| The traditional view on expert committees on important economic policy matters is that they are desirable and serve a very useful purpose in a democratic system. These committees with their reports and recommendations create a platform for debate on proposed policy changes among stake holders and civil society in general. At the end of the debate, the government of the day may not agree to all the recommendations of the committee. But the big gain from such an exercise is that experts get to examine a policy issue of national importance, which in itself is a huge comfort factor and a bonus for any system. |
| A bold government may even disregard a few of the recommendations of an expert committee and instead enforce what it considers is more desirable. But because it knows that its decision has not been endorsed by the expert committee, it is aware of the possible pitfalls. It is also prepared in advance and, therefore, can undertake damage mitigation action in good time. In short, expert committees, appointed by the government, help create an environment for change and its acceptance in a democratic political system. |
| Several path-breaking economic policy reforms in the last 15 years were preceded by the setting up of expert committees and debates""often long-drawn and time-consuming""over their recommendations. These expert committees did not always come up with a consensus view. Most of them carried at the end of their reports detailed dissent notes from a few of the members. And these dissent notes were considered as important as the main set of recommendations contained in the report. |
| In the early days of economic reforms, when the mindset was even more biased against a change towards an open, non-discretionary and rule-based system, the government was""perhaps justifiably""wary of these dissent notes. A few days before the Narasimham committee on financial sector reforms was due to be signed and finalised for submission to the government in the early 1990s, a worried Manmohan Singh (who was then the finance minister in the Narasimha Rao government) had wanted to know from his old friend and former Delhi School of Economics colleague Mrinal Datta-Chaudhuri (one of the members of the Narasimham committee) if indeed he was going to insist on a dissent note. Dr Datta-Chaudhuri had told the finance minister in his usual disarmingly frank manner that the finance minister should not worry over his dissent note because that alone would help lend credibility to the Narasimham committee report. |
| Indeed, dissent notes appended to reports of expert committees underline the spirit of debate and discussion inherent in the exercise of examining policy issues. No government should look at dissent notes warily, nor with suspicion apprehending that its best plans would be undone by those discordant voices. As Mrinal Datta-Chaudhuri pointed out, dissent notes lend credibility and are ample testimony to the democratic and open tradition of an expert committee examining policy issues and capturing the areas of differences as well. The government can always choose to either ignore the dissent notes or, if necessary, give more importance to them and use them to justify a decision against the majority view of a committee. |
| During the mid-1990s, the state of Andhra Pradesh was engulfed in a fiscal crisis. Its chief minister then, Chandrababu Naidu, was aware of the magnitude of the problem, thanks to the regular briefing he used to get from his senior officials. The solutions to the problem were known to Mr Naidu and his team of officials. But there was some inertia and no remedial action was being taken, till the chief minister asked his bureaucrats to prepare a report on the fiscal crisis and give that wide publicity. His objective was to create an environment conducive to implementing the hard decisions that required to be taken to address the state's fiscal mess. Eventually, when those hard decisions were taken, there was no criticism or protest. If anything, there were questions on why he did not initiate those steps earlier. |
| Expert committees also play a similar role. The problem, however, arises in cases where the government may not have made up its mind on what line of action it wants to initiate on a certain policy issue. Before setting up the Narasimham committee or the Malhotra committee on the insurance sector, the government of Narasimha Rao was clear in its mind that reforms in banks, financial institutions and the insurance sector had to be introduced. The precise recommendations or the dissent notes became a matter of detail which were eventually resolved through discussion. |
| Prime Minister Manmohan Singh announced in March this year that an exercise should be initiated to examine the advisability of introducing fuller capital account convertibility. That announcement took officials in the finance ministry and the central bank by surprise. Expectations about enhanced capital account convertibility also increased. The committee, set up by the Reserve Bank of India, has now submitted its report outlining a road map for fuller capital account convertibility. A full-scale debate on this issue is on. No one, though, knows as yet how and when those recommendations will be implemented. Two questions, however, remain unanswered: Was fuller capital account convertibility such a pressing issue for the government that it required a committee on this to be set up right now? And, more importantly, did the government or the finance ministry have any clear view on this issue before embarking on this exercise? |
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