Policy Engagements and Blogs

CPR Perspectives: Interview with K.P. Krishnan (Part 2)

K. P. Krishnan

July 18, 2023


Today, we bring to you part two of the interview between Rohan Venkat and KP Krishnan, as part of CPR Perspectives — our flagship interview series commemorating the Centre for Policy Research’s 50th anniversary.

In the first part of the 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 this second part of the conversation, Krishnan spoke about how he worked to bring knowledge from the think tank and research world into the government, 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).

Different governments around the world have different relations with think tanks, and India has its own approach. Was it hard for you to push through the idea of collaborating with NIPFP?

Remember, the recommendation to do this came from the chief economic adviser to the Government of India, Dr Ashok Lahiri, who felt it is important for this collaboration to be with an operational arm of government, not with an advisory arm of government. He was wise enough to see that the value will lie not in an MoU with the chief economic advisor to Government of India, but with the unit head of a division, which is the Capital Markets Division, which operates capital controls, which operates the FEMA. A recommendation from him already carries weight.

I was, as it is, very inclined to reach out because we were figuring out already that we didn’t know this area. His recommendation, my willingness, and then my willingness to translate his recommendation into an operational government MoU [made it possible]. Once we agreed, it was a question of whether the minister will agree to this. Since the institution recommended was NIPFP – a Ministry of Finance institution – it made it easy. You are not dealing with a private institution where some of the sensitivities are not easy to handle. P Chidambaram, the then Finance Minister, looked at it once. He said, ‘I’m concerned with advice that comes to me. You guys need advice from XYZ. I have no problem. Follow process, do due diligence, put it in place.’ And in all of two weeks we actually put it in place.

You spoke earlier about the feedback loop within the IAS. Did you find that folks from other ministries looked at this model and found something of value that they could replicate?

This is an interesting question. On balance, I found that on some of these issues, because of 1991 and the liberalisation that followed and the fact that you had serious intellectuals like Dr Manmohan Singh, Dr Montek Singh Ahluwalia in leadership positions, the Department of Economic Affairs was more open than any other ministry that I have seen, even within the Ministry of Finance. It’s the department that deals with the World Bank and the IMF and the ADB so it has an international orientation in its DNA. Plus, its leadership over a long period of time had created a culture where this kind of exchange was not out of the ordinary. I don’t find a similar culture or approach in many other ministries. One would expect, for instance, similar lively vibrant relationships say in commerce, say in MEITY… Probably now they are happening. But in the years that we did, I’m talking about 2005, which is 18 years ago, I think we were almost the only exception and I didn’t see enough of this happening in other wings of government. Not at that time.

It’s changing today and not just at the central level. We do see it a bit more now at the state level.

It is changing both at the Center and the state – much more at the state, but I think a lot of the push is also coming from another factor. There is a serious personnel shortage in government. There are serious capacity questions. Work has exploded. There are ministries like MEITY which have to deal with e-governance, privacy concerns, big tech, data… These are huge, huge issues. [But] Ministry staffing positions even today are exactly what they were 15 years ago. So Secretary, IT will be summoned by the PM and asked questions on Meta, on WhatsApp, on regulatory policy. But remember, the machinery that he has today is exactly the machinery that his predecessor had 20 years ago. But he can’t go and tell the PM, ‘sorry, sir, I don’t have a joint secretary who knows this subject’ because the buck stops with you. So they’ve all begun to figure out creative solutions to the problem.

It may be in one sense generically the same as the problem that I faced in 2005. We didn’t know about open economy macroeconomics, so we had to turn to the outside world. Likewise, we don’t know big data, we don’t know data privacy… I’m guessing because I don’t sit inside the government now. Likewise, we may not know regional trade block-related issues. If you don’t know and you still have to find answers, you will turn somewhere. So you turn to external institutions. I think it is happening on a large scale now both in the Government of India and in state governments for broadly similar reasons. But in my case, I wouldn’t say I was motivated by a physical lack of personnel. I had physical personnel, but I didn’t have personnel who knew this subject, so perhaps today it’s a combination of lack of bodies and lack of people with the relevant, right kind of knowledge.

