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'We Could Soon Become a Banana Republic'

"One of the Hindujas rang me at 10 pm. I told him it was late; he asked if he could call next morning. I told him I didn't keep a diary next to my bed."

'We Could Soon Become a Banana Republic'
'We Could Soon Become a Banana Republic'
Former secretary (economic affairs) in the ministry of finance Dr E.A.S. Sarma is not known to buckle under political pressure. Having served as secretary in key ministries—power, expenditure and economic affairs—he is remembered by contemporaries as "an outstanding officer", honest to a fault. When Sarma put in his papers in November last year, eleven months before his scheduled retirement, it sent shock waves through the bureaucracy. In his 36 years of service, Sarma was transferred 22 times. The latest—which he came to know of through newspapers—convinced him he should resign. That Sarma was a conscientious bureaucrat and his sudden transfer was "mysterious" is suggested in a Business Standard editorial: "The decision, to put it at its mildest, was a curious one, since Mr Sarma was generally well regarded." He will shortly be taking up an assignment as the principal of the Hyderabad-based Administrative Staff College of India. Sarma spoke to Outlook over two exhaustive sessions. Excerpts:

How does the pmo influence ministries on behalf of business lobbies? Does it interfere in the ministries' functioning?
The role of the pmo is merely to assist the PM in coordinating the functioning of different ministries. The decision-making authority is with the cabinet. The troubles begin when the pmo fails to respect the role and responsibility of the cabinet and the cabinet secretary.

The immediate fallout of this is that ministries have stopped applying their minds and have begun to depend more and more on directives from the pmo. Business lobbies like Reliance, Essar and the Hindujas have begun to exert their influence on the pmo and this is not a desirable trend.

How does lobbying influence decision-making?

Many industrial houses and lobbies depend on the government for sops and concessions to earn their profits. When the roles and responsibilities of ministries and the pmo get blurred, as is the case now, lobbying becomes the order of the day. All this erodes the credibility of the government.

Unhealthy lobbying is known to take place through brokers and intermediaries. This can have dangerous implications and can even be a threat to our democracy.

When you talk of the pmo, are you referring to Brajesh Mishra and N.K. Singh?
Of course, any institution is made up of individuals. As long as the pmo confined itself to its legitimate role, there were no problems. Otherwise, there are bound to be controversies as witnessed in the case of the office of the National Security Advisor. There is always scope for unhealthy lobbying when accountability gets abridged. As for the two officers—N.K. Singh and Brajesh Mishra—they are the two key functionaries and are in a position to influence decisions.

Has there been any interference from the pmo in the case of guarantees for the 3,960-MW power project being put up by Reliance at Hirma, Orissa?
In the case of Reliance's Hirma project, the pmo has been taking undue interest in pursuing early approvals including guarantees and comforts for the project. Such guarantees and comforts and any undue hurry in processing the proposal can have a long-term and adverse impact on the fiscal system. When the pmo is fixing deadlines for giving any guarantee or comfort, I certainly find it an unhealthy practice.

Before Reliance came into the picture, the five beneficiary states were negotiating the terms of supply of power from Hirma.That was a good arrangement as the states were responsible for negotiating a competitive rate. But strangely, the central government took over the overall responsibility!

The Hirma project involves a huge investment of over Rs 20,000 crore. If the government gives a counter-guarantee, it will be tantamount to guaranteeing a huge assured return to Reliance for the next 20 years.

I hope there is some circumspection on this. There seems to be an enormous hurry in pushing this project through.

Did the Ambanis ever contact you?
They have called on me several times. Not Dhirubhai but the sons.

What about the Hindujas?
They are very close to those in power. It was the Hindujas who got me out of the power ministry. When I was power secretary, I tried to straighten these fellows out who were pushing for counter-guarantees. And then one fine morning I was transferred. Incidentally, one reason why I have now quit is because of frequent transfers. The Hindujas were very powerful and could convene cabinet meetings at their instance. They would also try to influence senior bureaucrats. You know, once one of the Hindujas called me up at 10 pm. I don't know whether it was SP or G.P. Hinduja—both their voices sound the same. I told him it is too late in the night for him to call. He apologised and inquired if he could call next morning. I told him I do not keep a diary by my bedside to know my appointment schedule. Every 10 days they would telephone, complaining about officials. All the while they would have complaints. If a power secretary in Andhra Pradesh does not cooperate on a project involving their interests, he is transferred.

Is it true that Vajpayee makes public statements which is then interpreted to push decisions in favour of one lobby or the other?
In Hirma, for instance, they put words in the mouth of Vajpayee when he went to Lisbon. Of course, at that time it was not so much the pmo but the then power minister who was keen to push it. But later, what happened was that certain people in the pmo used this speech and the result was the MoU (memorandum of understanding) was signed. They justified it by saying they had signed it because the PM had mentioned it in Lisbon. This is a serious matter. It is repugnant and not correct.

What about the Group of Ministers (GoM) constituted by the pmo on telecommunications? What are the implications?
Any GoM should function at the behest of the cabinet and not at the instance of the pmo. In this case, the idea was to create a group that would bypass the cabinet and clear many telecom irregularities.

Take the migration policy (when the government moved away from licencing to revenue sharing). Once licences were issued on the basis of competitive bidding, it was most undesirable that it should have been reopened at the instance of the bidders as it erodes the credibility of the government. Tomorrow it could happen in the power and road sectors where competitive bidding procedures are being followed.

Similarly, once a deadline is fixed for the operators to pay the fees, any ad hoc extension of the deadline further erodes government's credibility. The implications of the decisions taken in this sector during the last one-and-a-half years by the GoM set up by the pmo is yet to be fully grasped. If we allow reopening of competitive bidding processes like this, very soon we will turn into a banana republic!

Does the pmo ride roughshod over the bureaucracy?
These days, if a bureaucrat points out the adverse implications of a given line of approach, instead of trying to appreciate the value of that input, there has been this tendency of branding that officer as being 'negative'.Good officers being repatriated to parent cadres. I am aware of specific cases of efficient officers being treated like that. Some others seem to get government patronage.

All this has had a demoralising effect on the services and it is bringing down the credibility of the government as a whole. Any rhetoric on honesty and efficiency of the civil services should first address the evil that this patronage spreads all around. The civil service cannot be weakened and still be expected to deliver.
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