Skip to main content

India seeks GDP growth by increasing govt cost, but staff isn't available for health, education, public services

By Mohan Guruswamy*
The truth is now staring us in the face. The latest breakdown of sectoral contribution to growth is out. Get ready for this. Public Administration, which somewhat perversely is classified as part of services, has now grown by 7% over the previous quarter making it the biggest driver of growth in India. 
Very simply, this means as you keep paying government employees more the GDP will keep growing ever faster till one day you run out of breath and cash.In the Q3 of 2018, Public Administration contributed 17.3% towards growth. In Q4 of 2018 it is 22.4%, making it a fraction smaller than the contribution of manufacturing at 22.7%.
But hold your breath. Not satisfied with the 7th Pay Commission’s across the board hike of 23%, government employees are hopeful that the Prime Minister on August 15 will make an announcement fulfilling the promise made by the Finance Minister to give central government employees a pay hike beyond the recommendations of the pay commission. They are also hopeful that the retirement age will be raised to 62 years, allowing them to serve this poor and hapless country longer.
There had been a spate of commentaries about how beneficial the 7th Pay Commission mandated pay hikes, and now approved by the Union Government with retrospective effect will benefit the economy. Despite this munificence, some government employees have called the 23.5% across the board hike peanuts!
Others have made comments like “you pay peanuts you get monkeys!” as if you will now have earnest and honest public servants because the same fellows get more pay? The metaphor is unfortunate as well as illogical as the “monkeys” are already in place, only now the diet has become much more richer. Fat monkeys are what you will get.
The high cost of wages has also slowed down intake into government and most departments are hugely understaffed. For instance, Revenue collecting departments are under strength by as much as 45.45%, Health by 27.59%, Railways by 15.15%, and Home by 7.2%. It speaks volumes about how much has gone wrong in our system. We have a saying, that the main business of government is to collect taxes so that they may be spent for the benefit of all the people. Thus we see the main business of government is now its least concern.
The sheer absurdity of the logic, that higher government salaries are beneficial to the economy, speaks volumes of the kind of stupidity that permeates our policy thinking at high places. By this logic if the pay hike was higher, GDP growth would be even higher. 
But think of this in terms of money denied for critically needed infrastructure and social development such as rods, power plants, schools and hospitals. As if these don’t generate GDP growth. Higher salaries mostly benefit those who get them.
The last pay hike benefitted 23 million government employees in the central and state governments and their public sector undertakings (PSUs). No doubt, this will make the Confederation of Indian Industries (CII) and the Federation of Indian Chamber of Commerce and Industry (FICCI) members will hear the music louder and dance all the way to the bank. 
No wonder the top industry and banking analysts have given a big thumbs up to the Union Cabinet decision stating the move will “boost consumption in the economy” and lead to higher GDP growth. Its their fond hope that the pay hike combined with continued public push to the capital expenditure will help steer the economy to higher growth levels of 8% and above.
“The pay hike of nearly Rs 1 lakh crore for government employees will give a strong boost to the consumer demand and help uplift the growth of the economy,” said Didar Singh, former secretary general, FICCI. He will approve being a former IAS officer rehired by the industry trade union. But has FICCI noticed an Indian Institute of Management (IIM), Ahmedabad, study that has found the “pay in the government sector is distinctly greater than that in the private sector”? 
The 23.5% average hike in central government employees’ salaries pushed up the government’s wage bill, including arrears, by an estimated Rs 1.14 lakh crore.
While you worry about the high cost of government, I will give you another reason to worry. If you wonder why our public administration is so ineffective, consider this. An analysis by a leading media organization suggests that roughly 14% officers get transferred within one year of service and another 54% within 18 months. 
In other words, 68%, or over two-thirds of India's top bureaucrats, last on an average less than 18 months at a posting. Only 8% of the officers analyzed had average tenures of more than two years and there are only 14 officers who have managed to complete an average stay of more than three years between transfers. So what is the government you are getting for all the money we spend?
This when 648 million Indians are living below the United Nations Development Programme (UNDP) stipulated poverty line. The question we all must ask is, growth at whose cost? Arun Jaitley crowing about it is akin to the head of a family who prefers to increase his spending on smoking and drinking by cutting down on the milk for the growing children.
The three levels of government together employ about 185 lakh persons. The central government employs 34 lakh, all the state governments together employ another 72.18 lakh, quasi-government agencies account for a further 58.14 lakh, and at the local government level, a tier with the most interface with the common citizens, we have only 20.53 lakhs employees. 
In other words, it simply means we have five persons telling us to do this or do that, for every one supposedly serving us. And whom even these one out of six persons are answerable to is still a big question?
Do we then have a big government bearing down on us? Not really.
Consider this: India has 1,622.8 government servants for every 100,000 citizens. In stark contrast, the U.S. has 7,681. The central government, with 3.1 million employees, thus has 257 serving every 100,000 population, against the US federal government's 840. Now look at the next tier at the state level. Bihar has just 457.60 per 100,000, Madhya Pradesh 826.47, Uttar Pradesh has 801.67, Orissa 1,191.97 and Chhattisgarh 1,174.62.
This is not to suggest there is a causal link between poverty and low levels of public servants: Gujarat has just 826.47 per 100,000 and Punjab 1,263.34. The troubled states or really speaking the troublesome states actually fare far better on this score. Thus, Mizoram has 3,950.27 public servants per the 100,000 populations, Nagaland 3,920.62 and Jammu and Kashmir 3,585.96. Bar Sikkim, with 6,394.89 public servants per 100,000, no state comes close to international levels.
Very clearly for the most part, India's relatively backward states have low numbers of public servants. This means staff is not available for the provision of education, health and social services needed to address poverty. It would seem that instead of getting better government and more public servants, we are getting more expensive government.
We are now riding the tiger of a high wage enclave of government employees, who also drive consumption and hence GDP growth. It may now be difficult to get off this tiger.
---
Source: Author’s Facebook timeline. Contact: mohanguru@gmail.com

