Why is it necessary to have a finance secretary Particularly, when each of the secretaries heading the respective functions of economic affairs, revenue and expenditure is sound and has expertise in his domain
There are two very good reasons. One, a massive exercise like Budget-making requires tremendous coordination between the protagonists, including the three secretaries and the chief economic advisor. Two, the Indian bureaucracy is feudal. It bows only to seniority. While even God waits to meet a joint secretary outside his office, the same JS steps out to welcome his immediate senior. (Which is rare: a senior would generally not walk up to his juniors room).
During Budget time, which begins by November and ends on February 28th, when the finance minister presents the Budget in Parliament, there is strong need for a point-person, who is clued in to the big picture.
Till 1980, the most important function of the government was to raise revenues. Hence, almost always, the revenue secretary was also designated finance secretary. This changed in 1981, when then prime minister Indira Gandhi decided to tap the International Monetary Fund to help India grapple with bankruptcy on balance of payments. Economic affairs shot into prominence: the Fund-Bank division came under its purview.
There is another story. In 1981, M Narasimham, economic affairs secretaryseniormost amongst the three secretaries and a non-IAS officerresigned. Apparently because the revenue secretary, and not he, was scheduled to chair the post-Budget press conference. The PM intervened and decided the senior-most officer will be designated finance secretary and chair it.
Chidambaram will presumably anchor the show in the run-up to Budget 2005
A finance secretary is needed as he helps in better coordination
Chidambaram, one must admit, has sparkling gems as secretaries. Expenditure secretary D Swarup, an audit and accounts service officer, is the face of continuity in North Block and a stickler for perfection. Economic affairs secretary Rakesh Mohan is a monetary policy and infrastructure expert. Before he came to North Block, he was deputy governor in the Reserve Bank of India. Revenue secretary KM Chandrashekar, a shrewd negotiator, played a crucial role in the Doha round of trade talks, as Indias permanent representative to WTO in Geneva. And we have Ashok Lahiri, a public finance and policy expert, as chief economic advisor.
But except for Chandrashekar, none of the other three belong to the IAS. In the Indian bureaucracy, which views the IAS as a cut above other services, an officer from some other servicehowever competent he/ she may beis often seen as a lightweight, compared to his IAS counterpart. Rakesh Mohan and Lahiri are economists, with views which may not always converge. Moreover, the financial sector does not fall under the ambit of Rakesh Mohan. Financial sector secretary NS Sisodia, the seniormost amongst all the secretaries, handles banking and financial institutions, and is not strictly part of the Budget team.
So, who carries the responsibility of ironing out the differences, holding the team together and leading it from the front Without a finance secretary, it is Chidambaram himself who is presumably anchoring the show in the run-up to the Budget.
But coordination is not the FMs job. Moreover, the minister is essentially a political being and has to deal with a plethora of problems, for example, keeping the Left parties in good humour. Designating one of the secretaries as finance secretary would have eased his burden.
The finance secretary is no more than first among equals. He ensures smooth coordination, because others respect his seniority. Also, when he is around, there is a tacit understanding that all important fileswhatever department they may be emanating from are marked to him. He chairs the Budget meetings and initiates discussions. When Chidambaram could have dealt with just one FS, why waste time with four secretaries