Interview / Mohan Guruswamy

'Both Vajpayee and Sinha are duffers'

Mohan Guruswamy, a former advisor to Finance Minister Yashwant Sinha, spends most of his time in Hyderabad. He was surprised hearing of the sudden reshuffling of top bureaucrats in the finance ministry as the budget presentation is hardly 14 weeks away. Guruswamy spoke to Ramesh Menon in a candid conversation.

Suddenly, the top bureaucrats in the finance ministry have been changed. That too four months before the budget is presented. The change in leadership at such a point in time is shocking. Both the finance secretary and the revenue secretary will take at least six months to understand what a budget has to have and how it should be made. So, ultimately you will have N K Singh in the Prime Minister's Office making the budget. If you ask me, you might as well disband the finance ministry.

The economy is faltering. The deficit is going up. The Finance Minister Yashwant Sinha has lost control of the country's finances. He has also lost administrative control of his ministry. Now, his policy decisions are announced by the Prime Minister's Office. Where then is the finance ministry? Even a decision to shell out Rs 2 billion to buy substandard wheat and paddy from Punjab was taken by the prime minister. The finance ministry said nothing though it does not have the money and granaries are overflowing.

If the finance ministry does badly, it is the finance minister who should quit. But here we have heads of bureaucrats rolling in the name of incompetence. Bureaucrats are there only to implement policy. It is for the minister to formulate policy.

Now, here we have a new budget team which has no track record of economic management. It is completely wrong. Ajit Kumar, the new finance secretary, had a poor track record in the defence ministry. Now, he gets shifted to a prime post before the budget. He has been rewarded for his poor performance. There were even complaints against him. If we have to bring in specialisation to the reform process, experts have to be got in. But not certainly a reshuffle like this.

Both the finance and revenue secretary positions are key ones when a budget is being made. At least, Montek Ahluwalia was in control of what he said and did. A finance secretary's job is big deal. The finance ministry has been floundering ever since Montek left.

Yashwant Sinha has no understanding of economics. Three finance secretaries have been changed under his tenure. Sarma was probably removed as he was tough and not pliable. Sarma cannot be manipulated. As an expenditure secretary, he did a great job.

Ajit Kumar was brought in because he was the choice of Ranjan Bhattacharya (PM's son-in-law) . This is no good as there is no continuity if secretaries are shuffled like this. Secretaries are now being treated like district collectors and can get transferred anytime.

Today, we have leaders without a clue of policy issues. No one typifies it more than Yashwant Sinha. He does not understand economics. He just looks at his computer every morning to figure out if the stock market is going up or down. I had to explain to him numerous times that the stock market may be doing well and the economy may be doing badly. Or vice versa. He could not understand that the stock market can be easily manipulated and stockbrokers often do it to make some quick money.

Today, there are no new investors. And what about the primary market? Nothing has been done to revive it. Our capital expenditure is about 16 per cent and is very low. If you want growth, it must at least be 35 per cent. There is a lot of activity that the state should generate like building roads. It would then automatically lead to a lot of economic activity not only in construction, but in other areas. But here we are looking at foreigners coming in to build our roads.

The revenue secretary's job is a very important one. What is the point of bringing in a new one now? The revenue department has been a target for the last 15 years. One needs real continuity to keep up the pressure to get collections. The excise revenues cannot be allowed to fall. But they do fall as there is tremendous leakage and total corruption. That tax collections are low is a troublesome indication.

You cannot cut interests, you cannot cut salaries, you cannot cut subsidies and you cannot cut defence expenditure. So, development expenditure gets cut and we end up cutting down on roads, infrastructure, schools, health. All these important areas get viciously slashed before the budget. Only a person with vision can fight this. Sarma could have fought. You have to be tough to be above board. It is fundamental in running a ministry.

The finance minister should be an architect who designs the structure and supervise it. P Chidambaram had vision. Earlier finance ministers like T T Krishnamachari and Manmohan Singh also had it. I may not like Chidambaram's arrogance, but he was a good finance minister who knew what he should do and how to do it.

But Yashwant Sinha keeps running to the PMO everyday as the PMO's secretary summons him. He almost behaves like a head clerk. Sinha thinks he is the third man in the race to become PM. But he is too insecure. He once told me that I always got good press, while he didn't. People used to go and tell him that Guruswamy is running the finance ministry and that added to his insecurity.

Almost two years ago, I told Sinha that an innovative way to lick poverty was to bring in water management. He did not bother and did not even call a meeting for the purpose. He then allocated Rs. 500 million for water management without knowing what it entailed. It is the finance minister who should look at areas like this and draw a blueprint.

Narasimha Rao was a thinker. He had ideas. So was Manmohan Singh. That is why they made a good team as they had a vision to share. But look at Atal Bihari Vajpayee and Yashwant Sinha. Both are duffers.

They got rid of Sarma as he was an honest officer -- honest to a fault. They just want to run it like dictators. Suhartoism has come to India with a bang! Both the finance and revenue secretaries must know their subject to begin with.

Liberalisation does not just mean MNCs coming in. There has to be a decontrol of the economy and self-regulation by the industry. Will a new team understand all this?

When the finance ministry again falters and fails, it will conveniently blame the old team.

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