Comments

TRENDING

Allow international human rights observers, media to access Kashmir: US lawmakers

Counterview Desk
In a letter to US Secretary of State Mike Pompeo, two members of the American Congress, Pramila Jayapal and James McGovern, raising "significant concerns" about what they call "humanitarian and human rights crisis in Jammu & Kashmir”, quoting "credible reports" from journalists and advocates on the ground" have said that "the Indian government has detained thousands of people with no recourse, imposed de facto curfews on residents' and cut off internet and telephone access in the region.”

Rescind Gates Foundation award to Modi, demand three Nobel Peace laureates

Counterview Desk
In a major boost to those opposing the award to the Gates Foundation’s proposed to be awarded to Prime Minister Narendra Modi for his Swacch Bharat Abhiyan, three Nobel Peace Prize laureates, Mairead Maguire (1976), Tawakkol Abdel-Salam Karman (2011) and Shirin Ebadi (2003), have in an open letter called upon Milinda and Bill Gates to withdraw their decision, stating Modi is allegedly involved in human rights violations.

Now clampdown on rally, arrest of pro-freedom activists in Pak-occupied Kashmir

Counterview Desk
In a fresh evidence, international human rights organizations are not just confining their attention on the Indian state of Jammu & Kashmir (J&K), whose special status was taken away by the Government of India in early August, leading to an unprecedented clampdown on the region. They have simultaneously begun focusing on the Pakistan-occupied Kashmir (PoK), where the situation is said to be worsening.
Thus, the International Human Rights Council ((IHRC) Hong Kong (HK), a top human rights organisation, said to be working towards to the promotion peace, equality, fundamental rights and social justice “as enunciated in the UN Human Rights Charter and other instruments of human rights”, has noted now a new wave of independence movement has struck PoK.  With offices in US, UK, Switzerland and Hong Kong, and having Kirity Roy and Lenin Raghuvanshi as IHRC office bearers from India, in a statement, it has claimed that on September 7 one of the biggest pro-Independenc…

Gujarat's incomplete canals: Narmada dam filled up, yet benefits 'won't reach' farmers

By Our Representative
Even as the Gujarat government is making all out efforts to fill up the Sardar Sarovar dam on Narmada river up to the full reservoir level (FRL), a senior farmer rights leader has said the huge reservoir, as of today, remains a “mirage for the farmers of Gujarat”.
In a statement, Sagar Rabari of the Khedut Ekta Manch (KEM), has said that though the dam’s reservoir is being filled up, the canal network remains complete. Quoting latest government figures, he says, meanwhile, the command area of the dam has been reduced from 18,45,000 hectares (ha) to 17,92,000 ha.
“According to the website of the Sardar Sarovar Narmada Nigam Ltd, which was last updated on Friday, while the main canal, of 458 km long, has been completed, 144 km of ranch canals out of the proposed length of 2731 km remain incomplete.
Then, as against the targeted 4,569 km distributaries, 4,347 km have been constructed, suggesting work for 222 km is still pending. And of the 15,670 km of minor canal…

