Policy Engagements and Blogs

CPR Perspectives: Interview with K.P. Krishnan (Part 1)

K. P. Krishnan

July 4, 2023

This month on CPR Perspectives — our flagship interview series commemorating the Centre for Policy Research’s 50th anniversary — we bring you a conversation with KP Krishnan, an Honorary Research Professor at CPR.

Krishnan spent three and a half decades in the IAS, retiring in 2019 as Secretary, Ministry of Skill Development and Entrepreneurship. Over his years in the civil services, he served at positions in the government of Karnataka and the Union Government, as well as a stint at the World Bank, giving him a unique vantage point to observe the changes taking place in Indian economic and development policy following the 1991 liberalization.

He has previously held the BoK Visiting Professorship in Regulation in the University of Pennsylvania Law School and served as the IEPF Chair Professor at the National Council of Applied Economic Research, in addition to stints as Visiting Professor of Economics, Public Policy and Regulation at the LBSNAA Mussorie, ISB Hyderabad and Mohali, Ashoka University and IIM Bangalore.

In the first part of our conversation, Rohan Venkat spoke to Krishnan about choosing a career in the civil services, how policy feedback operated within the IAS especially as the economy opened up and the question of being research-minded vs operational within the Indian bureaucracy.

In the second part of the conversation, which you will receive later this month, we spoke about how external research was integrated into government systems, Krishnan’s work at CPR looking at how well we understand Indian regulators and what advice he has for young scholars.

If you prefer audio, this conversation is also available as a podcast here.

And if you missed our previous interviews, read our conversations with Avani Kapur (Part 1 & 2, Partha Mukhopadhyay (Part 1 & 2) and with Navroz Dubash (Part 1 & 2).

(This transcript has been edited for length and clarity).

Can we get a sense of your personal history with the policy world as you chose to go into the civil services. What was your sense of both what government work would look like and also whether you had an idea of what it meant to work in policy at the time?

I joined the civil service literally as my first job. My background was an undergrad degree in economics, followed by a law degree in the Delhi of the late 70s, early 80s. We were in an area called Bhartiya Nagar, very close to Lodi Estate. My class was a bunch of children of government servants, judges, senior lawyers — so policy was part of one’s DNA.

As a student, one got thrown into conversations on policy because you had a cohort which was in some way or the other involved in policy. In the civil services, typically the first 8 to 10 years of your work are field postings where you don’t do policy. You do an enormous amount of law enforcement, revenue collection, and developmental work.

My first posting in the Government of India was in 1991. India was truly revolutionising public economic policy around that time. I was not on the economic side of the government. I was with the Minister of State for Personnel, Margaret Alva, as her private secretary. But ministers attend Council of Ministers meetings, so the private secretary ends up assisting the minister in everything. You help her run the ministry, craft speeches, and help when she attends meetings of the Council of Ministers. As it turns out, a series of what may look like accidents take you to positions where you get exposed to some things, and if you have an innate interest in that subject, you end up developing a little more interest and you get exposed and one reinforces the other.

I understand that you’d be looking at and thinking about policy in preparation for the UPSC exam. But then, in the 10 years that you mentioned doing more on-ground work in government, before you get into policymaking, are you interfacing with people from civil society or the policy world? Or is it purely internal?

Even while administering laws and implementing laws as a sub divisional officer, you come across situations where if you are somewhat inclined towards policy, that side of your brain gets activated.

I’ll give you an example. In the mid 80s, almost all state legislatures had passed legislation styled variously — in Karnataka it was called the Prohibition of Transfer of Certain Lands Act. This was related to earlier land grants that had been made to Scheduled Castes and Scheduled Tribe families that were landless. The thinking of the government was that landlessness is the primary reason for poverty and making land grants will lift families permanently above poverty and will sustain incomes. The way this actually worked in practice — excess government land is what is allocated to them, which will typically be poor quality, rocky land, far away from the village, not close to a source of irrigation. Even for a capable farmer, it’s not a piece of land that’s easy to work on. And if you are not a farmer already, it’s going to be very difficult to make that piece of land work for you.

We used to have endless cases where we were restoring land back to those farmers, because this law said land grants made to SCs and STs cannot be transferred by them to anybody. And any transfer so made would be a nullity from day one. Sub-divisional officers had the duty to cancel the transfer, restore the land to the original allottee and put him or her in possession. And one would watch this, you know, with a little bit of horror because this was a voluntary transaction. And it was backed by consideration. So the guy who bought it very often would also not be a very rich guy, who spent a fair amount of money buying that piece of land. And once I passed the order as a sub-divisional officer restoring land I noticed once or twice right outside my office. The two parties would get together, exchange further amounts of money, and the land would actually go back to the guy who was purchasing.

