The Indian Revenue Service (IRS) and the Indian Economic Service (IES) are two ends of the economic administration spectrum in the country. The former is well known simply as the income tax (IT) department while the latter, a relatively fledgling wing of the government, is slowly making its mark as government experts who help in formulating economic policies to meet new challenges.
Public images of certain all India services will always remain deceptive; nowhere does this apply more pertinently than to the Indian Revenue Service (IRS) which controls the Income Tax or IT department. Synonymous with everything that has to do with huge wads of money, this is just one of the public personas of the country’s gigantic revenue earning machine.
Get down to nitty gritties of every day management and IT department is just another vast government organisation bogged down in organisational chaos, inter-departmental pique, personal dissatisfaction, under staffing - its sanctioned strength has remained at 57,793 since 2001 - and the biggest bugbear of them all: big brother IAS officers who keeps a tight control over what IRS officers feel, is legitimately their territory - promotions in service.
To buttress their claims, IRS officers quote the example other all India services like the Railways, which has managed to keep out generalist IAS officers in favour of their own technical experts. In contrast, they say, the IT department is putty in the hands of the big brother whose knowledge about all things financial remain strictly suspect.
Despite the glamour associated with the IRS – attributable in a large measure to to their job profile which includes dealing only with the rich and affluent and postings in prosperous metros – income tax collection of India remains ridiculously meager.
The gross direct tax collections of the Central Government increased from Rs 15,352 crore in 1991-92 to Rs 5,90,077 crore in 2011-12. The percentage of direct tax revenue to total tax revenue increased from 14.00 percent in 1990-91 to 56.00 percent in 2011-12. The direct taxes to GDP ratio has grown from 2.35 percent in 1991-92 to over 6 percent in 2011-12. In the last decade in India, for every 1 percent growth in GDP, there was a growth of nearly 1.9 percent in direct tax collections.
Sounds impressive? Well, statistics may only tell the partial story. The number of taxpayers has gone up from 2.5 crore in 2000 to around 3.5 crore by 2012. In other words only a measly 2.77 percent of the total Indian population pays income tax and there is a huge tax base which needs to exploited for furthering revenues.
One of the sore points in the IT department is the delay in its cadre restructuring programme. Within the Income Tax department, it is seen as a conspiracy by a coterie of IAS officers spurred by their overwhelming ambition to continue untrammeled their game of self-aggrandizement. For instance, the IT department has proposed creation of 42 posts in the apex scale equivalent to Secretary, Government of India. They say the IAS lobby is hell bent on not conceding this legitimate demand of IRS officers which is leading to much demoralisation among its ranks.
In comparison, the Indian Economic Service (IES) – relatively speaking poor country cousins of the IRS – represent that breed of government officials who are leaving their mark on economic and fiscal policy management. They may not have acquired the high profile of their cousins in IT, but given the nature of their job, find more options for career advancement than IRS. Economic administrators have called the shots in any regime – from Nehru to Manmohan Singh – but with India’s growing economic clout, their need has gone up manifold. It is here where IES officials come in. As an inter-ministerial service, IES has spread out to a number of departments during the last five decades; the number of those utilising their services too have increased five fold from 10 in 1979 to 55 in 2011. That attests to their growing importance. Last year the number of posts for economic advisers in central ministries were increased to 89 from 52. It has naturally ran a parallel course with the different phases of the Indian economy – from phases of control, decontrol to economic liberalisation. The opening up of the Indian economy has hastened the need for government bureaucrats with an economic bent. Currently limited to serving in central ministries and regulatory bodies, there are proposals to extend the IES to the district level. Former RBI Governor Bimal Jalan in a Finance Ministry publication has argued that the next generation of IES officers should serve at the state and district level for five to six years and give accurate and ground-related feedback to the officers at the Centre about government schemes. Sadly, it is now on the backburner.
As with IRS, even the IES, set up in 1961, is feeling the power of the IAS stranglehold. Despite its advisory capacity, their officers believe that top positions are anyway `divined’ for that super service called the IAS. In a way therefore, Prime Minister Manmohan Singh’s efforts at effecting administrative reforms remains thwarted after nearly a decade in office. In February, 2005, when the first steps were initiated to set up a new Administrative Reforms Commission (ARC) at Singh’s behest to make the bureaucracy more responsive, the commission was given the mandate to suggest measures to achieve a proactive, responsive and accountable bureaucracy. Its rationale is good but results are not yet evident because of intense resistance from within. And by the looks of it, will remain like that.