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Ad hocism in policies

Ashok Dasgupta

THERE was a time, not too long ago, when the formulation of the Government's economic policies was in the hands of economists. This was particularly true during the trying times in 1991-92 when the country had no other alternative but to laun ch the process of structural adjustments and economic reforms to get the derailed economy back on the track.

Just a year before, in 1990-91, the state of the economy was such that would make anyone shiver. Foreign exchange reserves were precariously down to a week's import worth. The industry was going through a recessionary phase and exports too, were at a low . Worse still, with the crude oil import bill burgeoning, inflation was also at a high which, in turn, had a cascading effect across the board.

Those were the crucial days when, as a measure to guard against default in payment obligations, the Government pledged some of its gold reserves as a fire-fighting operation. And later, it had no other way but to go in for a $1.8-billion loan from the In ternational Monetary Fund (IMF) to salvage the situation. At the helm then at the Centre was Mr Chandrasekhar as the Prime Minister with Mr Yashwant Sinha as the Finance Minister who, in turn, was ably guided by his Finance Secretary, Dr Bimal Jalan, the current Governor of the Reserve Bank of India.

Soon, the regime changed and in came Mr P.V. Narasimha Rao as the leader of a minority Government. With the IMF's loan conditionalities in place, it goes to the credit of the Prime Minister that he chose Dr Manmohan Singh as the Finance Minister to launc h the reform process and steer the economy out of the woods.

The initial reform process was fairly simple, though it required a complete change in mindset among the political leaders, the bureaucrats and the people at large. Essentially, it meant dismantling the licence-permit raj through deregulation and delicens ing of a host of industrial sectors and gradually paving the way for easier entry of foreign investments. Helping the Finance Minister -- himself an economist of considerable repute -- soon was Dr Montek Singh Ahluwalia, an economist of the libe ralised era.

Till this time, financial and economic policy-making was largely entrusted -- the political guidance apart -- to economists in the North Block which ensured a continuity in formulation.

The regime at the Centre changed yet again and in came the United Front which marked the beginning of the coalition era. But even then, the Finance Minister, Mr P. Chidambaram, continued with the same set of economist bureaucrats to steer through the ref orm process, although policy-making had now become the baby of the `Core committee' -- the representative body of coalition partners -- who gave the initial go-aheads to or put road-blocks in the way of reform packages.

Needless to say, for purposes of consensus among the coalition partners, the continuity in policy- making and implementation received a jolt. And, in turn, it was ad-hocism that crept in, in good measure.

In the NDA regime, under the leadership of Mr Atal Bihari Vajpayee, Mr Sinha again took charge of the North Block with the same set of bureaucrats. But soon, it turned out to be the Prime Minister's Office (PMO) that started laying down policy matters fo r North Block to implement. The ad-hocism continued, one example being the North-South and East-West corridor, the dream project of the Prime Minister which was fished out of the shelves in an ad-hoc manner, initially.

To implement readymade policies, economists are not necessary. What is needed are administrators. And not surprisingly, therefore, there's not a single economist either at North Block or at the PMO at present.