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

Missed call drive for VVPAT verification follows online plea to "pressure" poll panel

By Our Representative
Several political activists have begun a new campaign, asking concerned citizens to give a missed call on 9667655855 to “support the demand that 2019 Loksabha elections must be declared only after verification of 50% electronic voting machines (EVMs) with Voter Verifiable Paper Audit Trail (VVPAT) receipts.” The effort, supported by civil society networks across India, is meant to "further pressure" India's election machinery to ensure that the poll outcome becomes more transparent.

Did Modi own, buy digital camera costing Rs 7 lakh in 1987-88, also used email?

Counterview Desk
In an interview to the news channel News Nation, aired on Saturday last, Prime Minister Narendra Modi declaring that he had approved the air strike despite bad weather because he felt the clouds would hide Indian planes from Pakistani radar is known to have become a laughing stock across India.

When a neo-nationalist "invaded" hijab clad ladies, Bengali looking scholar in Delhi metro

By Aditi Kundu*
Travelling in Delhi metro on a daily basis to commute from Mayur Vihar to Dwarka, I see diverse people everyday. One can hear them talk about different aspects of life, from kitchen pilitics to national politics. On the morning of May 13, I witnessed a strange incident; disturbing and amusing at the same time.

Terror attacks: Difference in public reactions in India, those in Colombo, Christchurch

By Battini Rao*
Recently, on April 20 during Easter Sunday, more than 250 people were killed in a series of coordinated terrorist attacks in churches and hotels in Colombo, Sri Lanka. Local Islamic organisations Thawheed Jamath (NJT) and Jamathei Milathu Ibrahim (JMI) are held responsible for the attack. Islamic State has also claimed responsibility.

Women lost 88 lakh jobs in 2018: Why Modi "failed" to address their disempowerment?

Counterview Desk
Five human rights leaders Anjali Bhardwaj, Shabnam Hashmi, Purnima Gupta, Dipta Bhog, and Amrita Johri of the Women March for Change have posed 56 questions (alluding to Modi’s claim of 56 inches chest) to Prime Minister Narendra Modi and BJP against the backdrop of his interview with a Bollywood star, which was allegedly masqueraded as a “non-political” conversation.

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.

Disproportionately high death sentences against Dalits, Adivasis, Muslims: UN told

Counterview Desk
In their joint submission to the United Nations Human Rights Committee to meet for the listing of adoption of list of issues at its 126th session, July 1-26, 2019, top Dalit rights organizations have taken strong exception to, among other things, "disproportional application of death sentencing by the judiciary of minorities, such as Muslims, Dalits and Adivasis".

Ex-IAS, IPS, IFS officers tell Modi: Pragya Thakur doesn't represent India's rich heritage

Counterview Desk
In an open statement, a group of former civil servants have said that normally they would have dismissed the candidature of Pragya Thakur, who is BJP’s choice for the Bhopal Lok Sabha constituency, as an act of political expediency. However, they were forced to react to her candidature after none other than Prime Minister Narendra Modi termed has as a “symbol of our civilisational heritage.”

India's 80% construction sites "unsafe", deaths 20 times higher than those in Britain

By Rajiv Shah
The Government of India may be seeking to project India’s construction sector as the country’s second-largest employer of the country after agriculture, providing jobs to more than 44 million people, and contributing nearly 9% to the national GDP, yet, ironically, its workforce is more unprotected than any other industrial sector of the country. Data suggest that the possibility of a fatality is five times more likely in the construction industry  than in a manufacturing industry, and the risk of a major injury is 2.5 times higher.

India sans Modi preferable, Congress worthier recipient of Indians’ votes: The Economist

By Our Representative
In a strongly-worded and crucial commentary on Prime Minister Narendra Modi as the electoral political battle is on, influential British weekly “The Economist”, has declared that “Indians, who are in the midst of voting in a fresh election, would be better off with a different leader”, even as pointing out that that under Modi, “India’s ruling party poses a threat to democracy.”