From Consultant Dependent State to Capable State: Re-Structuring External Expertise in India

On 13 April, a short political news report in the New Indian Express drew citizens' attention to an under-examined concern: the expanding role of consultancy firms in government. The news capsule said that consultancy firms now draft policy papers, design tenders, manage bids, and sometimes oversee implementation. In several cases, they act like end-to-end operators while the official machinery only signs approvals and clears payments worth thousands of crores. The Cabinet Secretariat is reportedly now reviewing this dependence.

The concern is valid—but incomplete.

The real issue is not that consultants are present in governance. Modern states, especially those operating at India’s scale and complexity, will inevitably draw upon external expertise. The deeper issue is that consultants are being used in ways that reflect underlying structural gaps within the administrative system. In that sense, consultant dependence is not the disease. It is the symptom.

The Misdiagnosis: “Too Much Consultancy”

Public discourse often frames the issue in simplistic terms: either consultants have become too powerful, or bureaucrats have become too passive. Both diagnoses miss the point.

Consultants expand their role when the system requires capabilities it does not internally possess. In India’s case, these include:

- Domain-specific expertise in emerging sectors

- Continuity in long-duration programs despite frequent transfers

- Coordination across ministries and levels of government

- Risk buffering in complex or high-stakes decisions

When these functions are weak or fragmented within the state, they are inevitably outsourced.

The result is a quiet but consequential shift: consultants begin to perform functions that are not merely advisory, but structural to governance itself.

The Deeper Problem: A Misaligned Administrative Architecture

India’s administrative system was designed for a different era. Its strengths—generalism, mobility, procedural rigor—were well suited to maintaining order and continuity.

But the demands of an aspiring $10 trillion and eventually $30 trillion economy are qualitatively different. Governance now requires:

- Technical depth in areas like AI, quantum, semiconductor, new materials, climate change management, etc 

- Long-term program ownership

- High-frequency coordination across sectors and jurisdictions

A generalist, high-mobility system struggles to consistently deliver these functions. The consequence is predictable: the state outsources what it is not structurally designed to do.

Re-Structuring Internal Capacity

Reducing dependence on consultants cannot be achieved through procurement reforms alone. It requires rebuilding the internal architecture of the state.

A six-pillar framework can guide this transformation (which I put forth in details in a blogpost on 10 February):-

- State-rooted administration: Officers develop long-term ownership within states, strengthening continuity and accountability.

- Union-level specialization: The central government builds domain-specific services for technical policy areas.

- Common formation, specialized depth: Shared foundational training followed by domain expertise.

- Institutionalized coordination: Councils and structured mechanisms replace transfers as the glue of governance.

- Development Accountability Code: A statutory framework aligning performance with outcomes, transparency, and sustainability.

- A specialized tribunal: A bounded mechanism to adjudicate between political direction and administrative legality.

This is not about turning bureaucrats into corporate executives. It is about aligning administrative architecture with growth & development objectives.

Re-Structuring Consultancy Contracting 

Even a capable state will continue to use consultants. The question is not whether consultants should be used, but how.

Two extremes must be avoided:

Treating consultants as substitutes for state capacity

Attempting to eliminate their role entirely

The appropriate approach would be to structure consultancy engagement—to define where, when, and how external expertise is to be used.

Consultancy is not a single category. It is a layered ecosystem.

The Consultancy Contracting Stack

Consultancy engagement should be guided by three factors:

Complexity of the task

Coordination load involved

Conflict risk

On this basis, a structured five-tier model can be applied.

Tier 1: Advisory and Pilot Design (with bounded delivery)

This tier includes diagnostics, benchmarking, policy options, and pilot design. Institutions such as the UNDP and similar multilateral bodies typically operate here.

A limited role in pilot delivery may be permitted—but only under strict conditions: small scale, time-bound, and with a clear transition to government-led or competitively selected implementation. Pilot participation does not confer rights to scale.

Tier 2: Domain-Specific Technical Expertise

This tier involves specialized inputs—digital systems architecture, climate modeling, advanced analytics, or regulatory drafting in niche sectors.

Here, consultants fill genuine capability gaps. But their role must remain bounded to expertise provision. They cannot transition into execution or evaluation within the same project lifecycle.

