The reported move to set up a department of services under the ministry of finance, to act as the nodal ministry for all matters related to the services sector, is foolhardy. It would create more problems than it would solve. Adding a new department to the various ministries catering to services would be an additional complication. To begin with, there would be confusion over the jurisdiction of policy and associated tussles of power. Remember, just a few years ago, a report on unshackling Indian industry prepared by the Prime Minister?s Council on Trade & Industry noted that there were 16 ministries dealing with industries, and that there was a need to bring down this number. The world over, there exist no strict norms on how many ministries are needed for good governance. In federal governments, though, the global average is 16, and it ranges from a low of 10 in Pacific countries to 15 in Latin America and Central and Eastern Europe, to 19 in Africa and 20 in Asia. These sound reasonable, and India also inherited a similar legacy, with the number of ministries just 18 at the time of independence. But over the past six decades, ministries have multiplied. We have over 50 ministries and autonomous central departments. Though various commissions have called for the downsizing of government, the outcome has been dismal, the only recent example of a major rationalisation being the integration of the ministry of industry and ministry of commerce into a single entity at the end of the last decade.
The current argument in favour of a nodal department of services emanates from the need to closely monitor the sector to aid in domestic policymaking. This overlooks the obvious fact that services has been the fastest growing sector, with its share of GDP up by around 15 percentage points since 1990-91. The other argument that a nodal department would enable better coordination in the collection of data and thus help devise cohesive strategies for assorted segments of the sector (say, on WTO negotiations) is also rather dubious. A much better way to serve such needs would be to strengthen professional bodies like the Central Statistical Organisation, which has the requisite expertise to collect vast amounts of information. The government certainly needs a cohesive view of the services sector, but another department is not the answer.
