Widespread use of consulting firms in government departments – Work of consultancy firms

Source: The post widespread use of consulting firms by government has been created on the article “Work of consultancy firms with government must be regulated” published in “Indian express” on 14th December 2023.

UPSC Syllabus Topic: GS paper 2- polity- Parliament and State Legislatures – structure, functioning, conduct of business, powers & privileges and issues arising out of these.

News: The article discusses the widespread use of consulting firms by government ministries in India. These firms help with policy making and program execution. However, there are concerns about government dependence on these consultants and potential negative impacts on public policy and government skills.

Why do governments hire consulting firms?

Expertise in Diverse Fields: Governments hire consultants for their specialized knowledge in various sectors like agriculture, transport, and digital services.

Complex Challenges: The increasing complexity of projects, such as the Jal Jeevan Mission and the cleaning of the Ganga River, requires skills beyond the government’s traditional scope.

Technological Advancement: Rapid digital transformation in public services, like the Direct Benefit Transfer programme, demands technical expertise that consultants provide.

Limited Internal Skills: Traditional methods of recruiting government officials often lead to a narrow range of internal capabilities, making consultants optimal for specific challenges.

What is the role of consulting firms in Indian government projects?

Policy Formulation and Major Project Support: Consulting firms, including McKinsey, BCG, and the Big 4 (EY, PwC, KPMG, Deloitte), are heavily involved in shaping government policies and executing key projects. Their involvement is evident in key projects like the Swachh Bharat and Jal Jeevan Missions, as well as in efforts to clean the Ganga River.

Economic Growth Strategies: They assist in significant economic endeavors, such as supporting Uttar Pradesh’s aim to grow its economy to $1 trillion, showcasing their strategic role in regional development.

Strategic Vision Development: Consultants are tasked with creating foundational documents like the Vision 2047, indicating their deep involvement in long-term national planning and priority setting.

What are the concerns about the government’s dependence on consulting firms?

Weakening of Government Capabilities: Over-reliance on consultants for both routine and complex tasks risks eroding essential government skills, leading to a concerning level of dependency. This situation can result in “mission creep,” where consultants gain excessive influence over policy and decision-making processes.

Manipulation of Policy: Concerns exist that consulting firms might use their influence to tweak policy directions for their own benefit, as seen in some international corruption scandals.

‘Consultocracy’ and Reduced Public Servant Role: The term “consultocracy” highlights how deep consultant integration can diminish the traditional functions and capabilities of public servants, altering the fundamental dynamics of governance.

What should be done?

Regulate Consultant Engagement: Implement transparent and fair regulations for hiring consultants. This is crucial, considering the Indian government spent about Rs 5,000 million on these firms in the past five years.

Build Government Capabilities: Strengthen internal skills to reduce reliance on consultants, addressing concerns like the overdependence noted in routine tasks like file note preparation.

Ensure Accountability: Regularly review and assess consulting engagements for effectiveness, mirroring the finance ministry’s recent initiative in auditing consultancy fees and engagements.

Promote Knowledge Transfer: Establish clear protocols for consultants to transfer skills to government staff, mitigating the risk of ‘consultocracy’ and enhancing government self-sufficiency.

Question for practice:

Discuss the role of consulting firms in Indian government projects and the concerns associated with government dependence on these firms.