A K Bhattacharya: Bureaucrat with a spine

BACKSTAGE

For Duvvuri Subbarao, life could have been entirely different and perhaps more easy, had he chosen what most of his college friends did. After graduating as an engineer from IIT, Kanpur, Subbarao decided to join the civil service, while some of his batch mates went for jobs in the corporate world and others went for either a management degree or higher education abroad.

In the 1972 civil service examinations that he took, Subbarao topped the list of successful candidates. That was also an indication that the trend of engineers, management graduates and doctors opting for jobs in the government as IAS officers was gaining ground. Thirty-five years later, Subbarao seems to have reached his Holy Grail. Last week, he took charge of the department of economic affairs in the finance ministry as its secretary.

Subbarao's appointment as economic affairs secretary is significant for another reason. He worked in the same department for five years between 1988 and 1993. In the process, he saw from close quarters how fiscal indiscipline and the balance of payments crisis came close to destroying the Indian economy and how Manmohan Singh's team in North Block managed to put together a reforms package and brought the economy back on the rails. He was not part of the A team, but as a middle-rung officer he played a useful role in providing valuable inputs to the reforms package that was put together in the early 1990s.

In that sense, Subbarao's appointment marks the return to North Block of a man who was intimately connected with the reforms process and now has the onerous responsibility of completing the unfinished task. Subbarao is tipped to become the finance secretary once the seniority issues in the finance ministry are sorted out. Once that happens, the similarities with what happened in the 1990s will become too obvious to be ignored. Montek Singh Ahluwalia too joined the finance ministry as economic affairs secretary and had to wait for a few months for the seniority issues to be sorted out before he eventually became the finance secretary.

An Andhra Pradesh cadre officer, Subbarao returned to Hyderabad in 1993 to become the state's finance secretary. He remained in charge of the finance ministry in Andhra Pradesh for five years and those were also the years when he saw how the political leadership's reluctance to take firm steps allowed the state to slip into an unprecedented fiscal crisis. Once Chandrababu Naidu became the chief minister, Subbarao presented him a detailed account of how the fiscal crisis would impact the state's economy and its people. Naidu's response was that Subbarao must make presentations that explained to his cabinet the adverse implications. Within days of those presentations, Naidu agreed to all the fiscal reform proposals that Subbarao had put together.

That was Subbarao's first lesson in the importance of political management of reforms (a skill that he might have to put to use in his current job as well). This was no less important than his masters in economics from Ohio University in 1978 and a few years later the doctorate in economics he picked up from Andhra University. His stint in the World Bank helped him further hone his skills in public finance and managing economic policies in developing countries.

A strong votary of fiscal discipline, Subbarao does not mince words while taking a stand on issues. The papers he wrote during his stint as secretary in the Prime Minister's Economic Advisory Council reject suggestions of relaxing the targets under the Fiscal Responsibility and Budget Management Act and reiterate the need to introduce a more transparent and autonomous pricing policy for the oil sector. Only time will tell if there will be any gaps between what Subbarao preached and what he practises.