With the appointment of T C A Anant as the new chief statistician, the United Progressive Alliance (UPA) government seems to have left no one in doubt about its liberal approach to filling key vacancies in areas of economic policy management. Economists from outside the government system, it would appear, are increasingly being favoured to head key positions in the government.
One might argue that this is not an entirely new development. As finance minister in the P V Narasimha Rao government, Manmohan Singh had appointed Ashok Desai as the chief consultant, who effectively functioned as the chief economic advisor. Later, Palaniappan Chidambaram had recruited Parthasarathi Shome as an advisor, who too functioned as the chief economic advisor. Then, Ashok Lahiri, who was with the National Institute of Public Finance and Policy, was roped in as the chief economic advisor. However, one must point out that these were exceptions. Almost all other key positions in economic policy administration in the post-reforms era have invariably gone to economists from within the government system or civil servants.
For instance, in 2007, Prime Minister Manmohan Singh brought in Arvind Virmani, who occupied various positions in the government for several years, as the chief economic advisor. A year later, he had an opportunity of appointing a non-IAS officer as the Reserve Bank of India Governor at the end of Y Venugopal Reddy’s tenure. Rakesh Mohan, who was then the deputy governor, was for some time in the reckoning for the top job at the central bank, but at the end of the day, the government’s choice was Duvvuri Subbarao, who at that time was the finance secretary and an IAS officer. Similarly, when the government decided to create the much-needed post of a chief statistician, the choice was Pronab Sen, who was then with the Planning Commission and had been part of the government system for some years.
Now Virmani, Subbarao or Sen are all qualified economists and the fact of their being either part of the government system or civil servants should not have disqualified them for the job they finally got. Two factors helped their recruitment. One, they were part of the government system and, two, they were also qualified economists who could do justice to the job given to them. When the second term of the UPA began in 2009, the prime minister must have realised that the pool of qualified and senior economists with the government has dried up, thanks largely to years of neglect in recruiting economists in various central departments and economic ministries at the middle level.
The option for him in such a situation was to either deprive himself and the government of expert advice on economic policy matters from senior economists or induct some economists from outside the government system. What the country saw in the second term of the UPA is the latter. First, it was Kaushik Basu, the Cornell professor, who joined the finance ministry as the chief economic advisor. Then, it was Subir Gokarn from Standard & Poor’s, who became deputy governor in RBI. And now T C A Anant, a professor from Delhi School of Economics, will guide the country’s statistics department as the chief statistician.
Inducting economists from outside the government system may address Manmohan Singh’s immediate concern, but this does not provide a long-term solution to the problem of feeding the government with quality, expert advice on the need for framing appropriate economic policies. The experiment of introducing the Indian Economic Service, launched several decades ago, has failed to produce the talent that can adequately face the challenges of formulating economic policies in today’s complex economy and government system. Talented young scholars in economics are no longer willing to spend years in junior positions in the government under the Indian Economic Service, subjugating themselves to the whims and fancies of their more glamorous and powerful colleagues from the Indian Administrative Service. The market has also opened up to assign more value to these young economics scholars, who can now look forward to a much more rewarding career in the private sector, research bodies and think tanks.
So, what Manmohan Singh began in his second term as prime minister with the appointment of Basu, Gokarn and Anant may well need to be regularised and practised in all key appointments in ministries where economists can do a far better job than civil servants. If the Indian Economic Service has failed to throw up an adequate number of economists at the higher levels of the government for whatever reasons, it is time to appoint young, talented economists, at present working in the private sector, in key economic policy-making positions in the government.
Governance will certainly improve as a result and the quality of economic policy inputs to the government will see a major improvement. Indeed, the government should extend this principle to all its departments by recruiting experts and professionals from the private sector for senior jobs and assignments. The Industrial Management Pool, created in the 1960s to blood private sector professionals into government service, did help improve the talent pool in the government. It is now time to introduce something similar if the quality of governance has to be improved.