Systemic barriers

NSG commandos after the completion of Operation Cyclone at the Taj hotel in Mumbai on November 29. The NSG and the three armed forces have not been able to spend several crores of money that have been provided for them in their budgets.-PTI

FROM time to time Prime Minister Manmohan Singh has stressed how important it is to reform the system of administration. A number of committees have been looking at this vital subject, so essential to the entire developmental process. And now, with the recent terrorist attack in Mumbai, it has become even more crucial that the system delivers, and delivers fast.

These are very suitable sentiments and objectives, no doubt; we will all agree that the bureaucratic system in the country must be radically altered to respond fast and effectively to the needs of the country security needs, developmental needs, and everything else. But not very long ago, in the middle of December, a month after the carnage in Mumbai, a leading newspaper carried an astonishing story. It said that the National Security Guard (NSG) and the three armed forces the Army, the Air Force and the Navy have not been able to spend several crores of money that have been provided for them in their budgets.

It leads one to wonder just what is going on. On the one hand, there are strong professions of the governments determination to improve our security system, provide the armed forces, the NSG, the Border Security Force (BSF) and other paramilitary units with state-of-the-art equipment and facilities for training and increase their strength. On the other hand, these units seem to be unable to spend whatever money they have been given. It is not just worrying but alarming.

This one issue should serve as an opportunity for the government to find out immediately what the problem is. But the sad fact is that the government knows what it is, as do some of us who were former members of the bureaucracy. It would be natural for the Prime Minister, who is also the Union Finance Minister, and for Home Minister P. Chidambaram, who was until recently the Finance Minister, to feel obliged to defend and perpetuate the system and try to work around the problem instead of confronting it head on.

This is the pernicious system that exists in the government: each Ministry has a set of financial advisers, who have a set of officers working under them at different levels. For instance, in the Ministry of Defence, the chief financial adviser is called the Financial Adviser (Defence Services) and has the rank of a Secretary to the government. Working under his supervision is a battery of additional financial advisers looking after different aspects of the Army, the Air Force and the Navy.

In theory, they are there to examine all financial proposals and advise the Ministry on what the most prudent decisions should be. In fact, they are the most formidable barriers to all projects, proposals and schemes. In every Ministry, it is these officers who send back files with queries that are often ridiculous. Most Secretaries would agree that their work would be much quicker if the financial advisers were exactly what their designations make them out to be people to advise the Secretary who then decides what is to be done.

I have personally been involved in several cases where the financial advisers have gone much beyond their brief and turned down proposals and projects because they did not think they were suitable or appropriate. In the Ministry of Defence, proposals for the acquisition of new weapons systems end up being discussed by the vendors and the financial advisers directly, with the Ministry officials concerned being mere spectators. These discussions can be tortuous and it is doubtful whether they help the government at all.

Both the Prime Minister and the former Finance Minister may think that they are essential to good governance. With due respect to their formidable intellectual abilities, it must be pointed out to them that if they do try to defend the system they will be preserving the ills that afflict the system at its very root, and they will be party to this pernicious hobbling of a system that can, freed of these shackles, actually deliver.

The reason is simple enough. Financial advisers have different priorities. They are more concerned that procedures are followed and that certificates of various kinds provided. If they have a doubt about the acquisition of, say, a radar system, they will send the entire proposal back. The proposal has to be then explained to them in simple terms because they are not professional officers of the armed forces. They are officers from the Indian Defence Accounts Service. But it is they who decide, finally; it is they who clear proposals, which are often incredibly complex. And they do so not after months but, often, after years of having queries answered, endless discussions and internal confabulations.

I am mentioning the dilemma of the defence forces but know that this applies to all other Ministries as well. Perhaps on not quite the same scale but in essence the rituals are the same. The key to all this is the fact that financial advisers are not really answerable to the Secretaries of the Ministries under whom they are supposed to function; they are actually answerable, all of them, to the Secretary (Expenditure) in the Ministry of Finance, who can overrule a Secretary in any Ministry without compunction. If that poor Secretary takes the matter up with his Minister, so does the Secretary (Expenditure), and finally the Finance Minister gives his verdict, which in virtually every case is supportive of what the Secretary (Expenditure) says.

Small wonder, then, that even the NSGs funds cannot be spent. One has only to ask and one will find out that many of the issues are, to use bureaucratese, pending with Finance. The Finance Department people are, of course, adept at fending off such accusations and their usual tactic is to say that the proposal came to them very late or in an incomplete form. And then the blame game begins, diverting attention from the original proposal.

Is it so difficult for the government to trust its own Secretaries? Why does it trust those in the Ministry of Finance and these financial advisers but not officers who have served for over three decades with distinction (before becoming Secretaries)? This is the first change that is essential; without this, one can say with confidence that if our defences are found to be wanting, and are penetrated, and our paramilitary forces, indeed our armed forces, are found to be ill-equipped in the event of another major terror attack, it will be because the most basic reform on governmental functioning was not done. That is, the conversion of the financial advisers to being what they need to be, advisers to the Ministry. Nothing more.

Keeping a system honest needs something quite different. Rather than hobble them with a plethora of rules and procedures, other means can be devised to determine who has his or her hand in the till. It can be done, even if it means the occasional invasion of an officials privacy.

What one is urging is that the basic mindset towards the system of governance change. The assumption should not be that everyone is dishonest or habitually irregular in their financial decisions. The assumption must be that they are honest and they will be as correct as the financial advisers. And then put in place a method of determining who the thieves and corrupt are. If one starts here, then the rest will follow. And the country as a whole will benefit substantially.