The Veto-Player Model for the IFA-System in Department of Telecommunications and Enterprises Controlled by the Ministry of Communications in India

Abstract

Ours is an enormously complex world. The dynamics of organizational Culture varies not only with time but also with the actors involved. Any model that attempts to explain this must generate hypotheses that are testable and falsifiable. The author has been a “Finance Manager” in the Department of Telecommunications for nearly two decades and subsequently in the Ministry owned Bharat Sanchar Nigam Ltd (BSNL) for more than a decade. Although any judgment related to the effectiveness of the finance function would be fraught with pitfalls, we venture to make the following assessment. Firstly, the government system created massive infrastructure both physical and intangible but delivered little in terms of output of telecom services. The real return on assets (ROA) was disappointingly low. Secondly, internal systems of control and management were designed to be effective but failed in its implementation because of the environment obtaining in the Government organizational culture. Both these observations are true for Department of Telecommunications (DoT) and BSNL even today. This is a pointer, among other factors, to the somewhat ineffective role of Financial Management systems in these organizations. The issues that arise now are: (1) what forces operate within the financial management system, in these organizations, that reduces its overall effectiveness? (2) Was the system designed for success but failed because of the actors involved in its implementation? This paper examines the system of Finance Advise as designed for the DoT during the early 1970’s and adopted in BSNL subsequently on its formation in 2000. This is so because historically the dominant actors involved in the two organizations are the same and the forces operating within the organizational culture remains unchanged. The first part of this article examines the Integrated Finance Advice System (IFA System) as designed in 1974 and the second part examines the actual implementation and working of the system along with the actors involved. We have found the veto-player model [Tsebelis (1995)], an eminently valid hypothesis to explain the process of the IFA system implementation. However, it must be stated that the model is adapted to an entirely different cultural environment not perhaps intended by its authors. It must therefore be stated that the substance of the model is used as an insight rather than as an adaptation.