A K Bhattacharya: Civil servants as policy signal

Last Updated: Tue, Aug 07, 2012 19:12 hrs

Every finance minister enjoys the prerogative of putting officials of his choice in charge of the ministry’s key departments. However, the manner in which they exercise this prerogative varies. Some finance ministers effect a reshuffle soon after taking charge, while some bring about their desired changes over a few months, and some others do not think it necessary to change secretaries before the officials in question end their normal tenures.

Manmohan Singh as finance minister believed in gradual change. Even though the provocation for change was fairly strong in his case, he took almost six months to put in place a team that he found comfortable working with. Soon after he took charge of the finance ministry in June 1991, it became apparent to him that he did not see eye to eye with his finance secretary, Sriranga Purushottam Shukla, and the chief economic advisor, Deepak Nayyar. However, he had little time before he was to present his first Budget within a few weeks. So, his first Budget was prepared with Mr Shukla and Dr Nayyar occupying key positions in the ministry.

It was only during the next six months that he managed to bring in Montek Singh Ahluwalia, who was then commerce secretary, to take charge of the department of economic affairs as its secretary and Dr Ashok Desai as chief consultant, who for all practical purposes acted the chief economic advisor. Mr Shukla’s tenure as finance secretary came to an abrupt end and Dr Nayyar quit his job. Even here Mr Ahluwalia was not brought in initially as finance secretary, as that coveted job went to K P Geethakrishnan, who was then in charge of the revenue department. Only after Mr Geethakrishnan was sent to the International Monetary Fund following the 1992 Budget was Mr Ahluwalia made finance secretary, a post he occupied for six long years.

Yashwant Sinha as finance minister also behaved a bit like Manmohan Singh. No abrupt changes — but it was clear who he would like to put in the key secretarial positions. He did experiment with IAS officers as his finance secretary (Piyush Mankad was the finance secretary, in charge of the revenue department); but, like his two immediate predecessors, he seemed to prefer economists to head the department of economic affairs — Vijay Kelkar and Rakesh Mohan occupied that slot between 1998 and 2003.

Jaswant Singh had no marked preferences in the selection of his top personnel. In his short stint as finance minister, he chose IAS officials to head all his departments in the ministry. Indeed, he made no secret of his disenchantment with economists as administrators.

Palaniappan Chidambaram has just begun his third stint as finance minister. In his first stint, between 1996 and 1998, he showed no desire to change his top team of secretaries. He continued with virtually the same team of senior secretaries that gave company to his immediate predecessor, Manmohan Singh. His second stint began in 2004 and Mr Chidambaram made some clear choices with regard to his top secretarial team. Yet, there was no abruptness or no apparent hurry in changing secretaries or shifting them around within the ministry.

In his third stint, Mr Chidambaram has been rather prompt in reshuffling his secretaries. In less than a week, he has shifted his finance secretary, R S Gujral, from the revenue department to the department of expenditure. Sumit Bose, who was earlier heading the expenditure department, has now been shifted to the revenue department. The context of these changes is significantly important. Retrospective tax law amendments introduced in Pranab Mukherjee’s last Budget have become a bone of contention, apart from dampening investors’ confidence in the Indian tax administration. Mr Mukherjee has left the finance ministry; but the officials associated with those controversial proposals are still around. By shifting Mr Gujral out of the revenue department, the new finance ministry has succeeded in sending out a clear signal to the investing community that a new era in the government’s approach to tax policy is to begin.

The move has conveyed two more signals. One, the finance minister has chosen to retain the finance secretary within the ministry. Shifting Mr Gujral out of the ministry, as was speculated earlier, would have required the government to find a secretarial slot for him in another ministry or an organisation. That could have taken some time or met with resistance. In comparison, shifting an official to another department within the ministry is relatively easy. So, what does Mr Gujral’s staying on within the finance ministry signify? Two, getting Mr Bose to head the revenue department could pave the way for faster implementation of the new finance minister’s idea to clean up the tax laws and procedures that may have become a little messy over the last few years.

Either way, civil servants may not be very enthused by the way they are being used as an agent to transmit changes in policy signals. Traditionally, civil servants are known to carry out the decisions taken by the ministers after following the due process of law. In any case, why should civil servants be held responsible if they took certain decisions at the behest of their ministers? If the minister changes, civil servants need not necessarily be reshuffled since they are trained to work under different political bosses to implement what the latter want. But over the last two decades or so, that idea has got diluted. What happened in North Block last week is further proof of that process.

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