Corruption in government sector is on the rise. This has a cascading effect, which is not good in the long run.
Number of honest people in the government system is going down day by day. One main reason could be the salary levels (official) for government servants (including politicians). No honest person can survive in this inflationary market, unless he bends his approach. This is one main reason, which prompts honest people to turn to high paying private jobs than government jobs. This has given free hand to filthy politicians and corrupt bureaucrats, to spoil the whole system.
Under this circumstance, can the private sector type variable pay model and incentive model do wonders in minimizing corruption if not totally eliminating it. First we have to identify those roles, which are developmental oriented. Increase their salaries on par with private or even more and introduce incentive scheme and variable pay too. This will attract the best talent to government sector (including politics).
Incentive programs should be structured/devised in a way to induce the govt. servants to give out their best performance. For example, in infrastructure projects a percentage of the project cost should be demarcated for incentive. This incentive can be given to the key contributors in the project (including the minister), if it is completed before time/in time with minimum cost and maximum quality. If there is an over-run, then the demarcated money shall be carried forward. In police dept. such incentives can be given to those under whose jurisdiction the crime rates are the minimum.
Such an incentive based dynamic system will attract the best of the talent and will make them to remain honest too, because they earn/get their essentials (ie monetary benefits) through rightful means.Related reading: Can IT spread, minimise corruption?