Some of that is material that you spoke about with Yamini Aiyar on a previous set of podcasts. Speaking of that difference in culture, you then moved on to other bits of the government. You moved to land resources. How did that shift play out for you?

So from DEA, I moved to the Department of Land Resources, [which is] a little tricky. The subject is largely with the states, so you had to be very creative in finding a useful role for the Government of India in a subject which is intensely local. And we did. With the help of an external foundation, we got into a program similar to the NIPFP-DEA program. This time, since our knowledge had to be much more regional, we got into a partnership with five institutions which were also local. So evaluation of some of our ongoing land record modernization programs, how to improve the land registration, etc etc.

Likewise, later, when I moved to the Ministry of Skill Development as a secretary in charge of that department, again with external funding support, we reached out to the group that works in Bangalore on the India Stack on how we can build a new regulator for skill development, which is a no-paper, pure IT technology-based regulator and we dipped into good old NIPFP for the legal design for the new skills regulator. With the approval of my ministers, we got into MoUs with them. They helped us and you will be happy to know that there is actually a National Council for Vocational Education and Training, a newly created regulator for skill development and vocational education designed with inputs from these external agencies, academic inputs, technology inputs. So one has been able to transport a bit of that knowledge into other domains.

How has your thinking evolved after your stint in government? You’ve been associated with CPR, with NCAER – what has been occupying your mind since leaving government? What are you working on?

The nature of public policy and regulation, which are the areas that I’m interested in, in an academic sense, are such that if you want to make a difference, you need to necessarily collaborate with the government and the authorities. There is clearly one way of influencing which is – you do research, you publish and people take note of it. And presumably some bit of it gets implemented. A second one is you’re also associated with activities in the government, as an external person. To give an example in the NCAER we got a wonderful opportunity. The Insolvency and Bankruptcy Board of India, which is one of the newest regulators in India created by the India Bankruptcy Code, when it was completing five years of its existence wanted an evaluation of the board as a regulator. It approached me and my team in the NCAER. We did the evaluation and the evaluation report accepted by the IBBI board is now in the public domain. It’s the first-ever example of an independent, non-government third party evaluation of a regulator. Public authorities in India do not subject themselves to these kinds of scrutiny. The fact that a regulator decided to do that, I think, spoke about both the integrity and competence and the domain abilities of the team. We’ve also done a series of events on investor protection on how each regulator could improve their own actions: Financial sector regulator, pension regulator, insurance regulator, securities market regulator, Reserve Bank of India in its various roles as a regulator… culminating in a long conversation with all the regulators.

Subsequently, after moving to CPR, we strengthened and launched the KYR series, (Know Your Regulator), in a big manner. The fact we owe a lot of lives to the work of regulators is not something we realise. For instance, practically every piece of packaged food that you eat is regulated by the FSSAI. Every piece of medicine that one pops is regulated and cleared by the drug regulator. Every financial product that you touch, the media that you deal with, your privacy – so much of our lives are in the hands of actions of regulators. The fact that we don’t understand this breed of public servants is what propelled us to do this conversation. We had a long series, 12 of them, looking at the Food Safety Standards Authority of India, the Electricity Regulatory Commission, Water Regulatory Commission, Real Estate regulatory authorities… This we did as a collaborative exercise with the forum of regulators and another couple of academic institutions, where we took them to the general public. All those conversations have also been put into an e-book and it’s a very good reference source material for students.

In terms of your audience, it seems your approach has been not just to speak back to government from the outside, but also to bring this knowledge to a wider audience.

I think that’s a good summary. Feedback to government. The equivalent of some kind of solicited and unsolicited advice to regulators. Parallelly, take regulators and policy to the public. Some bit of it is demystification, some bit of it is explanation and some bit of it is reform in terms of how they work. All of these.

And at the personal level, how have you found it different from your time being within government? Is it liberating in a way that you’re able to say or see things that you weren’t able to see before?

One got a ringside view of regulation, while inside government. That is, from the viewpoint of the regulator who looks at market failure and wants to intervene to correct the market failure. Post government, I also have a couple of corporate boards on which I sit, so I now get to see regulation from a completely different perspective, which is as a recipient to regulation, being a regulated entity. And it’s interesting, having seen market failure from inside government, I can now see state failure from inside a regulated entity. This is well captured in public economics, which is that you have market failures caused by a certain set of reasons, and therefore government needs to intervene. But government is also a set of individuals who come together – as public choice theory beautifully explains, given a bunch of constraints, given a bunch of motivations, this can also lead to another form of failure. Failure in the sense of not achieving the objective that was intended.

