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

#MeToo moment in Hyderabad Urdu varsity? Two girl students seek action against authorities

Counterview Desk
Has the #MeToo movement reached Maulana Azad National Urdu University (MAANU)? It would seem so if a recent letter by newly-appointed chancellor Firoz Bakht Ahmed to MAANU vice-chancellor Dr Aslam Parvaiz is any indication. Seeking reinstatement of two girl victims of “sexual harassment and humiliation”, the letter specifically names head of the department of the Media Centre for Journalism, suspecting, the problem could be much deeper.
Text of the letter: It is a matter of utmost perturbation for me to receive the two representations from the girls studying in the MCJ (Media Center for Journalism) regarding their sexual and subsequently, mental and social harassment at the hands of Prof Ehtesham Ahmad Khan, the HOD, MCJ.
We do not know, how many girls have been exploited by him and preferred to be silent for saving their family’s honour; however, there are two brave girls who stood to the depraved advances and misuse by Prof Ehtesham and came up with written complai…

"Ineligible" funding of Sardar Statue in Gujarat: CAG tells Central PSUs, it's not a heritage CSR activity

By Our Representative
The Comptroller and Auditor General (CAG) of India, in its recent report on Central Public Sector Enterprises (CPSE), has qualified public sector undertakings’ (PSUs') funding the 182-metre world’s highest Sardar Statue, currently being constructed in the Narmada river downstream of the Sardar Sarovar dam as an “ineligible” corporate social responsibility (CSR) activity.

29th "NRC-related" suicide in Assam, as Nirod Baran Das takes his life by hanging on a fan

By Our Representative
Reporting 29th case of National Register of Citizens (NRC)-driven suicide in Assam, one of India’s human rights campaign sites has said that, on October 20, tragedy struck Kharupetia town in Darrang district of Assam, when a retired school teacher and advocate Nirod Baran Das “took his life by hanging himself to a fan in his home.” The report adds, “The NRC process has so far claimed over two dozen such lives in the past four months alone.”

"Highly irregular" for PSUs to fund Sardar Statue under Corporate Social Responsibility

Counterview Desk
In a letter to I Srinivas, secretary, Ministry of Corporate Affairs, Government of India, former secretary (economic affairs), Ministry of Finance, EAS Sarma, has raised questions on the funding of the Sardar Patel statue in South Gujarat by Central Public Sector Undertaking (CPSUs) relying on the Comptroller and Auditor General report (No 18/2018).

Murder of Tamil Nadu teenage Dalit girl: "Stoic silence" despite #MeToo movement

Counterview Desk
Brinelle D'souza, who is with the Centre for Health and Mental Health, School of Social Work, Tata Institute of Social Sciences, Mumbai, has prepared a strong statement to protest the brutal murder of 13-year-old Rajalakshmi. "Other than a few media reports, this gruesome killing has not caught national attention despite a very vibrant #MeToo campaign currently underway", regrets D'souza.

World Bank clarifies: Its 26th rank to India not for universal access to power but for ease of doing business

By Our Representative
In a major embarrassment to the Government of India, the World Bank has reportedly clarified that it has not ranked India 26th out of 130 countries for providing power to its population. The top international banker’s clarification comes following Union Power Minister Piyush Goyal’s claim that India has “improved to 26 position from 99” in access to electricity in just one year.

Preventing childhood deaths: India performs worse than Bangladesh, "equals" Pakistan

By Rajiv Shah
A just-released study, “The Pneumonia and Diarrhea Progress Report 2018”, prepared by the International Vaccine Access Centre (IVAC) at the Johns Hopkins Bloomberg School of Public Health, has identified India among 15 other countries which are still far off the mark in achieving the targets of the Global Action Plan for the Prevention of Pneumonia and Diarrhea (GAPPD).

Bank account frozen, raid on Amnesty office: Govt of India "treating" human rights NGOs like criminal enterprises

By Abhirr VP*
Amnesty India’s bank accounts have been frozen by the Enforcement Directorate, effectively stopping its work. Amnesty India is thus the latest target of the government’s assault on civil society in the country. The accounts of Greenpeace India were frozen earlier this month.

60 ex-civil servants seek release of CAG reports on Rafale, demonetisation before 2019 polls

Counterview Desk
As many as 60 retired civil servants have asked President Ram Nath Kovind to expedite the release of Comptroller and Auditor General (CAG) reports on demonetisation and the Rafale deal. The letter, signed mainly by former Indian Administrative Service, Indian Foreign Service and Indian Police Service officers, regrets that the status of the audit is "unclear”. According to them, “An impression is gaining ground that CAG is deliberately delaying its audit reports on demonetisation and Rafale deal till after the May 2019 elections so as not to embarrass the present government”.

Govt of India "tarnishing" NGO reputation, dossier leaked selectively: Amnesty

Counterview Desk
Amnesty International India has said that a deliberate attempt is being made to tarnish its reputation by leaking a dossier, supposedly made by investigating agencies, to media without giving it access to any such information. The high profile NGO’s claim follows a Times Now report about proceedings launched by investigative agencies, including Enforcement Directorate (ED) against the rights body for “violations” of rules pertaining to overseas donations.