Column : Good advisor, but whos listening

Written by Bibek Debroy | Updated: Sep 22 2009, 03:06am hrs
Since reforms started in 1991, there have been five finance ministersManmohan Singh, P Chidambaram, Jaswant Singh, Yashwant Sinha and Pranab Mukherjee. There is a difference between chief economic advisor (CEA) and chief economic consultant (CEC), partly notional cum technical. The former has to mandatorily be via UPSC, the latter is ad hoc and not part of the system, though job descriptions are similar. More than once, a former CEA has technically been on leave. Consequently, a new incumbent couldnt be appointed as CEA until former CEA formally resigned. Without drawing distinctions between CEA and CEC, we have had six gentlemen occupy the positionDeepak Nayyar, Ashok Desai, Shankar Acharya, Rakesh Mohan, Ashok Lahiri and Arvind Virmani (The gender bias is inadvertent.) With Arvind Virmani moving on, there will be a seventh. Each of these six is a recognised and established name and their specific contributions to policy-research can also be mentioned. Their credentials are therefore impeccable. However, a slightly different question can also be asked. Independent of their individual contributions to research, how much impact have they had on policymaking as CEA The answer is not flattering and is an indictment of the system.

Who is CEA Apparently, CEA is Chief Economic Advisor to government, not only Finance Ministry. The glamorous view is CEA offers profound policy advice to government. But lets get the unglamorous bits out of the way first. First, CEA writes Economic Survey, aided by other Economic Advisors in Finance Ministry who write specific chapters. These other Advisors typically write sectoral chapters, while CEA writes the all-important first chapter. (For 2008-09, the all-important chapter is of course the second one.) Not all CEAs think Economic Survey is that important, by which one means an improvement in quality of Survey, as opposed to annual mechanical reproduction. At the risk of subjectivity, only three from that list of six thought Survey was importantAshok Desai, Shankar Acharya and Arvind Virmani. Second, CEA answers Parliamentary questions pertaining to Finance Ministry, particularly starred ones. Unstarred ones can be delegated to other Advisors. Third, CEA heads Indian Economic Service (IES) and this administrative nuisance can be significant. If ones academic credentials are impeccable, as has always been the case, offering policy advice is an easier task than managing a service. The latter requires an understanding of the system that CEA does not necessarily possess ab initio.

This is complicated by turf battles with broader civil service. There is Revenue Secretary, Expenditure Secretary, Economic Affairs Secretary (if there is one) and Finance Secretary (this is not a fresh post though, the senior-most among others is Finance Secretary). CEA reports to Economic Affairs Secretary, though CEA has Secretary-rank. The broader civil service doesnt bend over backwards to make CEAs task easier. So far as managing IES is concerned, it is learning by doing and a CEA with a short stint is doomed to failure. Among the six mentioned, only Shankar Acharya and Ashok Lahiri could have had a stab at success on this one. Once these three unglamorous items and endless meetings are out of the way, one realises glamorous policy advice finds little time. Not that it is non-existent. But there are caveats. First, four of five FMs (Jaswant Singh is the exception) possessed considerable economic expertise. It isnt always the case they necessarily sought, or accepted, CEAs advice. Second, four of five FMs (Pranab Mukherjee is the exception) brought in special fiscal (or non-fiscal) advisors. Since bread and butter of North Block is fiscal stuff, this marginalised CEA somewhat. After all, CEA is supposed to possess fiscal expertise.

Third, after first flush of reforms in early 1990s, thrust of reforms moved to other ministries (each of which usually has its own Economic Advisor) or States (where Planning Commission or Finance Commission come in). That too, means marginalisation of CEA. Fourth, PM often has a Prime Ministers Economic Advisory Council and this, together with role of PMO, often reduces CEA to economic advisor to Finance Ministry rather than CEA to government. CEA is certainly consulted at time of budget and CEA certainly drafts chunks of budget speech. However, thats not quite the image CEA conjures up. It is true some of those CEAs impacted policy. But did they do that in their role as CEA or as part of commissions and committees they were members of While it may be difficult to disentangle the two, more often this membership wasnt ex officio, but because of their individual expertise. Mentioning CEAs who had considerable influence earlier is neither here nor there. (In recent times, Bimal Jalan is the obvious instance.) The point is circumstances have changed. Becoming CEA is good for ones professional advancement (and ego too). One learns about the government system and data, good for writing books later. But beyond that, is there a big deal

The author is a noted economist