NITI Aayog to regulate consulting activity for India's public sector

17 April 2018 3 min. read
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Following an indication from the Prime Minister’s Office, the National Institute for Transforming India (NITI) Aayog has sharpened its vigilance on government agencies that hire external consultants from the private sector. The planning body has called for full disclosure of project details from all departments, in addition to other procedural changes. 

Hiring consultants from the private sector has become a fairly common practice for governments across the world, a trend that has received its fair share of scrutiny. In markets such as the UK or Australia, for instance, government agencies have faced substantial criticism for their heavy expenditure on hiring consultants.

Beyond the level of expenditure, government hiring of consultants is also often questioned for conflict of interest issues, given the extensive work that consulting firms do with the private sector. The government of India has now taken measures to tackle this ethical dimension of the issue, by giving the NITI Aayog a regulatory role of sorts.

As stated in a letter sent by NITI Aayog to all government departments, “Niti Aayog has received a note from the principal secretary to the Prime Minister of India regarding conflict of interest of consultants working for Government of India. It has been suggested that given the rising number of consultants being employed by every ministry, there is a need to streamline data pertaining to such appointments.”

NITI Aayog to regulate consulting activity for India's public sector

Indian government and public-sector agencies have turned to the consulting industry in an increasing capacity in recent years, to help with projects ranging from insolvency proceedings to divestments. The NITI Aayog itself was assigned a budget of nearly €5 million last year for the sole purpose of hiring external support.

Under this new regulatory framework, the first call of action is for all government agencies and departments in the country to submit details of all the consultants that they work with, and the projects that they have been hired for. The submission is to include detailed justifications of the appointments, and detailed statements on the absence of a conflict of interest.

The regulations do not limit themselves to government agencies. Consulting firms or consultants that are being hired by the government will also have to submit a declaration, not only providing personal and photographic identification of those involved, but also a disclaimer against their own conflict of interest in the matter.

In addition, NITI Aayog is hoping to become a consulting organisation itself, as plans have been revealed to form an internal body of experts, hailing from a wide variety of backgrounds, ready to be deployed to any public-sector project wherein their assistance may be required.

Lastly, NITI Aayog will also act as a point of contact between the public sector and the consulting industry. The letter states, “further, it has been proposed Niti Aayog will be made the coordinating body for consultants in ministries, departments and institutions entirely funded by the Government of India and it be made mandatory for all such entities that hire consultants to Niti Aayog to report data.”