Economic Times has invited its readers to state what their dream for the state would be. My response was that I dream of a state with the babudom reduced to such an extent that half of Vidhan Soudha (and, of course, the entire Vikas Soudha) itself gets rented out.
Mr Benjamin Disraeli, a former British Prime Minister, had very correctly stated that "there can be economy where there is efficiency".
Even as the Karnataka government seems to have made up its mind on getting totally out of manufacturing activities, it is seen to be doing very little by way of reducing its own gargantuan size. As of today, the entire government work can be done far more efficiently and effectively by less than a tenth of the existing work force if it withdraws from areas it doesn't need to be in, and by going in for large-scale out-sourcing, retaining the services of a select few who can then be paid well.
In fact, the government would do well to target totally vacating the MS buildings, the Vikas Soudha, and even half the Vidhan Soudha itself, and in the process, generate revenue for itself by renting out these premises.
The employees rendered surplus can be given the Golden handshake or even a Platinum one. If they don’t accept it, daily attendance melas can be organised in four different corners of the city and salaries paid to them at the end of the month. As long as they are kept away from office, their potential for harm reduces considerably, and the state will be the overall gainer even with having to pay for no work done at all. With the loaves of office no longer available, they will eventually tire out and quit.
Though such a step can be viewed as harsh, it should be realised that every non-productive government job is today coming in the way of creation of atleast ten times as many jobs in the private sector in newer and newer areas. As such, nobody need shed tears for the government babu any more.
The politicians should realise that privatisation, outsourcing, etc are no longer dirty words in the minds of the public. On the contrary, they have gained considerable acceptance since they are clearly seen to improve efficiency, and are in fact becoming very populist concepts.
The slogan for the states now may as well be ‘privatise, outsource and prosper’.
Muralidhar Rao
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Do we need an election and Government
government is the problem!
"Government is not a solution to our problem, government is the problem." In has been 27 years since former US President Ronald Reagan spoke these words during his first inaugural address. And in that time, large parts of the democratic world have undergone a great transformation in how citizens view government. So much so that in many countries, even left-leaning political parties today articulate a less state-led view of the world than in the past. And, despite a few hiccups, this streak appears set to continue for a while. In
India, on the other hand, 'less government' is not really about 'more freedom'; that equation doesn't have rational roots in Indian realities. Instead, the articulation here feeds off public despair at governments that haven't delivered even in critical and essential areas such as 'equality before law' and 'public goods'. The resulting angst has almost always led people to seek alternative ways of provisioning public goods and services, for everything except the legislature and the justice system itself.
The real shake-up will come when a political party - not necessarily a new one - decides it is opportune to question the very size and role of government, and make that challenge the core of its quest for power. Certainly, if the right conditions for a 'small government' party were to emerge, there will be someone to wear that mantle politically, a la-Reagan or Thatcher for our reality. Such a party might even do quite well at the hustings. The inability of the larger political parties to break with their traditional ways of gaining power and governing has left voids to be occupied. A small party with a focus on, say, urban government only, could easily claim a clear position for itself intent on limiting the size of government in specific ways for specific goals.
For the full text, click on: http://www.indiatogether.org/2008/aug/edt-lessgov.htm
Muralidhar Rao
re-sizing the state
There can and should be a debate about what the scope of the Indian state should be, but at a very minimum, most sensible people can agree that any state must be able to do at least four things: raise revenues, adjudicate disputes, uphold law and order, and provide public goods. Across these four crucial dimensions, the Indian state is woefully inadequate.
To read the full essay by Mr Milan Vaishnav in the Caravan magazine, click here.
This is apart from the government's key role as a facilitator, regulator, and where essential controller, of production of goods and provisioning of services, all of which are best left to the 'public', wrongly referred to as the 'private sector'.
Two highly readable articles
1) From ToI, by N V Krishna Kumar (full text accessible here)
If New Delhi has to get its house in order, it has to start downsizing government and move from social welfare to social development. - - - Trimming down expenditure has to start with the abolition of redundant ministries that are relics of a bygone era. Sell Air India, privatise airports and the civil aviation ministry can be eliminated. Free diesel, kerosene and LPG prices and the petroleum ministry can be shut down. Privatise coal operations and the coal ministry could be done away with. Divest stakes in all steel companies and the steel ministry would become unnecessary as would the mines ministry.
