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Flip side of economy measures

S. Venkitaramanan

THE famous economist, Prof. G. K. Galbraith, never missed a chance of having a quip at the cost of conventional economists who would inveigh against all government outlays as evil. In one of his earlier books, he narrated how he had once gone on a trip t o see various mansions, including those of the rich, such as J. P. Morgan, Henry Ford and so on. While he was admiring the elegance of those buildings, he commented almost sotto voce on how well they were maintained, compared with national monuments and government buildings.

One of the house-keepers with a sense of humour told him,``These are also maintained at government expense''. Prof. Galbraith asked, how could it be? The house-keeper mentioned that all expenses on maintenance were liberally provided as they were tax-ded uctible. Every dollar on maintenance of the rich nawabs' mansions was met by debit to Uncle Sam. Prof. Galbraith's question was, ``How come the same government issued instructions on austerity on maintenance of their own buildings, leading to poorly main tained public offices, with paint peeling off?''

Prof. Galbraith had made his point that mindless economy measures, which lead to neglect of national monuments, public buildings and national treasures were not really effective, when taking a holistic view. India is no exception. Our Government's econom y measures are often misconceived.

The latest noises from Mint Street about the threat to the rupee and reports of rising inflation, strengthen the prospect of the Government coming out with one more set of economy measures. Today's dominant school of economists, like those whom Galbraith encountered, also believe in cutting Government expenditure, wherever possible. The Government will soon be issuing its usual memoranda on steps to revive the economy through various economy measures. These measures have sometimes had unanticipated cons equences of various kinds.

Since independence, the government has been issuing economy measures, with an almost tiresome repetition and with little effect on the total outlays. Quite often, these measures are just accumulations of ``Do's and Don'ts''. They include bits of conventi onal wisdom about how no new post shall be sanctioned without reference to the Cabinet, which means long delay and many queries. Unfortunately, most economy measures often end up in contradictions. Every Government Order issued on economy measures has be en followed by a separate effort intended to remove the constraints created by the economy measures themselves.

The result of these measures has often led to clogging up government operations. Thus, the Joint Secretary in charge of external commercial borrowing operations for India could not get a fax machine or a computer because the Expenditure Department would not clear it. The ingenious officer, however, promptly did the PSU drill: Got SBI directly involved in managing the whole exercise. It not only provided him with an efficient officer, but a computer and a fax machine as well. In due course, the Joint Sec retary could report that his monitoring of India's external commercial borrowings was an exemplar to the world as a whole. Some of the contradictions were even more sickening. The Railways union pointed out how many stations did not have station-masters. The new stations had been inaugurated, subsequent to the initiation of these economy measures. How could one expect the Railway Ministry to get the Cabinet's approval for every such post?

Similarly, there were many government hospitals without nurses, because the original sanction did not include nurses. These inconsistencies could not be sorted out through the normal official process because it meant going up to the Cabinet for the clear ance of posts of a nurse or a peon.

No doubt, the government sorted out the problem by insisting that every building project should include the necessary sanction for staff. But in any private organisation, the responsible leader would have the powers to employ the requisite staff, and the re would be no need to approach the authorities. Under the government rules, going back to the Cabinet Committee involves a complex process.

I was once struggling with the completion of a project in the power sector when some responsible people in the CEA told me that they required a few draftsmen to complete their work in time. The Financial Adviser finally agreed to refer this matter to the Cabinet Committee. The project, which was close to the Prime Minister's heart was getting delayed. Finally, we had to go to the highest government authority to get a few draftsmen's posts cleared and in the process received advice such as, ``Why don't y ou engage the services of draftsmen from a private company or ask a PSU to help out?''

The thoughtless manner in which some of the economy measures are interpreted involves a great deal of hardship, both to the government and individuals. Economy measures also result in denying departments the facilities they need to complete their work in time. There is need to avoid such absurdities in the future.

The Finance Minister, Mr. Yashwant Sinha, has shown a keen sense of awareness of the dangers that expenditure-reduction sometimes leads to neglect of important functions, such as the upkeep of the country's offices. He pointed out, in one of the earlier Budget speeches, how the reduction of expenditure on maintenance of government buildings and plant, leads to the overall inefficiency and lack of useful government facilities.

It is hoped that when Mr. Sinha plans his next set of economy measures, he will ensure that it is designed to promote efficiency and it is not just a token reduction of expenditure. He need only take a tour around the offices of the Finance Ministry in N orth Block to see how poorly treated his staff are.

Once long ago, I accompanied the then Minister, Mr. Eduardo Falerio, on one such tour. The offices of the IT Department, which earn the revenues that help to run the government, are kept in bad shape. The way in which even the main offices of the tax dep artments are kept, is a matter of shame -- cupboards lining all corridors, no proper facilities in the rooms of even senior officers. This is no way of keeping the top revenue-earning department. All these are consequences of thoughtless economy measures! It is time Mr. Sinha applied his zeal for innovation in this area of governance.