Every five years, the Central government appoints a finance commission to divide up the Centre’s revenue between itself and the states. Every five to 10 years, it appoints a pay commission to recommend how much more government employees should be paid. Neither looks at how much the government can raise or should cost. Lack of concern for cost led the government to run huge, unsustainable deficits. So the government passed an act to bring down the deficit over time. Amongst these initiatives, it was no one’s job to ask how much the government should deliver. The only time any thought was given to this was last year, when P. Chidambaram presented the outcome budget. It was supposed to show what the government had delivered, though its achievement was not to be related to cost. But many ministries listed amongst their achievements the meetings they had held. They made a farce of the outcome budget. The finance minister could have pulled them up and asked them to deliver substance. Instead, he omitted the outcome budget altogether this year.

But the thought that the government must deliver must bother some people in the government. The Sixth Pay Commission took the idea seriously, and appointed six consultant groups to apply it to various ministries. It also gave thought to paying government staff by performance. But it could not be revolutionary. Ultimately, it settled for rewarding better government servants with small amounts of money, which would not make them significantly better off than their worse colleagues. It ensured the insignificance of the rewards by not providing specifically for them; it wanted every ministry to save something out of its budgeted expenditure towards an incentive scheme. It did not, however, give any ministry an incentive to save for performance-related incentives. Jealousy is so rampant amongst government staff that any incentive payments will be questioned and their recipients targeted by their incompetent colleagues. So it is likely that most ministries will opt for a quiet life, choose to keep out of trouble and forget about incentive payments.

Performance incentives, if they are effective, do not merely save money; they save staff as well. The Sixth Pay Commission did not choose to give the ministries the freedom of reducing their staff; if it had, the savings on salaries would have become permanent. It is common knowledge that Indira Gandhi, in her populist incarnation, created lakhs of jobs that were not justified by work. The government has been overmanned since then. Previous commissions showed awareness of this. In partial remedy, the fifth finance commission recommended a freeze on fresh appointments, in the expectation that total employment would decline as people retired. The National Democratic Alliance government chose to ignore the recommendation. The Sixth Pay Commission may have avoided the issue as being politically too hot. But it was an integral, unavoidable aspect of its concern for efficiency.