Can you plan economic development without statistics? With this objective, the Union Cabinet in 1952 decided that the Planning Commission appoint a committee to examine the question of establishing a national statistical cadre to serve the general needs of different ministries. Thus came into being the Indian Economic Service (IES) on November 1, 1961. Three year later, officers were identified and inducted into the IES. However, direct recruitment through all India competitive examination was conducted by the Union Public Service Commission (UPSC) in 1967. The first batch of direct recruit officers joined in 1968 and fittingly, last year the IES celebrated its golden jubilee. It is an inter-ministerial service and 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 the growing importance of IES. 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 Indian economy and the reform process has created the need for direct immediate access to economic data.
IES officers interviewed by Governance Watch admitted that things had changed for the better. For instance, the challenge for Peter Augustine, a 1982 batch officer and Director General at the Petroleum Planning and Analysis Cell (PPAC), is located in the economy and its attendant growth. “The role of economy is growing rapidly. It also means that the process of economic development becomes more complex, with new sectors emerging as growth centres while the old sectors start facing new challenges. Investment, international trade, infrastructure, service sectors, inclusion, environment etc. have emerged as major areas of interest in economic development. Economy has been gradually moving away from general administration-based governance to economic governance. Controls have been replaced by regulation in many areas, with all its attendant challenges”, he observed. (see interview)
How do IES officers work? Currently, most of them are out of Delhi. There are regional evaluation offices and project evaluation offices in Chandigarh, Lucknow, Hyderabad, Chennai, Bombay, and Kolkata, which come under the Planning Commission. Besides, IES officers contribute significantly to the Planning Commission and regulatory institutions-Telecom Regulatory Authority of India, Competition Commission of India, Central Electricity Authority, Insurance Regulatory and Development Authority and the Finance Commission. Keeping in mind the global economic environment, the Union Finance Ministry has asked them to be closely associated with and involved in economic reforms in their ministries. Their primary task is to provide ministries with inputs on all policy-related matters, their economic implications and monitor and evaluate the policy parameters from an economic angle, as laid down in the Fiscal Responsibility and Budget Management Act 2003, and assist the Ministry of Finance in preparing annual or any other periodical statement required for complying with the provisions of the act and consultations before finalising their Annual Plan Budgets.
Before his elevation as President, Union Finance Minister Pranab Mukherjee stressed that the IES decision-making processes must be armed with greater analytic ability and economic expertise. “Economic policy-making in today’s time is so complex that most decision makers find it very difficult to master this art. That’s why the importance of IES has grown,” he said.
Balbir Singh who joined service in 1968 and served till 1973, believes their cadre is essentially still involved in an advisory role. ‘‘Their job is to compare the cost-benefit of various choices to carry out a project. For example, I was asked to compare the costs and benefits of leasing versus buying big oil tankers. It was up to the Union Cabinet to make the decision.’’
Singh remembers another issue related to raising tax revenue. ‘‘A cabinet meeting was in progress and Secretary I G Patel was in that meeting. He would get instructions from the Finance Minister/Prime Minister. He would convey to the Chief Economic Adviser (CEA) Ashok Mitra. CEA would call K C Sharma, the then Director, who in turn would ask me to crank the numbers related to a specific proposal. Those numbers would travel to the Cabinet. Then a modified proposal would come. This process repeated itself several times and it was approaching 9:00 PM (office closing time: 5:00 PM). We were only four officers left in the department. I still do not know who found out that the proposal was made by an opposition leader. It was a good proposal but was dropped since the Cabinet did not want to acknowledge that fact. There was nothing the officers could do and willingly or unwillingly they had to accept the cabinet’s decision. I must confess that at the time I felt really good thinking that I was part of a very select team.”
Singh’s enthusiasm proved short lived after he was rebuked for writing a short note for The Economic Times. Later, he wrote a theoretical paper ‘Making Honesty as the Best Policy’ that appeared in a leading economic publication, ‘Journal of Public Economics.’ ‘‘It was considered so original that the Massachusetts Institute of Technology (MIT) gave me a fellowship. This paper dealt with income tax issues. The Direct Taxation Department in the Ministry of Finance would not give me permission to publish it,’’ Singh recalls. Cutting through red tape, the then Finance Secretary overruled the department and encouraged him to publish his work.
What determines economic advice is data and economic insight not political interference or ideology. A 1968 batch IES officer J.U. Mansukhani who sought retirement in 1975 when he was Senior Research Officer, says, “If our advice is not followed by the executive, we do not feel frustrated because we have done our job. We submit our suggestions to the economic advisers and they do the analysis. They takes instructions from the chief economic adviser and he gives his analysis. Rarely are we compelled to follow political compulsions.” That’s good news.
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 feedback to the officers at the Centre as to what works and what doesn’t on the ground regarding the Central and state schemes in every sector. But the proposal has been put in cold storage. If implemented it would have enabled transforming IES into an all-India service and ensured better utilisation of resources by states.
However, for this to happen, state governments would have to be taken on board for the process as it involves legislation.
Like other all India services, IES officers too grovel under the yoke of the big brother IAS. ‘‘Unlike the IAS, there is virtually no exposure to emerging areas like decentralisation, micro finance, appraisal of projects or accounting techniques,” complains an officer on condition of anonymity.
Despite giving directions to the thinking process in economic decision making, IES officers are not elevated to the level of a decision maker – after all, only an IAS officer can occupy the post of Secretary to the Department of Economic Affairs.
There are others who believe that IES officer are seldom taken seriously. Says reputed economist Jayati Ghosh of Jawaharlal Nehru University (JNU), ‘‘I wish the IES could do something to revive the Indian economy. Unfortunately, no one listens to them. Their contribution rarely matter as the government takes its own decisions.”
Despite these shortcomings, IES officers firmly believe that career fortune and learning opportunities are intrinsically linked to the growth of Indian economy. They also agree that their ability to communicate with decision makers will be vital.