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What India can learn from Pakistan’s scheme to incentivise its civil servants with better postings

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A study based on Pakistan’s civil servants showed that incentivising officers with a posting of their own choice remarkably improved their performance.

New Delhi: While a recent study based on India’s IAS officers showed that they tend to perform worse and be corrupt if posted in their home states, a study based on Pakistan’s civil servants had a probable solution to the problem of poor performance.

The Pakistan study found that promising merit-based postings to top performing civil servant significantly improves their performance.

Here’s what India can learn from Pakistan’s system to keep its civil servants motivated.

The study

The paper, ‘Making moves matter: Experimental evidence on incentivizing bureaucrats through performance-based postings’ was written by Adnan Q. Khan, Asim Ijaz Khwaja and Benjamin A. Olken.

It shows that even the incentive of a posting of choice can considerably improve performance.

The research studied the impact of a transfer mechanism called ‘performance-ranked serial dictatorship’ (PRSD) where better-performing officers got to choose their next posting.

“Postings were then carried out as described: the top-rank inspector was given his first choice of posting, the second-rank inspector was given his top choice among remaining circles, and so on,” explained the report.

525 property tax inspectors in Punjab region of Pakistan was studied over a period of two years.

“We find that overall, the promise of performance-based postings substantially raised revenues,” concluded the study.

The increase in revenue

The growth rate of revenues collected by the tax inspectors under PRSD (treatment group) was significantly higher, up to 41 per cent, than the control group who did not get incentives.

“Compared with the control group’s average growth rate of 11.7 per cent, this represents a 41 percent higher growth rate than controls,” said the report.

“For inspectors who were first included in the scheme, in the second year the impact is even greater… about 30 percent higher growth rate than controls,” it added.

The above result was purely the incentive effect working on the officials.

Surprisingly, the impact of the scheme even continued after the inspectors were no longer incentivised. One reason for this was the better allocation of inspectors under PRSD.

Financial incentives vs choice of posting

The study also looked at the impact of financial incentives on the performance of officials, noting that most civil servants receive low wages in developing economies.

Though the inspectors under PRSD collected one-fourth less the amount of tax revenues that inspectors given financial incentives did, the former had a greater benefit for the state: no financial burdens, making it extremely cost-effective.

“While the performance-ranked serial dictatorship may entail administrative and political costs, financially it was completely free to the government, whereas the financial incentives had the government almost doubling the wages of tax staff,” said the report.

The road ahead

The paper estimates a far-reaching impact if the area of the study was wider, with more locations for postings, unlike the present study.

However, the PRSD method would have little impact if applied two years in a row since inspectors would face the prospect of losing the posting of their choice as soon as they achieved it.

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