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'Scared of Bad Decisions, Babus Putting them Off'

Published: 24th April 2016 05:54 AM  |   Last Updated: 24th April 2016 05:54 AM   |  A+A-

CHENNAI: Raising questions on the “downsides” of the rising power of “referee” institutions like courts, CAG and others, Chief Economic Adviser Arvind Subramanian on Saturday lamented that there seems to be a certain kind of paralysis in decision making as civil servants are scared of bad decisions leading to investigations.

Delivering the T Narasimhan Memorial Lecture here, he said while referee institutions like the courts, the CAG, CBI, CVC have become more assertive and powerful, there could be downsides to the development. “It is not my business to say if there has been over-reach or not, but I think that as all things there needs to be a balance,” he said.

From speaking about spectrum auctions and the problems in assessing what exactly a “fair price” is, he moved on to a hotter topic - bad loans and bad decisions, the “Mallya Problem” and the need to balance discretion and rules.

“One consequence is that the challenge we face in banking (because of this). There is no doubt a lot of these assets are no longer as valuable as we once thought they were,” he admitted adding, “.... but no public sector bank manager will write down one rupee of such a debt because he will feel that the referee institutions will try to go after him. Therefore, there is a kind of paralysis in decision making.”

Refraining from being judgmental on the way things had evolved in the last two decades, he said to overcome paralysis in decision making civil servants require an element of discretion.

“Even the Prevention of Corruption Act needs to be revised because bad decisions can result in investigations, even if made in good intentions. It is inherent to decision making that there will be some bad decisions, inherent to investments that there will be some bad investments. Because these things are about taking risk....... We have to keep these things in perspective. Any good system requires some balance between rules and discretion,” he said.

Subramanian said India has been very good at crisis management and short term episodic accountability, like in averting famines, unlike China. However, China has been able to provide its citizens with health, education and good law and order.

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