The strategic imperative

That was the thinking in the Gandhi family PMOs, but Prime Minister Narasimha Rao changed that by allowing his finance minister, Manmohan Singh, to become the fountainhead of all economic policy reform. That situation has now changed, though the PMO still does not have any professional economists on its staff, in the manner in which Indira Gandhi had P.N. Dhar and subsequently Arjun Sengupta and Rajiv Gandhi had Montek Singh Ahluwalia.

It is surprising, however, that the PMO has dubbed a group responsible for policy implementation as the quot;strategic management groupquot;. Implementation of policy, getting sanctioned projects off the ground and speeding up reforms are important aspects of governance. Indeed, it is just as well that the system is made aware that the PMO has its eagle eye open and is keeping track of policy implementation. However, policy implementation is different from managing strategy8217; or, indeed, even strategic management.

The Planning Commission was used both by Nehru and, in the early years, by Indira Gandhi as the PM8217;s strategic management group8217; for economic policy. If the deputy chairman of the Planning Commission is a P.C. Mahalanobis or a Sukhamoy Chakravarty, the Commission can indeed play the role of the PM8217;s SMG. However, over time, the Commission has been devalued as a think tank and is today not in the inner loop on policy making.

Who, then, does the job of linking the imperatives of short-term economic policy management with those of long-term strategy? Who is able to identify the interface and visualise synergy between economic policy, foreign policy, internal security policy, and so on? Is there a need for coordinated thinking on economic policy from a national security perspective? If so, which of the many expert groups is responsible for this?

When US President-elect George Bush and his National Security Advisor Condoleeza Rice take charge, one of the policy papers they will be considering is a proposal from the Brookings Institution to increase the profile of strategic economic policy management in the US National Security Council NSC. Titled A New NSC for a New Administration8217;, the Brookings Policy Brief No. 68, November 2000, by Ivo H. Daalder and I.M. Destler, calls for the elevation of strategic thinking on economic policy in the NSC.

The paper proposes a major change to past practice, namely, quot;adding a second deputy with powers equal to those of the first. This second person, an economic specialist, would be dual-hatted: reporting both to the national security advisor NSA and the head of the National Economic Council NECquot;.

In India, the equivalent institution to the NEC could be the Planning Commission, or the office of the Chief Economic Advisor, which can easily be delinked from the finance ministry and made part of the PMO. Whether this is done or not would depend entirely on the conception the prime minister has of the role of the finance ministry. Is it the equivalent of the US Treasury, managing the fisc and keeping the markets happy, or is it an economic policy making organisation with policy influence over other economic ministries as well as the external affairs ministry?

In the US case, with its presidential form of government, the Brookings proposal sees the new quot;deputy for international economics and national securityquot; as a person who quot;would have overall responsibility for international economic affairs and serve as the government8217;s sherpa to the G-8 economic summits. This person would also oversee the NSC8217;s multilateral portfolio as well as the transnational and economic issues that flow through the regional directorates 8230;quot; His counterpart deputy would be dealing with non-proliferation, defence, transnational threats and other security issues.

The reason why India needs coordinated strategic8217; thinking on economic policy is no different from the reason why the US has thought this necessary. Economic policy and business interests have become central to national security and foreign policy interests of most major economies. The US administration has always recognised that quot;trade policy is an aspect of national securityquot;. It is a view of foreign trade which China has also pursued, using trade as an instrument of building relations with nations.

Economic growth and development are also recognised as the foundation on which both internal and external security and the well-being of a nation are built. Misplaced economic policies, shaped by sectional and vested interests and lobbies, can have a damaging impact on national well-being and security. Given the diverse dimensions to economic policy, major powers like the US and China, not to mention the European nations, have created the institutional structures to coordinate economic and strategic policy and link economic policy to larger national security goals.

It is this job a strategic management group in the PMO should be doing. It should be a link between the finance, commerce, industry, agriculture and other economic ministries, as well as the home, human resources development and external affairs ministry, alerting them to the national security dimension to economic policy. Hopefully this will enable the PM to then stop his ministers from hurting national interest by pandering to sectional and vested interests. A caveat: To be effective such a group must itself not become the handmaiden of vested interests.

The writer is editor, The Financial Express8217;The US administration has always recognised that quot;trade policy is an aspect of national securityquot;. It is a view of foreign trade which China has also pursued