Last month, the Cabinet Committee on Economic Affairs authorised the import of 1.5 million tonnes of pulses in order to reduce prices in the domestic market by increasing supplies at reasonable prices.
I often wonder whether our decision-making processes are geared for achieving the desired ends. Let me start with a personal experience from several decades back, when I was working in State Bank of India.
There was a drought in Maharashtra and the prices of foodgrains were shooting up. The late Vasantrao Naik, the then chief minister, was a farmer from Vidarbha, with abundant, earthy commonsense. He called a meeting of people in the government and other agencies, including banks, to discuss the problem and how each one could help.
A learned, 30-page background paper had been circulated to the participants. While opening the meeting, Naik's first question, asked in his Vidarbha-accented Marathi, to the worthy bureaucrats who had prepared the background paper, was "What is the price of...wheat (a particular variety) today morning in dane ali (Mumbai's wholesale grain market)?" No one had the slightest idea.
Secretaries rushed to the telephone to get the information, but nobody had the telephone numbers of the merchants, and pink papers giving market data were non-existent. I do not recall what happened later, but the incident well illustrates the divorce of lengthy bureaucratic processes from the reality on the ground.
Are the decision-making processes today much different? Given the umpteen channels through which data has to percolate before it reaches even the secretary, one has serious reservations about whether the processes are geared for timely actions in responding to changes in the market place.
In this particular case, the minister, Sharad Pawar, is a person of as much earthy commonsense as Vasantrao Naik, and probably does not require notes from his secretaries to know the reality on the ground.
But, in general, the point made remains valid, not only in terms of the decision making process itself, but its subsequent implementation, typically by some public sector agency. As far as wheat is concerned, it now seems that two different PSUs are going to handle it: STC and Food Corporation of India.
The former is to import wheat and the latter is separately buying a call option on wheat to be imported. (Apparently, only two parties made offers; others are scared of the risk of dealing with FCI's tenders.
The response to STC's tender is also limited as it is yet to settle old demurrage claims of suppliers.) Surely, purchasing wheat on world markets is a specialist commodity trader's job? Not a committee of amateurs? If we do not have the expertise, why not get a Chinese or Russian expert as adviser - both countries are large importers of foodgrains and are savvy purchasers on world markets, who cleverly avoid paying "impact" costs.
Again, why shut out the world's biggest producer and market, the US? Is the dispute about the certification of compliance with our phytosanitary rules really substantive or is it yet another bureaucratic hurdle?
Once the world market comes to know that India is buying - and the decision-making processes are such that this hardly remains a secret - commodity prices shoot up, and we end up paying a high price. Recently, for example, when we cut the import duty on edible oils, prices in Malaysia and Indonesia, the main supplier countries, shot up.
Surely, the way we go about these things does not seem to be in our interest? While one appreciates that the state, in a democratic country, cannot be a silent spectator when prices of essential commodities shoot up, surely there are more efficient ways of taking and implementing the decision on imports?
When the amateur civil servant has to decide on issues outside his competence, his natural recourse is to focus on procedures, not substance; to bring in as many different people in the decision-making process as possible, to dilute the responsibility; to delay decisions.
One cost a bureaucracy never appreciates is the opportunity cost of delays: firstly, such costs are not borne by the delayer himself (on the contrary, he often faces questions for quick decisions, rarely for delayed ones); secondly, time, and of course India, are eternal - what do a few weeks, or months matter?
The present processes and procedures for taking and implementing decisions on commodity imports - and exports - do not seem to be nimble enough to make optimum decisions in global markets.
These require quick responses; a willingness to take decisions based on professional judgement and quickly in full consciousness of the opportunity costs and gains - hardly the characteristics of a bureaucratic system wedded to purity of procedures, and long decision chains.
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