Search the Internet           Tips

Govt packing finance ministry with 'yes men', feel officials

Ramesh Menon in New Delhi

Usually, governments do not get themselves a brand new budget team just four months before it is presented. But Prime Minister Atal Bihari Vajpayee has just given Finance Minister Yashwant Sinha a new budget team. It came as a surprise in, both, the bureaucratic and the ministerial circles.

Various officials in the capital who spoke to rediff.com agreed on one thing: The economic affairs secretary, E A S Sarma was not only bright, he had an impeccable reputation. He was one of the best men the finance minister could have had while drawing out the budget. Why was he then changed at a crucial period of time? Why is the government allowing frequent transfers of bureaucrats to damage its credibility? And affect the functioning of various crucial departments?

In the corridors of the North Block, it was labelled as a late night massacre.

E A S Sarma, the economic affairs secretary, was one of the most respected bureaucrats in the finance ministry. Everyone knew him to be tough, idealistic and a no-nonsense officer. He had a grasp of the subject and was known to be a visionary. Just the kind of man who should be beside the finance minister to stave off all kinds of pressure in the crucial weeks before a budget is presented. But, without informing him, he was overnight shunted out into the coal ministry.

Ajit Kumar, a controversial bureaucrat who was secretary, industrial policy and promotion, replaced him.

Piyush Mankad, another efficient officer who was finance secretary, was packed off to the department of industrial policy and promotion. S Narayan, who had been petroleum secretary for just 13 months, replaced him.

Sarma was shocked to see newspaper headlines announcing his new job.

In the North Block everyone was wondering why Finance Minister Yashwant Sinha had got himself a new team just four months before the budget. Apart from the economic affairs secretary, a crucial architect of any budget is the chief economic advisor. But Shankar Acharya, who is presently in this post, is packing up to leave for a five-year sabbatical in a few weeks. Why then was a good team shifted overnight? Who will be the new chief economic advisor? Too many questions. All unanswered.

On the condition of anonymity, bureaucrats say that industrial lobbies were at work to remove the old team before the budget.

Mohan Guruswamy, the former economic advisor to Sinha, says he has the answer. Says he: "We will now have a budget which will be mainly dictated by N K Singh, secretary to the prime minister. Sarma was removed as he could not be manipulated or controlled."

One theory was that this was the handiwork of Brajesh Mishra, the principal secretary to the prime minister, who is reportedly keen to control the finance ministry. One rumour doing the rounds is that a Bombay-based industrial house wanted changes made in the budget team. Yet another view is that sweeping economic reforms are on their way and this needs new minds to chart the new course -- but Sarma would have been excellent for this.

Finance Minister Sinha explains it saying that he felt that the finance secretary should also be the economic affairs secretary as having two people in both these posts was not conducive. Sources close to the finance minister said that on his own he would never have let Sarma go, but had to under pressure from the PMO which was being dictated by strong industrial lobbies.

Says an economist who insisted on anonymity: "The new team will be more pliable as they do not know much about how the finance ministry is run and how the budget is made. "

Sarma who had put in 36 years of untainted service, chose to immediately resign. He must have had enough anyway. This was the sixth time he had been transferred when he had hardly completed a year. Ironically, Sarma had told a colleague that since he had just completed a year, the government may want to transfer him. He did not report to his new job as the coal secretary. A week later, the government accepted his resignation and appointed Nishikant Sinha as the coal secretary.

The Vajpayee government was shackled with enough controversies. It could have done without this one. Rumours are rife in senior government circles that Sarma and Mankad were got rid off so as to help the government push certain budgetary considerations. Sarma was reputed to be an absolutely straightforward officer who would not permit anything that did not have a logic to it or what was not in the larger interest.

Admitted a senior government official on the condition of anonymity: "The government would rather have pliable bureaucrats now to push their agenda. Sarma would have asked too many questions and refused to go along. "

Sarma is happy opting out. No more transfers for him.