So I wondered, what is it that we are doing? We are doing what looks like very progressive social legislation. And if you actually look at ground reality, none of the intentions, objectives of the government was turning into realisable outcomes. So even as an implementing officer, you saw a lot of situations where you realised policy and legislations were not achieving what was intended of them. There are many such examples — we were doing rural housing, we were doing drought relief. And it was very evident that a lot of what secretariats and legislatures thought of were not working in the manner that they were intended to work.

It’s hard for kids of today, or even my generation to imagine a time before you could just immediately Google whether someone had looked into this law and was writing about it. Was there any way for you to examine this policy from a larger lens?

Interestingly, sub-divisional officers would periodically go to the Collector’s office for meetings and occasionally to the Divisional Commissioner’s Office for a meeting where we would exchange notes. Sometimes collectors would respond saying, ‘OK, you guys have said what you need to say. Government policy is government policy, please go and implement, no further debate.’ But there were collectors who would say, ‘yeah, you’re making sense. Please summarise this, please prepare a note’. So it would get raised.

Not that you got a change of policy immediately. But there was a very good, serious feedback loop and I have seen changes come about. Even in the absence of the Internet, even in the absence of quicker modes of communication, there was deliberation and there would be serious ‘sunwai’. If somebody had a point regardless, the IAS gave you a platform because you are a peer group. You may be junior, but your collector is also from the IAS, the revenue secretary is also from the IAS, and the Chief Secretary is also from the IAS. There are various ways in which we managed a good level of communication.

As we move into the 1990s, India was opening its economy. Tell us a little bit about how that played out for you.

That stint, primarily my responsibility was in the Ministry of Personnel and Training. That didn’t have a direct economic policy sort of role, but it was a fascinating perch because as private secretary to the Minister, you get a bird’s eye view and normally in the eighth year of service, you don’t get this great opportunity. So one watched for instance the Harshad Mehta scam playing out in the financial markets, and the personnel consequences of that — the banks that were involved in the scam, the change of management, change of boards. How did the government react in terms of putting in place correctives? I saw it primarily from the personnel side.

But my other great window to policy making during that period was something called a starred question in Parliament. A starred question is a question where the person asking questions in the House can ask supplementaries, because the answer is given orally by the Minister. It’s not an answer which is written and put down on the table at the house. Flowing from the answers, further questions that are related can be asked.

Narasimha Rao, as Prime Minister of India, would take a briefing because he was Cabinet minister for about 6 or 7 portfolios, one of which was personnel. Those briefings would typically be an hour before the question hour, in his Parliament office and those days we were allowed as young junior private secretaries we would be hanging around behind our ministers when the briefing was going on. It was fascinating to see, for instance, Mr. Narasimha Rao’s minister in charge of industry.

So starred question number 2 would be about whether the licensing system for cement industry worked satisfactorily. If so, what were the number of licenses that were received? Are there concerns relating to monopoly or concentration of power and so on? These would be the questions. The Industry Secretary would give some answers. And Industry Minister of State, Madam Krishna Shahi would explain to the PM how she would answer in case there were supplementary questions. Mr. Narasimha Rao at the end of that would ask one short question here, one short question there, the significance of which at that point in time would not be relevant to you. Four weeks later, you would suddenly read in the newspapers about a new licensing system or abolition of the licensing system for cement or some such thing and if you sat back and wondered, a lot of puzzles would fall in place. Mr Narasimha Rao would have heard in that meeting a set of observations on what the Parliament is saying on cement. And the curious man that he was, apparently, that would soon be followed up by actual meetings with industrialists, with economists, and users of cement construction associations. It would be fed in and suddenly, you know, meetings would happen and changes would occur.

I didn’t realise it initially. I figured out this is an excellent mechanism that was being used by Mr. Narasimha Rao — that one hour of give questions would get him a complete sense of what is happening in a particular sector, but more interesting was he would also size up people in their responses to the supplementaries in those 15 minutes. And we saw secretaries and additional secretaries who were fumbling, who didn’t know their subjects. There was no immediate reaction. That was Narasimha Rao sahab’s style. Six weeks later or eight weeks later, you would suddenly see there is a new additional secretary in charge of foreign direct investment in DIPP, and suddenly [you realise] four weeks ago in that question, this gentleman couldn’t answer half of the supplementaries and Mr. Narasimha Rao would go back, get another round of feedback, verified, because he was a deliberate, slow man. So it was a fascinating window into how governments at the highest levels worked. These were my early insights and I am grateful for them.

You mentioned a bit earlier about internal feedback of the IAS and that being a super deliberative space. But at what point, then, in your career do you see more interactions with external experts?

