Cost cutting with a difference

Sachchidanand Shukla

America and India, two of the world’s largest democracies, present a contrast in more ways than one. Yet, wasteful government expenditure is an ill common to both. Ways of dealing with it, of course, differ. President George Bush has come out with a 71-page ‘Management Agenda’ which aims to fix “long neglected problems” in the federal government by “flattening bureaucracy and boosting delivery of services.” Bush argues that since “Americans demand top quality service from the private sector” they should get the same from their government as well. Not so in India
Here, we have a radically different scenario. The “hard work and dedication” of members of the legislature has finally been recognised and handsomely rewarded too! So much so that their salary has been trebled even as their perks would now put a corporate moghul to shame. After all, some must be more equal than others even in an erstwhile socialist democracy such as ours! Under K P Singh Deo, a Joint Parliamentary Committee on salaries and allowances has recommended a three-fold increase in salary and offered them liberal perks ranging from subsidised accommodation, free train and air travel, three telephones and gas connections, besides other special allowances. These add up to almost Rs 70,000 a month. Further, an MP is entitled to a life-long pension. We have not yet taken into account the fact that each MP gets Rs 2 crore as development fund for his constituency. At a time when the government is trying to prune costs by pushing through voluntary retirement schemes for several PSUs and banks, and subsidies for the poor are being axed, the Singh Deo Committee’s largesse typifies the ‘pennywise, pound foolish’ policy.

The fisc is in a shambles. The combined gross fiscal deficit of the centre and states at 9.1 per cent of GDP, is higher than the budgeted figure of 8.8 per cent. Alarmingly, during the first quarter of 2001-02, the GFD was higher by 68.3 per cent (at Rs 42,198 crore) over the corresponding period last year. Revenue deficit nearly doubled to Rs 32,431 crore while primary deficit remained at almost the same level during the period.

Not surprisingly, revenue receipts were lower by 28.8 per cent at Rs 21,683 crore. Revenue realisation was a mere 9.3 per cent (14.9) per cent while gross tax collections have declined by 13.4 per cent as against 16.5 per cent. The divestment process is mired in controversy. In India, the art of overshooting expenditure estimates and falling well short of budgeted revenues has been perfected. By rewarding the MPs with largesse, the Singh Deo Committee has only compounded the fiscal mess. Not a bad contribution!