The Vajpayee government has of late being transferring bureaucrats at very short intervals. Even before they settle down, find their feet in a ministry, study issues to be addressed and formulate a plan of action, they are given moving orders. Narayan, the new revenue secretary, spent around 13 months in the previous petroleum and natural gas ministry. Before that it was another 14 months in the department of industrial development and public enterprises.

The energy sector which has various departments under it like petroleum, coal, power and non-conventional energy have got scant attention as the secretaries get shifted very often.

The petroleum ministry is very complex and one takes time to understand it. Even to learn names of different oils, the dynamics of oil exploration, refining and marketing. But most secretaries it has had like Prabir Sengupta, T S Vijay Raghavan and S Narayan have had just about a year before being transferred. Ditto for power. Ditto for coal. Ditto for urban development. Ditto for rural development. Even the crucial telecom secretary gets shifted when so much is happening there and the whole world is watching our movements in telecom.

Exclusively talking to rediff.com, Sarma said: "An institution to work effectively and deliver goods needs to be respected by the government. What the government requires today is to maintain, nurture and strengthen the existing institutions at least till they have viable alternatives. Frequent transfers will weaken institutions, reduce its credibility and also affect the image and credibility of the government."

Nothing could be closer to the truth.

Crucial ministries like finance, petroleum, coal, power, non-conventional energy, urban development and rural development have seen numerous secretaries ever since the Vajpayee government came into power. Said Sarma: "You cannot treat bureaucratic posts like parking lots. Anyone needs at least three years in a job to do substantial work that will ensure results."

All important ministries have the same story to tell. Secretaries are being transferred at the drop of a hat. The rural development ministry which had Nareshchandra Saxena who was one of the finest rural development secretaries had just about completed a year and a half when he was shifted out even though he is an expert in that area. He was replaced by P L S Reddy. He was again transferred in a few months.

N N Mookerjee, secretary of non-conventional energy was recently transferred to the urban development ministry though he had just four months to retire.

Mookerjee was replaced by a secretary who was transferred out in two months. Says Sarma: "The government is making a mockery of these institutions. Common people get affected by this. Soon, questions will be asked."

Sarma's ouster and consequent resignation has sent waves of anger in the bureaucracy. Sarma's phone rings all the time with bureaucrats saying that they are proud of him. Many just ring up to proclaim their solidarity. And sense of anger. And helplessness.

Asks an angry senior bureaucrat: "What can we achieve in four months? The government is degrading the bureaucracy and treating it like a joke." The government is not serious with its bureaucracy or with implementation of its programmes."

A senior government official who is close to senior bureaucrats told rediff.com soon after the bureaucratic reshuffle: "In the next few months, we will see the human face of reforms as the government is now doing some forward planning for the next elections. They have to do it to carry the people with them."

Sarma had got used to frequent transfers.

He had earlier been shunted out from the power ministry as the late Rangarajan Kumaramangalam did not want him around. It was Sarma who piloted the work on regulatory commissions, the transmission bill and the energy conservation bill. Sarma used to argue that it is wiser saving energy and cutting transmission losses than blindly okaying mega projects which would take years and be very expensive. But as projects involved hundreds of contracts, Sarma hardly got any listeners.

Earlier, when he refused to clear private power projects without following competitive bidding procedures and norms in Andhra Pradesh, he fell foul of the then Chief Minister N T Rama Rao. Despite Sarma taking a strong stand, NTR wanted to go ahead with MOU projects. Sarma protested in writing and proceeded on leave. He was then shunted to the industry ministry as financial advisor.

Wherever he was posted to, Sarma made waves. When he was the expenditure secretary, he initiated federal fiscal reforms in crucial areas like power, irrigation, started the process of signing memorandums of understanding with various states. Sarma was a strong advocate of decentralisation of power as he argued that would bring in real empowerment. Not many ministers in Delhi would like that.

Sarma was secretary, expenditure for only 15 months, but he was responsible for pioneering legislation in insurance, capital market, introduction of derivative trades, national housing bank, SIDBI Act, State Financial Corporations Act and the Debt Recovery Act. Sarma was also part of a committee headed by Arun Jaitley that cleaned up legislation related to the Telecom Regulatory Authority of India. He tried to bring in transparency there. He helped bring about amendments for the Bank Nationalisation Act to allow banks raise capital from the market.