The power ministry has been the biggest hindrance to India becoming a preferred destination for manufacturing. Free power is given to vested interests while theft is rampant, costing genuine consumers and causing businesses to pay an extraordinary price to secure electricity. Together with the state electricity boards, the central government must exit the power sector and do away with the power ministry.
Despite being politically sensitive, price controls in agriculture commodities must be abo-lished followed by the killing of the agriculture ministry. Agri exports were worth more than $37 billion last year, with India becoming the largest rice exporter following the government`s decision to lift a four-year ban. Indian farmers cannot prosper under the stifling diktats of a capricious ministry.
Once ministries are abolished, a roadmap can be established to end politically unpalatable subsidies ”like for fertiliser and food” and subject them to economic fundamentals. The government must also move quickly to bring all of the poor under cash transfer schemes and scrap the 147 centrally sponsored social schemes that have not achieved desired outcomes over the years.
2) ToI editorial (full text accessible here)
Modi's mantra - "minimum government and maximum governance" - exactly the reverse of current political practice. - - - And while votaries of gargantuan bureaucracy and interventionist politics may scowl, Modi rightly suggests that government's business isn't to be in business. It's when government facilitates business that India will fully harness the ingredients it possesses for global success: youth power and rich natural resources.
of, by, and for employees
The Andhra Pradesh government spends 40 per cent of its revenue to pay salaries and wages to its staff. This does not include the outgo on pension and PF interest - - - The expenditure is way above the 35 per cent limit fixed by the 12th Finance Commission. A noteworthy finding is that the salary bill had doubled in just four years. The state has already appointed a new pay commission to keep the employees in good humour in this election year. Once its report is implemented, the salary bill will go up further.
Andhra Pradesh is not the only state where the government has virtually become “of the employees, by the employees and for the employees”, to paraphrase Abraham Lincoln’s famous definition of democracy. The situation in other states is not very different.
For the full text of the editorial in the New Indian Express, click here.
In addition is this kind of profligacy
Responsible Chief Ministers
Gujarat and West Bengal have raised the red flag on the setting up of the 7th Pay Commission, saying it would lead to unwanted financial stress which they cannot afford.
The two states, which are leading the charge in the coming Lok Sabha elections with their chief ministers as prime ministerial candidates, have told the Centre that the revision of salaries would increase the burden on states and this would be most inopportune in view of global economic slowdown and debt condition.
While Gujarat said the central pay panel's recommendations have encouraged "contract employment" which is not governed by government salary structures, Bengal said the pay panel must evolve a mechanism to provide financial assistance to states to meet costs of salary review - 100% assistance in Bengal's case.
The objection to the pay panel is hardly a populist move given that the Congress-led Centre decided to announce it ahead of Lok Sabha elections to woo the voters.
For the full report in the ToI, click here.
The two CMs who are opposing the setting up of yet another pay commission are the ones who are going to be around for some time to come, and have therefore appreciated the need for fiscal responsibility. The Congress, on the other hand, is desperate to clutch onto every straw available, damned be the economy.
Simultaneously, one hopes the need to reduce government size to its barest minimum is also beginning to dawn on the responsible CMs.
Responsible or Opposition Chief Ministers?
Murali,
Don't jump onto this band wagon so soon and start giving certificates. The opposition from Mamta and Modi is very consistent with their opposition to central govt's moves in last few years. They have opposed each and every move that had the central govt mooted, be it VAT, GST, Police Reforms, Centralized Security Apparatus and the list goes on. There is nothing rational in their opposition except that they oppose the central govt ruled by UPA.
Only today, the PM candidate is saying he is OK with FDI in retail. His party had disrupted in parliament opposing FDI and even Yeshwant Sinha had threatened when his party comes to power they will over turn the FDI decision. Few days back their party in Rajasthan had reversed the FDI decision. Now he is OK with GST.
http://www.hindustantimes.com/india-news/allaboutnarendramodi/modi-signals-shift-in-favour-of-big-retail-in-favour-of-nationwide-goods-and-services-tax/article1-1189098.aspx
Only reason they had opposed GST was This - http://www.business-standard.com/article/beyond-business/has-held-up-gst-113020200073_1.html
We are better off, leaving the political band wagons where they are.
