IIMs and meddlesome mandarins

RAISINA HILL

Some also wonder why the bureaucrats should not follow a more sensible path by which the crisis can be defused. But why blame them? They are doing what their minister has asked them to do. And in any case, bureaucrats have always treated themselves as a powerful class and have rarely shied away from an opportunity to flex their muscle.

There are many examples of how they try to extend their zone of influence. Only a few weeks ago, those in the power ministry were exploring various options to frame a power tariff policy that gives them more clout than the central electricity regulator.

All that the Central Electricity Regulatory Commission needed was a power tariff policy that should set the broad goals the government wanted to achieve through tariff fixation.

But the mandarins wanted to use that policy to decide many other things with regard to the fixation of tariff. The issue went to the prime minister, who was even asked if the tariff policy had to be cleared by the Cabinet.

The hidden agenda was perhaps to get a tariff policy in place without the mandatory scrutiny of the Cabinet. The prime minister made it clear that if a policy had to be announced, it was better that the Cabinet gave its stamp of approval.

Similarly, the bureaucrats' desire to control one more financial institution was evident from the manner in which the Infrastructure Development Finance Company (IDFC) was sought to be merged with the State Bank of India (SBI).

The finance minister may have just wanted more funding for the infrastructure sector. But the bureaucrats hit upon this idea of bringing IDFC under SBI so that they could direct its operations a little more closely.

No one knows if bureaucracy will succeed in its efforts either in respect of the power tariff policy or in the proposed IDFC-SBI merger. But the manner in which the North Block mandarins have reacted to the en masse resignation of the IDFC brass reveals the same mindset that was in evidence at the IIM-A Society meeting.

Two important steps must be taken immediately to stop the bureaucracy from needlessly flexing its muscles. The government must make it clear that it should not allow any of its officials to tinker with the day-to-day functioning of an institution under the administrative control of the Central ministry.

The government, the ministers and the bureaucrats should be bothered about the overall policy and not the running of an institution. And one way to eliminate interference in the day-to-day functioning of such organisations is to stipulate that only secretary-level officials can be nominated to be members of the governing boards of such institutions.

Till some years ago, the finance ministry used to nominate a joint secretary-level official on the board of the Securities and Exchange Board of India (Sebi). But that practice was stopped once the Sebi chairman raised the issue with the finance minister.

A secretary-level official from the finance ministry is now on the board of Sebi. Why can't the IIMs and other such bodies threatened with bureaucratic interference insist on the same policy?