Pay the Piper Never Mind the Tune

Pay the Piper Never Mind the Tune

Sailing the ship of state is, at all times, an expensive proposition. In India, for over fifty years now, ever since the last vestiges of Gandhian austerity faded away, we have been treated to the spectacle of excessive government spending, on itself, and the way it works. This ranges from the housing, security, entourages and junkets of our elected leaders, both at the central and state levels. It continues unabated in the spendthrift manner the bureaucracy, in turn, conducts itself. There is little or no accountability to the public. Most of this expenditure is off-budget and tucked under various heads. It dwarfs the sanctioned direct cost figures by many times.

It is therefore something of a wonder that this country continues to grow. There are much richer, more developed, albeit smaller countries, that make the business of government a simpler, more efficient, and less expensive affair. But India takes its cues, probably from the Mughals and the British of yore, neglecting, conveniently, to focus on the fact that their establishments and equipage were nowhere near as vast in absolute terms!

So, it stands to reason that putting yet another raft of large figures on the table in the nature of a recurring bill, tends, inevitably, to irk. That is why most of the bigger operating expenses are not displayed for public scrutiny, except in a theoretical sense, under charades such as the RTI.

But when an item of expenditure pokes the public in the eye, being in the public domain, supported ultimately by our taxes, we tend to react adversely. It is another matter that this sense of our proprietorship is largely belied by the government’s cavalier reliance on its sovereign borrowing and inflation inducing deficit financing. But be assured, we citizens are not required to give our permissions, even as we pay the bill with interest! The moot point, as always, is, are we getting anything like our money’s worth?

But, leaving the grand macro-economics, the ultimate liability and cost-benefit questions aside for a bit, it must be admitted that when it comes to the government servant’s salary hike, it is indeed long overdue. And it is hard to imagine any of the recipients being more than shrug-worthily happy. This, despite an average net jump of over 30 per cent. That is why, we, the public, must stay unsurprised when the 6th Pay Commission’s recommendations, endorsed on the eve of our 61st Independence Day, with an upward revision, and with retrospective effect from January 2006, are met with more sighs than cheers.

The numbers, given the size of our gargantuan bureaucracy, are neither negligible nor huge, compared, for example, to the farm loans waiver, or the cost of armaments. The total cost of implementation of the Pay Commission’s recommendations, to benefit 55 lakh Central government employees, is about Rs. 17,798 crore annually. This excludes the arrears, those retrospective benefits inevitable in a system that grinds both slowly and fine. The back pay will, in fact, whack the national exchequer with a single blow of Rs. 29,373 crore, and additional hikes beyond the suggestions of the Commission will cost another Rs. 11,000 crores annually.

And then there’s the pension entitlements of our many central government superannuated. All this comes on top of the existing central government wage bill of roughly Rs. 30,000 crore per annum. So, the total, under various heads, will look more like the Rs. 71,000 crore farm loan waiver after all. And coincidentally, it will make about the same difference to the state of affairs in government, as far as the public is concerned, as the loan waiver has made to the poor farmers.

And the foregoing does not take into account the Commission’s impact, if its recommendations are implemented, in the States. The States may be notoriously profligate, but will be under moral pressure nevertheless to give their babus as much as the centre does.

If one is not churlish, it should not be anyone’s case to grudge the government servant his pay hike. But having said that, in the public mind, the sheer size and multiplicity of our government is incomprehensible. It is this, and the fudging of our real deficit figures, that might see the ship of state run aground yet, as it did in the USSR.

There was a time, in the fifties, when business, industry, the private sector and services were all in their infancy, when it could be argued that it made sense to employ five to do one man’s job. It represented a measure of welfarism in a land of little opportunity and fitted in nicely with the Fabian Socialist cum Soviet derived statist thinking of the times. But later, particularly nearly two decades on from the open sesame of 1991, it is clearly an unwieldy government we have, bossy, unfriendly, ponderous, and, taking into account the natural ingenuity of the Indian people, in the way.

We have a robust democracy today and a free press/media, but one that is largely unable to deliver change. Most of our political energies likewise go into managing each other rather than contributing to the progress of the country. Perhaps the answer, Ronald Reagan and Margaret Thatcher fashion, lies in less intellectualism, less partisanship, and a determined effort to cut down “big government” that has proved inefficient all over the world.

We need no longer fear that the government is the sole repository of faith for the common man. All that was self-serving socialist propaganda after all, and may ultimately account for most of those sighs over cheers on the part of government employees.

At least we can be sure of one thing today--government may still be the biggest employer but not perhaps the preferred one anymore. We have a big fiscal deficit problem of course, much bigger than we officially admit, estimated by the World Bank at nearer the 10 per cent mark, when one adds in all the election year sops, the PSU losses and State Electricity Board bad debts.

In any case, it is much higher than the wildly optimistic 3 per cent the government cites. The government knows this, but it is banking on buoyant GDP growth rates to keep itself afloat. But shouldn’t the government, a much smaller one, content itself with responsiveness to the public and governing instead?

(1,050 words)

Gautam Mukherjee
September 10th, 2008

Also published by The Pioneer on 16th September, 2008 on the OP-ED Page as "Just pay the piper!" and online at www.dailypioneer.com