Immediately after the Department of Personnel stint, from 1994 to 1997, I had the good fortune to serve as advisor to Dr Bimal Jalan, who was our executive director at the World Bank. That was my first real exposure to international organisations and an organisation which prided itself as a knowledge bank. The International Bank for Reconstruction and Development, which is the formal name for the World Bank, its argument was — we certainly bring money to the table, but that’s not the only thing we bring. So if we are lending money, let’s say, for electricity reform or electricity distribution or for a project on women and child development or skill development, in addition to money, we bring you global best practices in similar country situations. What worked, what did not work? In addition to giving you cheaper money, what we bring to the table is knowledge, which is as important as capital resources for development.

And one saw it in action. India has been a great experimenter. Every possible approach to rural development has been tried out in India. If you look at post Independence India, you name the approach to alleviation of poverty, we would have tried it in some block, some district, some state or the other. We were, as it is, a crucible for experiments, and the bank was an enormously good documenter of practices and great cohesive concise compilation of actionable knowledge.

I returned from the World Bank back to Karnataka and decided that this is something I need to do seriously because the next round in government will involve a lot more knowledge. So after a year in the government of Karnataka and the Department of Finance, I wrote the CAT because I wanted to be in Bangalore. I went and joined IIM Bangalore initially for an MBA, because at that time they only had an MBA, they didn’t have Public policy. And completing the coursework I got into the PhD program in financial economic policy, essentially on funding of infrastructure through the securities market. I was lucky enough to be located in a city like Bangalore and ended up doing a PhD and got to apply [this knowledge] because everybody and his uncle, if you remember in the early part of the century, was trying to do public private partnerships in infrastructure. Now governments didn’t have knowledge on how to do this, so we had to dip into talent outside of government. In this case, it was a conventional, straightforward external consulting firm, consisting of serious financial experts, road making experts, building experts, municipal solid waste management experts. And we were among the first states to create a body to catalyse the movement of private sector money into infrastructure in Karnataka. So that’s sort of the beginning of the second journey on applying knowledge and the experience to public policy in government.

I was curious, both in interfacing with the bank and then going out to do this MBA and coming back, how receptive were others in the IAS to external interventions like a consulting firm, the World Bank, or even someone going out and doing an MBA?

By and large, if you don’t wear it on your sleeve and throw it around the system accepts it. One good thing about the IAS, in particular of all the civil services, is that everybody has some strength or the other. If my strength is knowledge-based, evidence-based public policy analytics, somebody else’s strength is terrific execution. A third person’s strength is an enormous nose for handling – and it’s not something I may want to do — politicians and politics. So there are a variety of requirements and therefore a variety of talents in the IAS. So by and large, there is reasonable tolerance. Not only was there no pushback, there was acceptance. Mr. Siddaramaiah was the finance minister in Karnataka when we brought this policy for PPP in infrastructure and created a new institution for project development and infrastructure. He was very supportive. The rest of the government was very supportive. The worst that could be said was that there were some who were indifferent, but no hostility.

Likewise, [after that I] ran a public sector entity created for the purposes of development of infrastructure in the urban space. If there had been a dream PhD followed by a career in exactly the subject on which you did the PhD, it would be this. It was possible, because the chief secretary who recalled me from IIM, in a very interesting way reflected what you said just now. She called me over one day and I met her. Her husband had given me the study leave to pursue PhD, so she said look, ‘Bipul is an intellectual. He believes in these kinds of pursuits. I am a practical Malayali. I believe we are here as civil servants to deliver on outcomes. We are not here to generate theories, so I don’t think you should be wasting your time doing a PhD on urban infrastructure development. I think you should be doing urban infrastructure development. So I’m giving you 15 days notice. At the end of 15 days, I promise you that you will get to work in this sector. Pack up your bags, come here and start delivering on all of your serious research and PhD.’

She made me secretary in charge of municipal infrastructure. And subsequently made me MD of the Karnataka Urban Infrastructure Development and Finance Corporation. So, quote-unquote, you may call her anti-intellectual, but her point was that all of your intellect building, unlike an academic, in the case of an IAS officer, is for delivery of outcomes. So please come here, work your backside off, create the urban infrastructure and don’t lecture about urban infrastructure, which is what I did from 2002 to 2005. I was in that sector doing stuff.

And would you say there was a stereotype within the government for those on the academic side, or the think tank side, for those who do a lot of research but don’t necessarily understand the implementation or the political economy side of things?

