• Excessive control from higher authorities poses a major obstacle to the functioning of PSUs. Whenever a PSU undertakes a new project, it must navigate through the Expenditure Finance Committee and Project Investment Board, resulting in cumbersome processes, unnecessary delays, and an authoritarian environment.
• There is a lack of clear criteria for evaluating the performance of PSUs. To address this, certain memoranda of understanding have been signed between the PSUs, the central government, and state governments, based on recommendations from the Sen Gupta Committee. A recent example is the agreement between the central government and SAIL.
• Political appointments in PSUs, driven by nepotism and favoritism, contribute to inefficiency and incompetence in their operations. Therefore, merit should be the sole criterion for selection.
• Adequate retention policies are lacking to retain competent staff who are enticed by lucrative offers from the private sector.
• Challenges such as inadequate corporate planning, inefficient inventory management, resource shortages, below-par pay scales, and project implementation delays exist.
• Insufficient authority to pursue commercial opportunities for profit-making results in PSUs getting entangled in bureaucratic and political red tape, maintaining a bureaucratic nature instead of a balanced approach combining profitability and social obligations.

An effective measure to enhance the autonomy of PSUs is the introduction of the Navratna, Maharatna, and Miniratna statuses, which confer greater privileges and independence upon them.

Problems of Control in PSUs

Controls are often excessive, overlapping, and politically motivated, stifling operations.

Key Challenges:

1. Excessive and Overlapping Controls:

• Description: Ministerial directives frequently override the statutory autonomy granted to PSUs, leading to day-to-day interference in operational matters despite DPE guidelines advocating for "arm's length" oversight. This includes multiple layers of approval from administrative ministries, finance committees, and vigilance bodies, creating bureaucratic bottlenecks. For instance, even routine decisions like procurement or hiring require clearances from the Expenditure Finance Committee or Project Investment Board, delaying timelines by months.
• Examples and Evidence: In power sector PSUs, overlapping controls from the Ministry of Power and CAG have led to project delays, as highlighted in CAG reports. A recent case involves state-level PSUs in Kerala, where excessive ministerial interventions in operational decisions contributed to inefficiencies, with 25 out of 64 working PSUs incurring losses of ₹14,504.02 crore as per the latest finalized accounts. Nationally, this overlap is evident in the approval processes for investments, where PSUs must navigate directives from both DPE and line ministries, often conflicting with their corporate charters.
• Impact: Such controls erode managerial flexibility, resulting in cost overruns and missed opportunities. For example, in infrastructure PSUs, delays in approvals have hampered projects under schemes like Atmanirbhar Bharat, leading to underutilization of funds.

2. Risk-Averse Approach:

• Description: Oversight bodies like CAG and Parliament (through COPU) emphasize fund protection and compliance over growth-oriented risk-taking. This fosters a culture of caution, where PSU executives avoid innovative decisions to evade audits or parliamentary questions. Audits focus disproportionately on procedural lapses rather than performance outcomes, as per NPM critiques.
• Examples and Evidence: CAG reports consistently note that risk-averse controls prioritize "zero-error" compliance, limiting PSUs' ability to compete in dynamic markets. In Madhya Pradesh, 23 state PSUs reported losses amid such controls, with CAG flagging misappropriation cases involving ₹40.02 crore up to March 2024, underscoring how fear of scrutiny deters bold investments. Similarly, in Tamil Nadu, power sector PSUs contributed ₹15,357.90 crore to total losses of ₹22,192.94 crore, partly due to conservative pricing and investment policies enforced by oversight bodies.
• Impact: This approach stifles innovation, as PSUs shy away from R&D or market expansions, contributing to technological obsolescence (e.g., in telecom PSUs like MTNL, discussed later).

3. Lack of Clear Guidelines:

• Description: Undefined boundaries between control and autonomy lead to arbitrary interventions, such as ad-hoc directives during annual plan reviews or budget allocations. Without standardized protocols, controls become discretionary, often influenced by short-term political priorities rather than long-term PSU viability.
• Examples and Evidence: Investment approvals during Five-Year Plans or annual budgets frequently abridge PSU powers, as seen in CAG audits where unclear guidelines resulted in delayed disbursements. In Telangana, state PSUs accumulated ₹56,000 crore in losses by March 2023, exacerbated by arbitrary controls on resource allocation without clear performance-linked criteria. Nationally, the absence of precise DPE norms allows ministries to intervene in trivial matters, like contract awards, fostering inefficiency.
• Impact: Arbitrary controls disrupt strategic planning, leading to suboptimal resource use and heightened vulnerability to external shocks, such as global commodity price fluctuations affecting energy PSUs.