Tier 3: Transaction and Procurement Advisory

This is the most sensitive layer. Designing tenders, structuring PPPs, and defining eligibility criteria can shape outcomes in subtle but powerful ways.

Strict conflict-of-interest rules are essential. Entities involved in this tier must be firewalled from bidders, implementers, and evaluators.

Tier 4: Program Management (PMU) — A Core State Function

This is where correction is most urgent.

Program management—coordination, monitoring, and execution oversight—is fundamentally a core responsibility of the state. It should, by default, be led by civil service officers.

Consultants may be used only as a temporary support mechanism, under clear safeguards:

Time-bound engagement

Mandatory capacity transfer

Parallel state ownership

A narrow exception exists for PSU transformation, where management consultancy firms may assist in transforming specific public enterprises. The recent transformation of BSNL with the aid of BCG could be case-in-point. Even here, mandates must remain bounded and time-limited.

Tier 5: Independent Evaluation and Audit

Evaluation must be institutionally independent. Entities involved in design or execution cannot assess their own work.

The Golden Rule

No single entity should operate across multiple tiers within the same program lifecycle. This would prevent self-design, self-execution, and self-validation—common sources of accountability failure.

Federal Risk Management: Centre vs States

Governance risk scales with jurisdiction. At the Union level, consultant overreach can influence entire national systems. Therefore:

- Consultants at the central level should be limited to pilot projects and bounded technical roles

- Multi-ministry program management should be limited to individual states, but only as a transitional tool, with sunset clauses and capacity transfer requirements

Philanthropic Partners as Innovation Engines

Alongside consultants, a parallel ecosystem has expanded: private and corporate philanthropic foundations, often described as “not-for-profit technical partners”.

Despite different labels, their functional role overlaps with consultancy: they design interventions, run pilots, and support implementation. They must therefore be situated within the same governance framework.

As government welfare and development schemes rapidly approach saturation, the traditional justification of “reaching the unreached” is rapidly diminishing. Therefore, the role of philanthropic actors must evolve.

Their primary function should now be:

- Innovation and experimentation: testing new models of service delivery, behavioural interventions, or institutional design

- Pilot implementation: demonstrating proof-of-concept under clearly defined, time-bound conditions

- Specific technical knowhow and capacity support

They should not become:

- Parallel delivery systems

- Permanent implementation partners

- Unaccountable policy influencers

In effect, philanthropic organisations should function as the innovation arm of the state—not as substitutes for it.

CSR wings of public sector enterprises should be prioritised in this regard. This would provide alignment with public objectives while leveraging additional resources.

At the same time, all external partners—whether commercial or philanthropic—must operate within the policy direction set by elected governments. Innovation cannot override democratic mandate.

Accountability Beyond Bureaucracy

If external actors participate in governance processes, they must also be subject to accountability.

This would require:

- Disclosure of prior engagements and potential conflicts

- Clear attribution of recommendations and decisions

- Defined contractual boundaries

- Structured grievance redressal mechanisms

Consultants and philanthropic partners must not become parallel administrative actors. They must remain instruments within a state-led accountability system.

Domestic Capability vs Procurement Integrity

Should the government favour domestic consultancy firms?

Public procurement should not be used as a blunt instrument of industrial policy. Selecting weaker firms in the name of domestic preference may undermine outcomes.

At the same time, long-term dependence on a narrow set of global firms is undesirable.

The solution lies in design:

- Capability-first, origin-neutral selection

- Consortium models combining global and domestic firms

- Knowledge transfer requirements

- Stronger roles for domestic actors in appropriate tiers

Public procurement is not a startup promotion scheme. But it can build domestic capability without compromising standards.

From Consultant-Dependent State to Capable State

The debate is not about consultants versus bureaucracy. It is about where the thinking, coordination, and accountability core of the state resides.

A consultant-dependent state outsources these functions.

A capable state retains them—and uses external expertise selectively.

Conclusion: The Administrative Question for a 2040s India

India’s next phase of growth & development will demand:

Technological sophistication

Industry 4.0/5.0 strategies 

Climate resilience

Federal coordination

These demands cannot be met by a system that simply outsources its core functions. The state must re-structure its administrative capacity. 

At the same time, consultants and philanthropic partners will continue to play a role. But that role must be structured, bounded, and accountable — within the larger administrative state. 

The objective is not to eliminate external expertise. It is to ensure that the state never becomes dependent on it.