To some extent, this is a serious tension in the government. A lot of us are considered bookish by politicians, saying that you guys are good at cracking exams but life in Kakinada or in Srikakulam is about handling stuff in real life. This is a grievance that many politicians have. I would not say it’s entirely misplaced because, at least the initial entry of a lot of us is primarily because of our ability to crack an exam. The personality test that is done by the UPSC is not a serious personality test as much as an interview and notwithstanding all their attempts that also continues to be primarily cerebral and knowledge based. My academic friend Devesh Kapur has written about this: If you are looking for a good forester who would become Principal Chief Conservator of Wildlife or Deputy Conservator of Wildlife, he or she temperamentally needs to be an outdoor person. There is a certain attitude to nature, outdoor life and to innovations, experiments, openness that you need in terms of being a personality rather than just being a great MSc Zoology. Now our system is very good at identifying the great MSc in zoology. But is he or she capable of running around in Kaziranga or in a pinch handling difficult issues of man-animal conflict on the border and deal with a live problem? I think there are serious questions. So the way the civil service recruitment is done, I think you’ve actually hinted at a very serious tension.

Invariably what happens is a lot of us also evolve in the service and the service provides enormous opportunities to grow. The government is a great teacher and typically our bosses are tolerant. They allow us to commit mistakes because there are correctives that are available in the system, so we all evolve in the system and grow. So if I was a bookish guy in the first two years, it’s drilled into me that I need to deliver rations on the ground, not talk about the economics of logistics. Rice has to be delivered on Monday morning. Figure out how. The ‘can do it’ attitude actually becomes a very important strength of the IAS.

And maybe this is jumping ahead a bit, but I wonder if those two strands then come together as you move forward in your career where you invite more external experts to interface with the government. So whether this is with NIPFP or NCAER, I’m curious whether those two strands come together in a way that allows you to better integrate the advice that’s coming from the more academic spaces.

Oh yes, very much. The stint that I did in Delhi in Government of India around 2005 was a post called Joint Secretary, Capital Markets. Now if you remember, these were the serious boom years. The world was growing. Enormous foreign capital was flowing into India. India had started opening up in 1991, but we repealed something called the FERA — Foreign Exchange Regulation Act — only in the late 90s and introduced a new act called FEMA (Foriegn Exchange Management Act), which was much more open. So serious flow of foreign capital into India was a relatively new phenomenon and there is a whole strand of macroeconomics, which is open economy macroeconomics, which is very different from closed economy macroeconomics.

The truth is we guys didn’t know anything about open economy macroeconomics other than what the textbooks told us because we had never been an open economy macro economy. Remember, when dollars come into India through the Reserve Bank of India, it translates into rupees in your and my hands. It seriously fuels inflation. And it is not inflation caused by internal factors, it’s inflation caused by money flowing in from outside. But that money is flowing into productive sectors as foreign direct investment or it’s flowing in as foreign institutional investment and actually adding liquidity to the markets. It’s doing good things, but in parallel it’s also creating a new problem which you were not familiar with earlier. We were struggling with this.

And there was an Ashok Lahiri committee, which went into this question in 2005 and gave a report on how India should deal with these new sets of problems. And one of the recommendations of the committee was: Honestly, we guys don’t know this. We need to reach out to experts in academia and practitioners who know this.

Quickly – and this was a high priority, but then FM wanted it, then PM wanted it – we entered into an MoU with the National Institute of Public Finance and Policy. And I must say, though it may sound a little self congratulatory, that it was a path breaking MoU. For relatively very little money, we got access to some first rate brains. And it wasn’t your usual KPMG type consulting assignment. There were a bunch of serious economists, finance policy professionals sitting in NIPFP who would engage with us continually.

If we have a current problem, we pose the problem to them. They give suggestions on how you can handle it. These are the changes in policy. It may require a change in regulation or legislation. Parallelly, they would also build up their knowledge base and out of this engagement would come better policies for the government and good quality academic work for them. Because they are academics first and foremost, interested in research, interested in publications, and there was a lot of global interest in how a newly emerging open market economy like India deals with problems that the West faced 70 years ago, 100 years ago. There was a lot of academic interest, so this was a very interesting, mutually beneficial collaboration. This program ran from 2005 till 2015-16. I left my desk in 2010, but it completely outlasted me.

In 2016, we got an amendment in the RBI Act, converting Reserve Bank of India into an inflation targeting central bank. This specific idea was the direct result of this engagement. Lots of changes that occurred in Indian macro, in Indian finance was were actually the result of this fantastic collaboration, which at its peak cost a crore per annum. It was hugely beneficial mutually and worked because there was a great deal of trust on both sides, because we were handing over current live government data to them and they were handing back to us their thinking, which they could have gone to the market and given advice and made much more money. They didn’t do it, we didn’t hold back. So this was a great collaboration.

One example of a collaboration of the kind that you’re talking about: Policy thinkers in think tanks, academic institutions working closely with the government, not merely as advisors but as actual doers.

This is part 1 of 2 for our CPR Perspectives conversation with K.P.Krishnan. We’ll be back in 2 weeks with part 2.