Business Daily from THE HINDU group of publications
Saturday, Dec 02, 2006
Industry & Economy - Economy
Finance and Commerce Pool An old-is-gold idea
Sumit K. Majumdar
The Second World War was a break point in India's evolution when it was necessary to change its administrative super-structure. The inclusion of India in the war needed a machine in place so that the country could transform into an industrial power. The creation of a global supply platform was the aim of the war machine and the innovation then was a separate Finance and Commerce Pool (FCP), of key individuals at the Centre, possessing abilities in several key economic, commercial, industrial and supply-related issues.
The FCP was a group of individuals belonging not just to the ICS (Indian Civil Services, the fore-runner to the Indian Administrative Services) but also to other services who joined the Union government as specialists early in their careers, having had experience as a Collector or as a Deputy Accountant-General and stayed with the government for the rest of their careers. These individuals specialised in taxation, Customs duties, trade relationships, price controls, etc., and many headed key economic ministries at an early age.
The FCP provided an opportunity to create a cadre of super-specialists. The major impact of the FCP was to create a critical mass of competencies at the Centre, tempered by field experience, to provide the collective wisdom. Once in the FCP, the service identity ICS, IA&AS or IDAS was dispensed with and everyone in the pool was treated equally.
Collective wisdom requires that the prowess available be accessible too. The FCP members would not revert to their parent cadres in the ICS, or to their parent departments. Thereby, the Centre created organisational knowledge, based on the abilities of its best officers and eventually this wisdom was codified as institutional memory.
While in their early or mid-careers, several individuals, identified as competent, were targeted and trained to occupy key economic administration positions. Already there was precedent in earmarking talent to senior level positions in the Finance Department.
Sir Bhupendra Nath Mitra, later the Indian High Commissioner to Britain, while still a relatively junior substantive Controller of Military Accounts, was made Finance Member of the Viceroy's Executive Council, one of the most significant and powerful positions in the Union government because of his significant financial competency. Later V. Narahari Rao and K. Sanjiva Row rose to the very top, as Finance Department Secretaries.
The foundations of the FCP lay in the ear-marking of members of the ICS, starting with G. V. Bewoor, later Secretary for Posts and Air during the War; C. D. Deshmukh, later the first Indian Governor of the Reserve Bank of India; N. R. Pillai later Cabinet Secretary; Y. N. Sukthankar also later Cabinet Secretary; R. K. Nehru later Secretary-General of the Ministry of External Affairs; H. M. Patel later Defence and Finance Secretary, and N. M. Ayyar, later Transport and Shipping Secretary, to occupy economic positions early on in their careers.
Thus, when India achieved self-governance there would be a corpus of trained individuals to shoulder the governance of as vast and diverse a country as India. During the course of his career, G. V. Bewoor became a postal services specialist, C. D. Deshmukh became a finance wizard, N. R. Pillai, R. K. Nehru and N. M. Ayyar specialised in Customs while Y. N. Sukthankar and H. M. Patel were trade experts.
The the FCP was formalised during the 1940s, using about a dozen Indian ICS and ten Indian accounts services officers as the core group.
The impact of some individuals on economic policy-making has been profound. Individuals such as P. C. Bhattacharya, A. Baksi and A. K. Roy, of the Audit and Accounts Department, influenced economic and financial administration from Independence till well into the late 1960s/1970s. S. Bhoothalingam, B. K. Nehru and L. K. Jha, of the ICS influenced significantly the economic and political governance of India till well into the late 1980s/1990s.
S. Jagannathan, S. Ranganathan, R. L. Gupta, G. R. Kamat, N. N. Wanchoo and K. B. Lall were some of the ICS officers in the FCP. From the Audit and Accounts Department came K. R. P. Aiyangar, who Chaired the Central Board of Revenue, and A.K. Chanda, who was Comptroller and Auditor General of India. K. R. K. Menon of the Defence Accounts Department was the Finance Secretary for several years.
The FCP was a one-time affair. No effort was made to re-staff it. Therein lies the pity. For, in dispensing with the FCP, India denied itself the benefit of wisdom and institutional memory that comes when experience and specialisation are supported as a matter of policy.
No doubt, the limited Central Secretariat tenure idea, an innovation of Lord Curzon so that fresh district experience of individuals can be brought to focus on policy problems in Delhi, and Central Secretariat hands would go back to the districts from time to time to re-appraise reality, was relevant. But the world of policy was far less complex a hundred years ago.
The limited Central Secretariat tenure idea, currently also implemented, has clear merits. Nevertheless, the areas of policy making today are unique and have idiosyncratic and complex intricacies, needing special skills that can only come with some experience. Hence, it is the welfare of the Indian public-at-large that is being short-changed, when policies on critical topics are decided on by individuals, who, while energetic, motivated and committed, may not have the specialised grassroots expertise required in today's increasingly complex economic environment.
A NEW FCP NOW
While the FCP was a product of its times, there has been no similar contemporary administrative product, post the 1991 reforms. Yet, an FCP is needed to provide a platform for creating and evaluating policies that will transform India into a global supply platform for the 21st century.
The original FCP provides the blueprint for such a necessary innovation, though it may be modified to current economic policy sensibilities.
By earmarking the best, young, candidates from all the civil services to the FCP, a cadre of super-specialists, trained in the details of contemporary economic policy making, will get created.
It will be a cadre based on exclusivity, but an exclusivity based on skills, analytical abilities, competencies and eventually experience in economic policy-making where the mother service a candidate belongs to will lose relevance. These individuals will serve for a quarter of a century as FCP members, and re-create an institutional policy memory of issues germane to India's status.
(The author is professor of Technology Strategy at the University of Texas, Dallas. He can be reached at firstname.lastname@example.org)
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