Sarma genuinely felt that transparency in the budget was important. That is why he piloted the Fiscal Responsibility Bill. This required the government to prepare a medium three-year term rolling fiscal plan. It would also have an independent group to check whether the government was sticking to it. This would bring in transparency of the budgeting process and an independent committee to review the actual budget figures with estimates. What will now become of it is anybody's guess. Sarma fears it might be diluted as the government does not like looking into the mirror.

A lot of what Sarma said raised many hackles. Sample this one: "In the power sector, the stage of reforms is now in the states. The theme should be to reduce costs and rationalise tariff. Ministers should go to the state capitals instead of going off into foreign destinations to sign memoranda of understanding. What we need is to strengthen the distribution system and modernise generation system and cut down transmission losses. There is an over emphasis on new projects as huge contracts are involved."

Sarma points out that the Planning Commission was a sacred body but the government used it to park inconvenient bureaucrats. He should know. He spent six years in the Planning Commission in two different stints. He enjoyed his job there, but stresses that when the government uses it to shunt bureaucrats they do not want, the seriousness of work that the Planning Commission does gets diluted.

Said Sarma: "The Planning Commission should be staffed by professionals who have a strong commitment to long-term planning of the economy. You cannot have birds of passage in such an important institution."

Sarma is a nuclear physicist from the Tata Institute of Fundamental Sciences. He completed his PhD from IIT, Delhi in energy planning. He had a reputation for not bowing down to ministers' whims and fancies and was a complete professional. Mankad who stood first in his batch when he appeared for his IAS exams is another senior officer with a good reputation. He is known to be a negotiator par excellence. Mankad has been offered a position of India's director on the Asian Development Bank in Manila. These again, are temptations that the government holds out to bureaucrats.

Yashwant Sinha now agrees that Sarma was a fine officer but maintains that it is the government's prerogative to transfer officials when it so wishes.

A senior ministry official said that it was much deeper than an ordinary set of transfers as the finance minister is now making it out to be. The idea, he said, was to lace the budget in such a way that would pave the way for the BJP doing better in the next general elections. Said he: "At the moment, Sinha does not need independent thinkers like Sarma, Mankad or Shankar Acharya. He needs a bureaucracy that would follow orders. The new team will just do that."

Former bureaucrat and Congress leader Mani Shankar Aiyer remembers how he had worked with Sarma when Bangladesh was liberated. Sarma was then a young undersecretary in the petroleum ministry. Remembers Aiyer: "Sarma was an outstanding officer. I cannot forget the dedication and commitment he showed. It is no surprise that this government has no use of him. Piyush Mankad again was another outstanding officer. In fact, this government was lucky to have got these two in such key positions. Any competitive government would have exploited their expertise and rare qualities."

A finance ministry official pooh-poohed the whole controversy saying that it was just a media creation and government officials occasionally get transferred and it was just that. The media, he said, had even suggested that a top Bombay-based industrialist was involved in getting the old team thrown out which is just not true. He said the ministry did not want to react as there was no need to explain why transfers were ordered.

Ajit Kumar, a Punjab cadre officer from the 1965 batch, is no finance wizard. He will take time to understand the intricacies of the budget. And there is no time to learn. Ajit seemingly got the plum prestigious post because of Brajesh Mishra who is the prime minister's advisor. The joke already doing the rounds is that Kumar asked that abbreviations should not be used as he could not understand what they stood for. He reportedly asked a colleague what FDI is. Only commoners like us need to be told that it stands for foreign direct investment.

Sinha now says he wanted a spanking new team to present his budget. This adds credence to the theory that the finance ministry was looking for bureaucrats who would nod and say yes.

Ajit Kumar was in the news when as defence secretary, he got involved in an unpleasant fracas with Vishnu Bhagwat, the then chief of naval staff. He did not get along with the defence chiefs either. There were complaints in the defence ministry that essential supplies were being delayed. He was then shunted to the department of industrial policy and promotion. Asks Aiyer: " How can they even replace Sarma with someone like Ajit Kumar whose record is badly flawed and was involved in a coup d'état against a naval officer and that too at the behest of the defence minister."

