- Arvind Subramanian, Chief economic advisor
Has definitive views on public spending-led growth; put question mark over new GDP numbers
- Hasmukh Adhia, Secretary, department of financial services
Gujarat cadre officer is Modi’s choice to carry out financial inclusion schemes
- Anita Kapur, CBDT chairperson
Heads a very active department looking into black money issue; was recently divested of I-T investigations charge
- Shaktikanta Das, Revenue secretary
Is seen to have failed in the image makeover exercise of the tax department
- Ratan P. Watal Expenditure, secretary
Is generally not very communicative; is ?due to retire in Feb
- Rajiv Mehrishi, Finance secretary
Competent but seen as an outsider who has not been able to foster coordinated decision-making
***
There’s a disquieting rumble in the FinMin jungle. For some time, there has been chatter that finance minister Arun Jaitley is not fully in control of his crucial ministry. It seems key officials in the ministry are at loggerheads, leading to wide gaps in communication. Which in turn is affecting the decision-making process. After speaking to a cross-section of officials and sources, Outlook found most were quick to defend the minister—but admitted that there is indeed some “breakdown in communications” within North Block. So what’s going on really?
A source who closely interacts with the finance ministry is scathing. “Lack of communication is an understatement. There is a complete breakdown of communication across the ministry,” he says. Mentioning the tax-form controversy in June—when the revenue department was forced to change the new ITR forms after an outcry over details it sought from bank accounts to foreign visits—he says nobody’s head rolled for the goof- up. “Similarly, you can see every department is working in silos. Many a times they seem to be working at cross-purposes,” the source adds.
There’s no shortage of such instances either: official sources claim the lack of consensus-building has started impacting even India’s stand on important multilateral issues like the crucial Green Climate Fund. The green lobby has been complaining that India is not taking development issues seriously, going by the lacklustre representation proposed in some of the crucial negotiations and summits later this year. This comes after the doubts voiced by RBI governor Raghuram Rajan and chief economic advisor Arvind Subramanian about the government’s new growth numbers. Then there are the continuing unresolved issues with retrospective taxation and the lack of clarity on the fate of the long-awaited goods and services tax (GST).
In part, this dissonance is attributed to the new ‘silo’ style of functioning that has crept in with the change of government at the Centre. It is also alleged that ‘the team’ has been hijacked by the omnipresent bureaucrats at the PMO. This has been proved already in a couple of instances, where unfamiliar signatures were seen on files though there was no evidence of the file having left the finance ministry or being returned.
No one is—at least for now—blaming the finance minister for the state of affairs. “The finance minister is a very conciliatory person who tries to carry everyone together...but if every issue of every department has to be pushed by him, it’ll be very difficult—considering that he has political responsibilities too,” says a senior bureaucrat.
Traditionally, there has been an effective coordination system with a committee of secretaries chaired by the finance secretary. In 70-plus per cent cases, the issues would be resolved at the finance secretary-level and a consensus built before being sent to the FM for the final decision. In the remaining cases where there was no consensus, “there was no acrimony” and the issue would be left to the finance minister to take a decision.
“It is apparent that not many people like finance secretary Rajiv Mehrishi. He is the seniormost among the bureaucrats in the finance ministry yet many a times you get the feeling that he is not in control. There is a decided lack of the coordinated effort one witnessed in the past. The problem is not just there. The expenditure and revenue secretaries are also not very communicative,” observed a veteran finance ministry watcher.
Gujarat-cadre officer Hasmukh Adhia, secretary, department of financial services, is among the senior officials handpicked by the PM to implement schemes close to his heart. Tipped by many to be next in line for the finance secretary or even cabinet secretary post, Adhia is steering the Centre’s financial inclusion programmes like making banking networks more accessible and social security tools for the poor. Indeed, observers say it isn’t the lack of capability of top officials but lack of authority in many instances that is questionable. Sources reveal that consultations in the true sense seem to have been done away with. “Even in cases where a meeting is held for consultations, the decisions are predetermined. Junior-level officials are briefed in advance in one-to-one meetings not to voice their opinion during inter-departmental consultations. The result is most officials remain clueless about the process and the decision-maker,” cites a source.
Ironically, the ministry that pushes most reforms across the country is the one that has long awaited a dose of reforms in its own operations. Several studies commissioned by the finance ministry, including a paper on ‘Ministry of Finance for the 21st Century’ submitted by Vijay L. Kelkar in 2004, have spoken about the need for reforms in the role and functioning of the ministry.
But despite the many pointers, there has been no attempt either during the UPA tenure or in the present regime to improve policy formulation. What is more discouraging is that while replacing the Planning Commission (for long the sounding board for policymakers) with the Niti Aayog, the role of economic experts and civil society also seems to have been cut. A case in point: after many months, it is only now that Niti Aayog vice-chairman Arvind Panagariya has been given a cabinet rank and the right to participate in meetings and give some expert guidance. The finance ministry could do with more such wise moves.
By Lola Nayar with Ushinor Majumdar
