News & Analysis

WHAT I TOLD THE FM

Avoid Wastage, Raise National Income PRADEEP S MEHTA   The UPA government wishes to achieve a growth rate of 7-8 per cent, but what is hardly spoken about is how national income can be increased. While experts prescribe various productivity-enhancing measures to achieve a high growth rate, hardly anyone talks about taking measures to curb wastages in the economy. A few issues: Competition law: If this new law is effectively implemented, it could contribute substantially to growth. A study in Australia has shown a gain of 5.5 per cent of GDP by effective implementation of competition measures. Non-merit subsidies: Subsidi-es on non-merit goods and services (such as in agriculture, irrigation, power, etc.) amounted to 10.7 per cent of GDP (2001-02) or Rs 20,600 crore. Poor delivery etc., are some issues that need to be tackled. Performance-based system: Given the job security provided to government servants through Article 311, output level in government departments is quite low. On the other hand, the 5th Pay Commission has raised the expenditure without the concomitant pruning. It is imperative to set productivity norms and a performance-based management system. Corruption and accountability: As per estimates of Transparency International (India), Rs 26,728 crore is wasted every year due to corruption, and that the government loses at least Rs 41,000 crore due to delay in over 300 projects, all above Rs 20 crore. Imagine the total cost of delays if all central and state government projects are examined. Road safety: Economic cost to India from road traffic crashes is estimated at 2-3 per cent of GDP. Attention needs to be paid to improving road design and visibility of road signs, strictly enforcing laws on drunken driving, etc. If these and other measur-es are implemented, the amo-unt saved by the economy would be roughly around Rs 2,00,000 crore and would lift the national income by 8.9 per cent in one shot. — Secretary-general, CUTS International, an economic policy research & advocacy NGO

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