Bibek Debroy: A case study of a failed committee

OF THE RECORD

"The UPA administration will revamp the functioning of the Khadi and Village Industries Commission (KVIC) and launch new programmes for the modernization of coir, handlooms, powerlooms, garments, rubber, cashew, handicrafts, food processing, sericulture, wool development, leather, pottery and other cottage industries."

This is from the National Common Minimum Programme (NCMP) and the KVIC's inclusion in the NCMP suggests the commission hasn't delivered on the mandate the 1956 Khadi and Village Industries Commission Act set out, or that circumstances have changed so that revamp is needed.

The 1956 Act provides for a Commission (with a full-time Chairman), a chief executive officer, a board and the KVIC's functions, with the statute supplemented by 1957 rules.

Following the NCMP requirement, the KVIC was dissolved in October 2004. What should the KVIC's structure, functions and programmes be and how should the 1956 statute be amended? The best way to decide is to set up an expert committee and that is precisely what the ministry of agro and rural industries did in December 2004.

This committee (the Sukthankar Committee) submitted its report in March 2005. Let's ignore the Committee's recommendations on the KVIC's role, policies, strategies and programmes and focus instead on the management structure, since the former is contingent on the latter.

"According to the provisions of Rule 10 of the KVIC Rules, the Chairman (who is full time) is responsible for the proper functioning of the Commission, implementation of its decisions and discharge of its duties under the Act. The Chairman exercises administrative control over all departments and officers of the Commission. It is the Chairman who is thus the de jure and de facto Chief Executive of the Commission....The division of powers, responsibilities and duties between the Chairman and the CEO of the Commission, as described above is, to our knowledge, rather unique.

We have not been able to come across any other organization functioning in the Government of India, which operates on a similar pattern... This arrangement marginalized not only the CEO of the Commission but also the seven part-time Members... Thus, in practice, while the entire responsibility and accountability essentially remains with the CEO, there is no guarantee that he will have the requisite powers and authority to be able to properly discharge his responsibilities, as the same may not be delegated to him by the Chairman... With a view to remedying the present situation, we feel that there should be a clear division or separation of powers... In fact, this is how organizations having corporate form""and the KVIC is no different""normally function.

They have a policy-making board (with its Chairman) at the top and a Managing Director/Chief Executive Officer, who is a member of the Board and in whom is vested the responsibility of execution and day-to-day administration.... The Chairman and/or an individual member shall not, however, have any executive powers nor any role in the day-to-day working of the Commission." Ipso facto, the chairman's position ceases to be full-time.

In all fairness, there was a dissenting note (March 14, 2005) from Kamal Taori, a member of the Sukthankar Committee. "I feel that KVIC needs to have a full-time Chairman and part-time won't help.... The structure, width, depth, coverage and type of target group requires non-official as full-time. Because somebody has misused his position, the requirement of the sector can't be sacrificed. Bureaucrats have their own limitations and culture of functioning.... As regards, North Eastern Region, Hills and boarder (sic) areas etc. I am convinced that bureaucrat led model won't perform. As an executive, he will hardly find any time to tour. Chairman and members have a role to be proactive."

Given this letter of dissent, the Sukthankar Committee met again on April 5, 2005, and saw no reason to change its views.

"The crux of the matter is not whether the Chairman of the Commission should be a full-time or part-time non-official but what the role and functions of the Commission (including that of its Chairman) should be and in whom the executive authority and responsibility should rest.

On this issue, the members present were clearly of the unanimous view that the Commission (including its Chairman and individual members) should not have any executive functions, authority and responsibility and should not have any role in the day-to-day administration." This is thus more than a bureaucrat versus non-bureaucrat tussle.

What happens now? We don't quite know, because information is not in the public domain. We will only know when an Ordinance or a Bill (to amend the KVIC Act) is placed in the monsoon session of Parliament.

However, the grapevine is a reasonably reliable source. And from what one gathers, despite the Sukthankar Committee's report, one is about to go back to the old KVIC model, with a full-time chairman with executive responsibilities and the CEO under his/her thumb.

Almost tautologically, appointing a chairman is more discretionary and amenable to rent-seeking than appointing a CEO. If rents are sought and paid, there must be commensurate returns from a full-time executive chairman's position.

In hindsight, the NCMP promise, KVIC dissolution and the Sukthankar Committee have proved to be completely unnecessary and a waste of time. Such is the way of the committee raj.