Ajit Kumar is an old school bureaucrat not known for his quick responses. How he will fare in the high voltage finance ministry that has to move fast, especially in the age where India is warming up to tackling the WTO and laying the foundations of new trade relations with various countries, remains to be seen.

The new team would have to implement the expenditure reforms commissions recommendations, oversee introduction of the Fiscal Responsibility Bill and numerous other economic bills in the coming winter session of Parliament.

Narayan, the new finance secretary, is known to be pro-reformist and is for reduction of subsidies in a phased manner. The only thing is he has little time to warm up to his new job before the budget is declared.

Aiyer wonders if the RSS is at work getting bureaucrats shifted so that it can force the government to toe its line in the coming budget. Observers, however, feel that it is highly unlikely that Vajpayee would succumb to the RSS on key issues like liberalisation now. Both Vajpayee and Sinha know that there cannot be any rollback on reforms and all they can do is to go slow to pacify the RSS.

A senior bureaucrat says that one will only fathom why the two key finance ministry bureaucrats were replaced after the budget comes through. Maybe, Sinha wanted them out of the way to push his style of reforms or maybe, he wanted to slow down and appease the RSS.

To the extent that it could, the Vajpayee government tried to please the RSS by delaying on the insurance reforms and the textile policy. The RSS has been a dampner on the speed of reforms. And that will continue. But bureaucrats argue that Vajpayee will be able to push it all the same. The fact that he had not given in to Mamata Banerjee's tactics to go back on the petrol price hike, is proof enough, they say.

The Economic Survey released a week before the budget is written by the chief economic advisor. Now that Shankar Acharya is leaving, Sinha will have to find someone as good as him. The name doing the rounds is Arvind Virmani, senior economic advisor to the finance ministry who may be appointed as the chief economic advisor. Another name is of economist Rakesh Mohan, who is presently at the National Council of Applied Economic Research.

Admitted a senior economist who understands how the government functions and has seen it from close quarters: "Maybe it is just one of the bureaucratic changes. No one has been able to fathom the prime minister's move just four months before the budget. But it is odd, to say the least."

The current reshuffle, however, does not worry Bombay-based Shekhar Bajaj, president of the Associated Chambers of Commerce and Industry of India. Says he: "There is no reason to worry. In fact, this is the right time to make changes as work for the budget is just starting. Changes are required if new policy initiatives and new thinking has to be brought in. The finance minister has not changed and ultimately it is he who would formulate policy.

Added a senior government official: "New faces are as reformist as the old ones and one need not worry. Many are asking why Ajit Kumar has been inducted. So many questions about him are being raised. But look at his proposals that came in from the industry ministry that dealt with liberalisation. He was piloting change there. There is no reason why he will not do it in the finance ministry. One needs to give him some time."

Economist Omkar Goswami says that he is not worried about the change as ultimately the proof of the pudding is in the eating. He felt that the new team had enough time to catch up with the intricacies of the budget.

As he now draws out his future plans from his Pandara Park residence in Delhi, Sarma wonders whether he should move to a peaceful town like Visakhapatnam. Maybe, he would get down to reading and writing. Or get involved with some academic work as that excites him. Sinha got rid of him, but Chandrababu Naidu, one of India's most competent chief ministers, had asked Sarma to consider being an advisor to the Andhra Pradesh government. Sarma is said to be considering the option.

One of the best stints he had was as a tribal commissioner in Andhra Pradesh where he ushered in tribal welfare as few secretaries have ever done. He did bold things like restoring tribal land that was usurped by moneylenders.

Even today, Sarma gets postcards from tribals of Andhra remembering his deeds in the mid-eighties. This is what he values most. He does not need a certificate from Atal Bihari Vajpayee. It is those little yellow postcards which give him hope and courage.

SEE ALSO:

'Both Vajpayee and Sinha are duffers'

Money

Specials

Tell us what you think of this report