If Chief Economic Advisor Arvind Subramanian does not continue beyond his current three-year tenure, which is due to end in October, the number of secretary-level officials to leave the finance ministry in the next eight months would be four. The two secretaries, who would continue to remain in the finance ministry, are Revenue Secretary Hasmukh Adhia and Disinvestment Secretary Neeraj Kumar Gupta. For the next Budget, therefore, the top secretaries team would be relatively new.
How new it would be can be gauged from the fact that barring the finance secretary, everybody in the current team of secretary-level officials in the finance ministry has been involved in at least the last two Budgets. That lent some continuity and stability to the Budget-making exercise. But that comfort will be missing when October onwards four out of the six top officials in the finance ministry will be new. Remember that the next Budget, the last to be presented by this government and therefore a crucial one, will have to be presented on February 1 and preparations for that must begin by October. The challenge for Finance Minister Arun Jaitley, therefore, is to identify the right officers to help him deliver his last full Budget in his current tenure.
Jaitley needs to be mindful of this challenge for another good reason. It is widely acknowledged that skilful and effective management of the country’s economic affairs is largely dependent on the top officials, who operate from North Block in New Delhi and Mint Road in Mumbai. These are the key secretaries in the Union finance ministry (headquartered in North Block) and the top team comprising the governor and deputy governors of the Reserve Bank of India (RBI), the head office of which is on Mint Road. Therefore, manning the top teams in both North Block and Mint Road with the right people must receive priority attention from the finance minister.
Fortunately, the central bank has seen a significant strengthening of its top team in the past couple of months. The elevation of Urjit Patel as the governor of the RBI last September also meant that there was a vacancy of a deputy governor in charge of the monetary policy department. After remaining without a dedicated deputy governor for that job for several months, there is now Viral Acharya, an economist with strong credentials, who as deputy governor is looking after that crucial portfolio. Soon, there would be a chief financial officer, at the level of an executive director, to oversee the financial affairs of the central bank, filling a critical gap in its management structure. A new department of enforcement will soon be in place with a senior official in charge. This will strengthen the role of the department of supervision by ensuring that banks do not flout, bypass or ignore its directives.
In contrast, the top team in the finance ministry will require some special attention as so many of them would be leaving before work on the next Budget starts. While Adhia continuing in the finance ministry, and most likely as the next finance secretary in view of his seniority, looks like almost a certainty, the key question would be whether Subramanian continues as chief economic advisor beyond October. Gupta’s continuing in the finance ministry would also help, but the departments of economic affairs, expenditure and financial services would need to be steered by able officials who have experience of handling Budgets at least in the states, if not at the Centre.
A major shortcoming in recent months, particularly after demonetisation, has been the relative absence of communication and consultation on policy matters between the top teams in North Block and Mint Road. A two-way exchange of frank views on policy issues between the top finance ministry officials and the top team at the central bank has always been the cornerstone of effective economic management. That needs to be revived and identifying the right people for key positions in the finance ministry in the next few months could be an opportunity for achieving that goal.