4. Political Misuse:

• Description: Controls are often exploited for vested interests, including favoritism in contracts, appointments, and resource allocation, particularly during electoral cycles. This politicization undermines meritocracy and efficiency, aligning with theories of "patronage politics" in developing economies.
• Examples and Evidence (2023-2025): Recent instances include favoritism in public procurement, as analyzed in a World Bank study, where political connections influenced contract awards in state PSUs, impacting productivity growth. In India, 2023-2025 saw cases in states like Kerala and Madhya Pradesh, where electoral pressures led to interference in PSU contracts, contributing to losses and misappropriation (e.g., ₹40.02 crore in MP). A 2022 study on agency independence further highlights how campaign contributions correlate with procurement favoritism, a trend persisting in recent state-level audits. In coal and power sectors, political directives for subsidized pricing or preferential contracts amid 2024 elections amplified inefficiencies.
• Impact: This misuse erodes public trust and financial health, with populism-driven irrational pricing in agro (e.g., fertilizers) and service sectors (e.g., transport) contributing to losses, as seen in Tamil Nadu's ₹6,622.19 crore non-power sector deficits.

Overall Impact

Excessive controls delay modernization efforts, such as digital transformation or green energy shifts, leading to competitive disadvantages. For instance, irrational pricing due to populist controls has fueled losses in agro and service PSUs, with national figures showing persistent inefficiencies. In Uttar Pradesh, many PSUs remain a drain on the exchequer, with profits overshadowed by losses across years (e.g., ₹784.29 crore profit in 2019-20 vs. mounting deficits). This perpetuates a cycle of dependency on government bailouts, hindering India's economic self-reliance.

Interlinkages, Conflicts, and Reforms

The concepts of autonomy, accountability, and control are interlinked in a delicate balance: autonomy enables agility but risks misuse without accountability; control ensures oversight but can conflict with both if over-applied. Conflicts arise from systemic tensions, while reforms aim to harmonize them through policy innovations.

Conflicts

• Autonomy vs. Control: Micromanagement erodes independence, as excessive directives stifle decision-making. For example, ministerial overrides in investment approvals conflict with PSU charters, leading to inefficiencies.
• Accountability vs. Autonomy: Burdensome reporting (e.g., multiple audits) hinders operational agility, creating a trade-off where transparency demands compromise innovation. MoUs (introduced in 1989) seek to mitigate this by linking performance targets to autonomy but often face implementation gaps due to weak enforcement.

These conflicts manifest in prismatic bureaucracies, where political-bureaucratic nexus amplifies imbalances, as per Riggs.

Reforms and Way Forward

Reforms under successive governments, particularly post-1991 liberalization, emphasize balancing these elements. Recent initiatives under the Modi government (2024-2025) focus on reducing interference and enhancing PSU viability.

Enhance Autonomy:

• Fixed tenures for executives (e.g., 3-5 years) and merit-based appointments via PESB (Public Enterprises Selection Board) to ensure stability.
• Maharatna/Navratna/Miniratna statuses: Maharatnas (e.g., ONGC) enjoy investment freedom up to ₹5,000 crore without prior approval, promoting global competitiveness. Recent upgrades, like ONGC Videsh to Navratna in 2023, have enhanced financial autonomy.
• 2024-2025 Reforms: Modi government's deregulation commission (announced Feb 2025) aims to curb government interference, complemented by a Task Force for Next-Generation Reforms (I-Day 2025 address) to minimize compliance burdens and foster self-reliance. This has positioned PSUs as "wealth creators" by reducing political meddling, as per analyses.

Strengthen Accountability:

• Robust MoUs with clear KPIs, monitored digitally for real-time performance tracking.
• Digital audits (e.g., via e-governance platforms) and citizen feedback mechanisms, including RTI enhancements and social audits.
• Corporate governance: Mandatory independent directors on boards, aligning with SEBI norms, to ensure ethical oversight without stifling operations.

Optimize Control:

• Follow Arjun Sengupta Committee (1984) recommendations for minimal interference in day-to-day affairs, focusing controls on strategic outcomes.
• Disinvestment and Structural Reforms: Post-1991 policies, accelerated in 2024 (e.g., One Nation One Election and Unified Pension Scheme), promote efficiency by privatizing non-strategic PSUs. Economic Survey 2024-25 emphasizes business reforms to reduce overlaps.

Case Studies

• ONGC's Success via Navratna Autonomy: Granted Navratna status in 1997, ONGC gained financial flexibility, leading to improved performance through intensified exploration and debt management. Post-liberalization, it became India's highest profit-making PSU, with huge cash reserves enabling global acquisitions. This autonomy allowed self-reliance, contrasting with pre-Navratna inefficiencies.
• MTNL's Failures from Excessive Control: MTNL's decline stems from government interference, policy failures, and unused spectrum (e.g., 4G delays). Revenue falls, debt defaults (five in 2.5 months by 2024), and 100% value erosion highlight how controls prevented agile responses to private competition. Government shifts to BSNL operations in 2024 underscore revival challenges.

PSUs' challenges stem from imbalances in autonomy, accountability, and control, resulting in inefficiencies and losses (e.g., over ₹18,000 crore in state PSUs). Reforms fostering "autonomy with accountability" can enable creative bureaucracy for sustainable development. As per experts, without structural changes, PSUs risk stagnation.