The substantive point in your argument is the one we need to discuss. You are absolutely right, it is time we need to move to a regime wherein the salaries are commensurate with performance and the inflation index. I am not sure how much you have followed the previous pay commissions. Only thing they do is to club the DA with the Salary. Politics then sets a date for the old timers gets some more money. The lucky ones are new comers or who joins after the pay revision.
Less govts not necessarily a prescription for good governance either. The true less govts are the dictatorship or the monarchy. I am sure you are not asking for such majoritinism? The PM candidate you have referred is one such example in his state of Gujarat.
CMs and responsible governance
@ Syedbhai - Yes, NaMo and Mamtadi have both commited enough wrongs in the past, and they have earned the wrath of the people each of those times too. But, that doesn't mean they can't correct themselves ever. From all indications, both seem to be putting the past behind, and moving forward a lot more responsibly now. The expressed worry over the extra unproductive burden that will befall their respective exchequers, resulting out of the pay commission recommendations, is but one indication of that.
Perhaps, a caption like "CMs becoming more responsible" would have been more acceptable to you - fair enough.
My purpose in generating a debate over it was to see if the talk will reach the powers that be in the state, and they too begin to relook at their current profligate ways, pandering to vote banks.
Also, while less government may not the only prescriptiion for good governance, it definitely is a necessary prescription. And, as for majoritarianism, socialism, et al, see here what none other than M J Akbar is saying.
unsustainable non-performing liability
The Seventh Pay Commission has been asked to recommend the extent to which the salaries and benefits of more than 70 lakh Central Government employees and pensioners. - - - Going by the kind of ticking time bombs lobbed into the lap of the next finance minister, including a slowing economy, reduced revenue growth, soaring non-Plan expenditure, and a major — and permanent — diversion of central funds to states for implementation of most of the government’s welfare schemes, this might seem like small beer.
But nevertheless, given the scale and size of the potential outgo, there has been practically no noise over this. Which is quite astonishing, since the previous Pay Commission has so far cost the central government over Rs2 lakh crore, the Railways and additional Rs1 lakh crore and state governments, local governments and public sector undertakings probably more than this, thanks to me-too demands from their staff.
This is because, regardless of the colour of the political dispensation in power at the Centre, pay and perks of government employees — a significant vote bank by themselves — have been a taboo topic for political debate. If at all any noise is made, it is almost always in support of the demand for better pay and perks for government workers. It is no different this time around either.
- - - No political party has seriously taken up the issue of another key parameter, which anybody else who works for a living, including, ironically, politicians themselves, takes for granted — performance.
- - - The need for a ‘living wage’ — the guiding principle for the first Pay Commission — is long past. It is time government employees are asked the same tough question that all other working Joes get asked at appraisal time — what have you delivered?
For the full text of the column by R Srinivasan, in The Hindu BusinessLine, click here.
No wonder the babu's still are still the top catch in Indian marriage market (check this too). But, can the country afford this never ending spree?
way to go
With the Centre proposing to keep its control over the service tax component and fixing the threshold for GST filing at Rs. 20 lakh, the tax department employees of the states fear that reduced jurisdiction may mean reduction in jobs in states.
The association spokesperson D Gautam said, "Since 2013, without GST anywhere on the horizon, the Centre strengthened and restructured its tax cadre. At this rate, state tax employees may have no work and may lose jobs."
For the full text of the report in the NDTV news, click here.
If you ask me, this reduction in unproductive government work is going to be the biggest benefit for the country through this exercise. As such, more and more such exercises need to happen. For every unproductive worker retrenched (through golden, or even platinum hand-shake), there'll arise scope for employing ten times as many productive workers. Plainly, this is then the way to go.
Importance of "ease of doing business" index
Here 's the link to an excellent TED talk titled "A few ways to fix a government" by Ms Charity Wayua, a Kenyan cancer researcher, who used her skills to finding solutions for 'cancer' in the governmental systems in her country, and thereby improve the "ease of doing business" index substantially.
All of it as true for India, as for Kenya. The importance of creating the right climate for businesses to grow is not appreciated, either by the govt or even the people. We want govt to do everything for us - statism; but, the government just don't have the capacity, and can't build it either. And consequently, we stand at 130 in the overall ranking for ease of doing business, far below Kenya.
All of this in spite of the supposed emphasis placed by the Modi sarkar in this matter, but which appears more and more inclined towards statism now - check here.