It’s interesting that I can get to see that, sitting where I am. I think I now have a good, complete picture of both market failure and consequential state intervention and state failure. Conversations, therefore are much more holistic now. Somebody could say it is motivated because now I am a regulated entity and therefore I may be seeing it from only the view of the regulated entity. I don’t believe that’s the case. I think I now have a more complete perspective and by training I don’t necessarily look at things only from the eyes of the private sector or market, I think I look at it from the eyes of both now.

I’ll just go on then to our final set of questions that we like to direct to all on the series: What misconceptions about government, regulators, and your work in general do you find yourself constantly having to correct whether they are coming from the media, scholars or even fellow civil servants?

There’s this general impression that government is impervious and not open to external suggestions. We’ve covered that area in depth. I think it is not very correct. Government consists of a lot of individuals like you and me, who are exactly like you and me – they sit in different positions, different organisations. They are also open and on an average that is subject to the same distribution of individuals, as in journalism, as in private sector, as in NGOs, as in think tanks. So there are lots and lots of government servants who are open, willing and ready to accept suggestions from the external world.

Two, very many of the more cynical friends of mine in the media and in the civil society very often keep thinking of government as evil. My own assessment is very often, half the problem will be incompetence, lack of knowledge, not necessarily evil. So if there were to be a piece of advice, it is much more about building competence. So, for instance, the kind of things that are now being done like the capacity building commission, which focuses on continuously working on the various parts of the civil service from the lowest to the highest to improve their skill sets to update them on modern methodology etcetera, is a very good idea. So the second point is, can we focus a lot more on competence and a lot of the problems that we see in terms of bad delivery by government?

What advice would you have for younger scholars and folks looking to work with, or get their material to government?

Opportunities in government have now increased hugely both in terms of structured positions. You know there is, for instance, direct recruitment of directors and joint secretaries in the government through a formal advertisement through the Union Public Service Commission. It’s a small number, but it’s still a significant move forward.
Plus, there are large numbers who are being inducted as mid-career consultants, professionals who are part of project monitoring units and things like that. So the opportunities now are far more than before. I would strongly urge my younger colleagues in think tanks that this is an area they should look at. The bulk of them are also not looking for a lifetime of employment in government. They’re quite happy to do a stint in government, move back to academia, or move back to research, so that flexibility is now in-built in some of these positions.
Three, it is also, I think, a very good experience in as much as it brings you close to the reality. Sitting outside, I may feel it is such an easy job of reforming any one program. If only I were in charge, I would have changed India’s rural, water and sanitation campaign…Once you are inside the setup you can then see all the constraints that hold us back. It’s not as if people inside are lacking in knowledge or ability… The fact that the constraints are fully appreciated only when you are inside makes your experience in the government that much more valuable for your own research. So my quick advice is look at these opportunities, take them seriously and do wet your feet, get into the deep end of the pool, understand how public policy actually works, and then be in a better position both to do public policy and comment on public policy.

Would you recommend any three works that have influenced you?

I assume we are in the context of what we are discussing. There are many books that have influenced me, but in the context of what we are discussing today, I think this book, In Service of the Republic: The Art and Science of Public Policy, by Dr Vijay Kelkar and Dr Ajay Shah is an excellent lucid, very direct, extremely well written book on public policy and now covers regulation. It’s also by a set of people with whom I interact regularly. So they’ve influenced me intellectually and their book has influenced me quite a bit.
Second, some of Vinay Sitapati’s works are styled as biographies of individuals, but they capture the sense of not only the time, but also the events, the activities of those times. So it’s something which has very significantly improved my understanding of the reform process over the last 15-20 years in India.
The third book which I am re-reading for my current work on health regulation, is this book called The Truth Pill by Dinesh Thakur and Prashant Reddy on pharma regulation in India. It’s a great book in terms of enhancing my understanding of how regulation in the pharma sector works and it’s something I’m deeply sort of immersed in, as a matter of study now.