Finance minister P Chidambaram will not take much time to put his own stamp on everyday governance in the finance ministry which, by all accounts, seems to have become excessively bureaucracy-driven. The results were there for all to see in the form of convoluted and messy tax issues relating to GAAR, Vodafone, etc. If Chidambaram specialises in one thing, it is to rein in the bureaucracy by putting in rigorous processes of feedback and management information systems. So tenacious is he in seeking follow up information and action within strict timelines that one top Central Board of Excise and Customs (CBEC) official, who shall go unnamed, used to spend more time in his junior officer?s room to avoid frequent calls from Chidambaram?s office in the same building. This tactic of avoiding ?the big boss? had become somewhat of a joke in the corridors of North Block during Chidambaram?s stint as finance minister in the UPA-1. Not just the CBEC official, other bureaucrats of secretary rank have also privately confessed how difficult it is to keep pace with the finance minister?s punishing work schedule!
On a more serious note, I am citing these examples to merely illustrate how hands-on Chidambaram can be as a minister. He strongly believes in processes and feedback mechanisms. In his last stint as finance minister he had created a daily tax collection feedback from IT Commissioners. In the last two days he has already asked many officers to come back with answers to specific queries on actual subsidy payouts etc.To facilitate this style of functioning, he tends to hire Officers on Special Duty (OSDs), normally from the IAS cadre, who have had some management education background. Almost all his OSDs in recent years have had degrees from one of the premier IIM institutes. Chidambaram doesn?t stand on protocol and is known to call a junior officer directly to get an accurate feedback.
At least two of his initiatives at the home ministry testify to his penchant for a process-driven work ethic. Immediately on taking over as home minister after the Mumbai terrorist attack, he put in place a simple information feedback and coordination mechanism?a daily 45-minute meeting with the heads of Intelligence Bureau and RAW, the national security advisor (NSA), and the chief of joint intelligence committee. Home ministry officials say this meeting was rarely missed even for a day and would happen at 10 in the morning. On days when Parliament was in session, the meeting would shift to the evening hours, but it would not be missed. By doing this, Chidambaram ensured all heads of security organisations shared information and were on the same page. Hopefully this will continue under the new home minister, Sushilkumar Shinde.
The other important process-driven initiative in the home ministry was engaging on a constant basis with some of the insurgency outfits in the North East. Chidambaram did this largely by appointing retired home ministry officials to talk to these groups on a daily basis and get them to renounce violence and agree to move back to notified camps before reaching the final stage of surrendering arms. This institutionalised process should continue even after Chidambaram?s exit from the home ministry. Few also realise how he has halved the CRPF contingent in Jammu and Kashmir gradually over a period. Pending political clearance, he was just a whisker away from removing the Armed Forces Special Powers Act from non-sensitive areas in Kashmir.
The larger point is that good administration is not about making big, bombastic announcements of reforms to create mere atmospherics. It is about creating processes brick-by-brick, and indeed real governance is all about the integrity of these processes. Normally, there are no rewards for doing this because it is part of everyday work. Possibly, the national grid collapse would not have happened if these simple tenets of governance were followed.
In the economic sphere, too, the markets seem to have constant anxiety over big-ticket reforms such as FDI in insurance, multi-brand retail, etc. Here, too, the key is to put in place simple governance mechanisms to deliver various public goods and services efficiently.
In regard to cleaning the administrative cobwebs, Chidambaram will surely focus on two of his pet projects that he had initiated as finance minister: the Direct Taxes Code (DTC) and Goods and Services Tax (GST). He is passionate about both these systemic reforms, which are again about better governance and less leakages. He was not very happy at the way DTC, announced jointly by him and Pranab Mukherjee, had been substantially diluted by the tax bureaucracy.
If Chidambaram follows his normal instincts, he would certainly bring some key changes in DTC. He had personally drafted the entire new code and there were chapters in regard to easier tax prosecution procedures and more transparent functioning of the Central Board of Direct Taxes (CBDT), which the tax bureaucracy had either diluted or removed completely. Obviously, the taxman could not take away his own discretionary powers. Knowing Chidambaram, he would bring back these provisions because he is very keen to ensure that tax disputes are transparently decided in quick time and are not allowed to linger. CBDT proceedings being recorded transparently and reasons assigned as to why certain tax actions were taken as per what rules is also something he is likely to push for as part of DTC.
Overall, he would want to put the tax department yet again on the trajectory where technology plays the bigger role in tax collection. The interface between the taxman and the taxpayer would be minimised. A very pernicious practice was started in recent years where the taxmen had started informally telling businessmen they should pay up a certain amount in a year, way beyond their liability, to show better collections. The businesses were promised informally that the excess tax collected would be refunded in the subsequent year. This will not sit well with Chidambaram?s style of tax administration.
Chidambaram is also quite passionate about implementing GST as the next driver of growth in the economy. At the very least, he will attempt to get the legislation passed by 50% of the states by mid-2013. He probably realises he cannot do the big bang reforms given the current political climate. He may settle for scaling up processes and administrative capacities, which is possibly more critical at this stage of our governance.
mk.venu@expressindia.com