The delay dividend

The harm caused by carelessness (if it were that) over the appointment of officials does not seem to bother the bureaucrats in the ministry of finance

The Mahabharata tells us how Dharma decided to test the Pandavas in their years of exile. Posing as an invisible Yaksha, he denied them access to the waters of a lake, when they were exhausted after chasing a stag, unless they could answer a series of questions. The only one who rose to the challenge was Yudhishthira. One of the conundrums put by the supposed Yaksha was: "What is the greatest surprise in the world?" The answer was: "Death is inevitable, yet each human behaves as if immortality is a birthright."

May I recommend that the mandarins in the ministry of Finance be forced to read this passage? True, the precise moment when the life of an individual ends is known only to the gods. I must point out, however, that the date when a civil servant retires — the end of his life as an official — is a matter of simple calculation. Yet the ministry of Finance always seems to be caught by surprise when the time comes to find a successor.

In previous columns I spoke of the utterly cavalier manner in which the ministry treated the appointment of officials to organisations such as the State Bank of India and the Life Insurance Corporation. The harm caused by such carelessness (if it were that) does not appear to bother the bureaucrats in the ministry of Finance. Nor do they seem concerned by the prime minister’s directive that no government servant be granted an extension after his 60th birthday. Was the ministry of Finance cognisant of this decision, or has it simply chosen to ignore it altogether? I leave it to you to decide after reading about how senior bureaucrats are treating the Industrial Development Bank of India and its daughter agency, the Small Industries Development Bank of India. (The latter agency was hived off the parent organisation in 1990.)

Let me begin with the Small Industrial Development Bank of India. Dr Sailendra Narain was the head of the bank since August 3, 1995. He was due to retire in July 2000. (As a rule, the date of retirement is taken as the last day of the month when it is due.) This would, or should, have been clear to everyone who bothered to take a look at the records. Yet, for no apparent reason, there was no attempt to find a successor!

As far as I can make out, the only effort was to give Dr Narain an extension. The first suggestion was that his term should be extended for a further two years. When the prime minister refused, this proposal was reduced to a term of one year, then to six months, and finally to a mere three months. The prime minister, however, turned down each suggestion.

When Dr Narain finally went off, the senior officer in the organisation was not given ‘acting’ charge as is the norm. Nor was the duty offered to the Industrial Development Bank of India’s nominee on the board. For some reason, the gavel passed to the chairman of the Punjab National Bank. Seven months on, the ministry of Finance has finally settled on a new chief — none other than the man who had been denied ‘acting’ charge, Dr Narain’s senior colleague. Why on earth did it take seven months to reach this decision?

The Small Industrial Development Bank of India is small beer, however, compared to its parent. G.P. Gupta, who was born on January 11, 1941, had taken over the reins at the Industrial Development Bank of India on July 1, 1998. According to the dictum cited above he was set to retire on January 31, 2001. The ministry of Finance started looking for a successor in October 2000.

The advertisement for the post invited candidates who had at least 25 years of experience and were not over 58 years. The advertisement appeared on October 9, and the last date for an application was October 24. Six days before the deadline, on October 18, a corrigendum to the original advertisement appeared, specifying that the maximum permissible age would be 57 rather than 58.

Thirty-four applications were received and 14 candidates were invited for an interview on December 1, 2000. (I have no idea if all the 14 met the advertised qualifications.) A five-member panel was constituted to conduct the interviews, although only four seem to have been present. The chairman was a former deputy governor of the Reserve Bank, with the current deputy governor, the secretary (Banking), and a management expert being the other members.

The interviews went off as such matters do, and with two months to go before G.P. Gupta retired, everything was on course to designate his successor. At this point, however, there was a break in the pattern — the committee sent up only one name to the Appointments Committee of the Cabinet (the prime minister, the home minister and the finance minister). This was nothing more than an insult to the ministers, telling them that they had no choice but to do as the mandarins decided.

Confronted by an angry political leadership, the bureaucrats decided against an open confrontation. But they are still unwilling to offer a choice of names to the ministers. The ministry of Finance’s current ‘solution’ is that the senior officer in the Industrial Development Bank of India should be appointed forthwith as its head. It appears that a point in his favour is that he still has two years to go before he retires. Of course, this is just another variant on the one-card trick — effectively giving the Cabinet just one option!

While this tug of war continues, it goes without saying that the Industrial Development Bank of India is without a chairman.

As long as I am on the subject, I should note that there are a couple of other major financial institutions that are in the same state. There is, for instance, much talk of making insurance firms lean, mean, fighting machines. May I point out that depriving Oriental, National and New India — three of the four insurance firms — of chairmen is not the best way to make this happen. And, just for the record, a couple of them have been going on this way since 1999!

A fortnight from today, we can read about the Budget — the ministry of Finance’s blueprint for the future and its record of past management. Given its appalling record in the latter area, to what extent can we trust these bumbling mandarins to manage the economy of tomorrow?

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