Ceramic worker dies: 20,000 workers in Thangadh, Gujarat, 'risk' deadly silicosis

Even as the country was busy preparing for the Janmashtami festival on Saturday, Hareshbhai, a 46-year-old ceramic worker from suffering from the fatal lung disease silicosis, passed away. He worked in a ceramic unit in Thangadh in Surendranagar district of Gujarat from 2000 to 2016.
Hareshbhai was diagnosed with the disease by the GCS Medical College, Naroda Road, Ahmedabad in 2014. He was found to be suffering from progressive massive fibrosis. He is left behind by his wife Rekha sister and two sons Deepak (18) and Umesh (12),
The death of Hareshbhai, says Jagdish Patel of the health rights group Peoples Training and Research Centre (PTRC), suggests that silicosis, an occupational disease, can be prevented but not cured, and the Factory Act has sufficient provisions to prevent this.
According to Patel, the pottery industry in the industrial town of Thangadh has evolved for a long time and locals as well as migrant workers are employed here. There are about 180 units in in the to…

Bullet train impact report Japan agency property: Govt of India tells Gujarat NGO

The National High Speed Rail Corporation Limited (NHSRCL) has told Gujarat-based environmental organization, Paryavaran Suraksha Samiti (PSS) that the detailed report of Japanese International Cooperation Agency (JICA) representatives on their visit to Gujarat and Maharashtra assess the impact of the Mumbai-Ahmedabad bullet train project on farmers is not its property, but that of JICA.

NHSRCL letter to PSS, signed by activists Rohit Prajapati, Krishnakant and Swati Desai, comes following the latter’s request to it on June 10 for the report. PSS was one of the NGOs that represented JICA on the project, saying, if implemented, it would adversely impact farmers, even as pointing towards the fact that the project itself is unviable and Indian Railways needs to invest, instead, more on upgrading the present railway infrastructure.
Following the NHSRCL reply, PSS has shot a second letter to JICA, insisting that the latter should share a copy of the report, even as providing details of the …

Karma tribal festival an occasional to campaign for tribal rights: IPMSDL

By Our Representative
The International Indigenous Peoples Movement for Self Determination and Liberation (IPMSDL), in a solidarity statement has suggested that the current Karam festival of Central India -- which seeks to promote sisterhood, friendship, cultural unity, and closer link to nature -- should be the occasion to campaign against alleged efforts to violently drive away forest dwelling communities from their forest homes.
"Millions are threatened to lose lands and livelihood under the implementation of Forest Rights Act (FRA) of 2006", the statement States, adding, "As corporate interests continues to enter tribal territories and extract profit from its natural resources, indigenous people are pushed to further marginalization and discrimination."
Asserting that indigenous movement in India "remains steadfast in keeping their culture, deeply linked to their lands alive by carrying out their heritage and struggles", IPMSDL, even as extending "…

US Air Force expert smells regional security threat following Chandrayaan mission

Counterview Desk
A United States Air Force expert, writing on India’s Chandrayaan -2 mission, has expressed the apprehension that Indian moon probe’s “failure” won’t stop an Asian space race that “threatens regional security.” Affiliated with the US Air Force School of Advanced Air and Space Studies, Wendy Whitman Cobb, who is Professor of Strategy and Security Studies, believes like other space powers, India may be “seeking to improve its technology”, but advances can “also bring greater security concerns.”
Currently, admits Cobb, “These efforts have been primarily civilian and peaceful in nature.” However, India’s turn toward the military uses of space, so much so that lately it has been developing its own military satellites providing services such as remote sensing, tracking and communications “with greater frequency” has begun to “concern” the neighbours.
In her disclosure statement to an article published in the e-journal “The Conversation” Cobb, however, states that whatever…

Historic Chikhalda, temples, mosques submerged, activists 'rescue' Gandhi idol

By Medha Patkar
The first farmer of Asia was born in Chikhalda, if one is to believe archaeological researchers. A historic village, 50 percent of its population is of Hindus and 50 percent of Muslims, yet it has always remained peaceful. Chikhalda has struggled to save water, land and people along Narmada river.

Gujarat govt 'agrees' to place 2002 riots report in budget session of state assembly

By Our Representative
The Gujarat government has informed the state High Court that it would be tabling Part-II of the Justice Nanavati and Mehta Commission report on the inquiry into the 2002 Gujarat riots, submitted to the state government on November 18, 2014, in next budget session in the Legislative Assembly.