Buch The Trend

Some merit-based lateral entry is good, period

Sebi’s first woman chief, Madhabi Puri Buch, signed out on Friday. Like all records, hers is a mixed bag. On the plus side, she brought stricter norms for stockbrokers, and curbed retail participation in high-risk derivatives. But she couldn’t, or didn’t, reduce mutual fund expense ratios. Also, the conflict-of-interest charges she faced in the last few months of her three-year term will mar her record. As a lateral hire – first private sector executive to helm Sebi – she should have cleared the air. Her long silence and reluctance to appear before Parliament’s public accounts committee now seem like own goals.

Sebi is back with a career bureaucrat, Tuhin Kanta Pandey. And after last August’s retreat on lateral entry, GoI may not have the stomach for pushing more direct appointments. Which is unfortunate because lateral entry has served India well for decades. Amul is among the world’s strongest food brands now, but who made it a juggernaut? Verghese Kurien, a lateral hire, long before the term was coined. Bimal Jalan, Jagdish Bhagwati, Raghuram Rajan and many others proved the wisdom of the policy. They had already made their mark outside govt, and brought fresh ideas and energy to the system.

GoI formally announced its lateral entry scheme in mid-2018, and hired 63 specialists over the next five years. Transparent hiring and background checks to spot conflicts of interest were going to be key to its success. However, it wasn’t the Buch case but politics that stalled lateral entry. It’s nobody’s case that career bureaucrats don’t make good leaders – look at Maruti chairman RC Bhargava. But equally, if private sector experts want to serve govt, doors shouldn’t be shut. There will always be cutting-edge areas like AI and clean energy where in-house talent may not suffice. GOI shouldn’t be wary of merit-based lateral entry.

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