As part of the institutional changes needed to combat terrorism, our government has announced the setting up of a new federal investigating agency. This is fundamentally a good move. Criminals and terrorists do not respect state borders. Veerappan was able to operate for so long because he moved back and forth between states cleverly taking advantage of the lack of coordination between state bureaucracies. State governments have under-invested in police forces. Expenditure for the police has been classified by our mandarins as a "non-plan" expense. Whenever there are fiscal shortfalls, as is always the case for every state, police budgets get slashed. We have far fewer police personnel as a proportion of our population than we did 60 years ago and our numbers are proportionately far lower than most other countries. Our police is underpaid (exposing them to the temptations of corruption) and under-equipped. We have no data bases worth talking about. If you commit a crime in one neighbourhood and move to the next one, you can easily disappear. The police stations do not communicate in real time and there is no integrated data base. We now know (tragically!) how poorly armed and protected our police force is. But that is only the tip of the iceberg. Our police procedures are trapped in 19th-century colonial straitjackets. Criminals and terrorists operate in the 21st-century world with aplomb. An efficient, modern, well-funded federal agency is certainly worthwhile.

However, we run the risk of adding one more agency to the laundry list of the CBI, the IB and the RAW, with endless turf battles and bureaucratic wrangling. We also run the risk of state police forces not working in coordination with the federal agency, sowing the seeds of gridlock. Many state governments are apprehensive of a new agency. Given the alleged misuse of agencies like the CBI and the Enforcement Directorate to target political opponents, such fears are not misplaced. It is therefore of the greatest importance that we get the eco-system around the new agency right. Otherwise down the road having wasted crores of rupees we may end up worse off than where we are today.

One of the noteworthy features of free India is that agencies which have been granted constitutional autonomy have performed relatively well. Our independent judiciary, despite its ills, has retained credibility across sections of society as a defender of our liberties. The Comptroller and Auditor General (an official with a six-year term and autonomy guaranteed by the Constitution) started off well. Our first CAG, the redoubtable Narahari Rao, took on the arrogant Krishna Menon despite the latter being the then PM's favourite. While in recent times the CAG's office has not lived up to its promise, the Election Commission has gone from strength to strength emerging as a credible independent institution of high integrity and competence. The state governments despite misgivings abide by the commission's rulings. The voters trust this institution. The technology of our voting machines is world class and rugged (it has to be in order to function in a country with a pathetic infrastructure). The EC's use of technology stands in stark contrast to our police forces.

If our government wishes to ensure that the new federal agency works efficiently and does not get destroyed by turf battles, the best solution is to make it an institution with constitutionally guaranteed autonomy. The director of this agency (and perhaps a few deputies) should be given fixed six or seven year terms and not transferred every year based on short-term whimsical considerations. This will ensure stability in management, which is a prerequisite for building a competent organisation. Fixed terms are better than frequent changes or very long terms. Edgar Hoover, the FBI director in the US who had a virtually endless term, abused his powers and brought disrepute to the government itself. We need to avoid that trap. All political parties have a stake in an autonomous institution if for no other reason than to ensure that they are not victimised when in the opposition. They should therefore be willing to support a constitutional amendment in this regard. If our political parties remain short-sighted (as is most likely) a second order optimality can be achieved by at least making the agency autonomous by statute. In recent times, we have seen that the SEBI and the RBI, with their statutory autonomy, have in fact been citadels of both competence and public credibility.

Setting up a federal agency is at best a first step. Whichever way we look at it, improving the police infrastructure in the states is a must. Given the tricky political battles involved, the best solution is to imitate the Jawaharlal Nehru National Urban Renewal Mission (JNNURM). Urban reform and development is slowly getting attention from the states simply because that's the only way they can access JNNURM funds. Rather than mandate changes, the federal agency should generously fund those states that reform their police systems and upgrade their technology. Such funding should definitely be considered "plan" expenditure and should not be tied to the states raising incremental resources (which they never will). This will have the added advantage of the emergence of an eco-system where the state police will automatically cooperate with the federal agency rather than fight it.

Lastly, we need to use the opportunity created by the present crisis to improve the morale of our IPS officers. They have legitimate grievances that they do not have promotion prospects similar to their IAS counterparts. It is said that even the most unworthy Applebys in the IAS get to the rank of secretary by retirement date, ensuring good compensation and a good pension. The IPS concerns are not that different from those of the officers of the armed forces. For a very small real cost to the fisc (and indeed trivial in comparison to the national savings that will result from reduced terrorist activity) these issues can be addressed. For once let's act generously with our fellow citizens in uniform and not take recourse to setting up one more committee.