JOIN USThe austerity measures announced by the government are too little and too late to revive a sagging economy.
Their effectiveness may be questioned not just on the ground of their cosmetic nature but because it is difficult to see them implemented. While the economy is in serious trouble with the growth rate dipping to 6.5 per cent, the rupee hitting its lowest ever value and other economic indicators beaming red lights, the nation expects the government to go beyond routine and tried out measures to get the situation under control. Finance minister Pranab Mukherjee had proposed these measures in Parliament some time back and the ministry has now outlined them through an office memorandum for ministers and officials to adhere to them ‘till further orders.’ There was a similar burst of austerity measures over three years ago, as the economy started sliding in the wake of the global slowdown, which was ridiculed even by members of the government. There was no account of the savings effected then and the impact it had on the economy is still unknown. It cannot be very different now.
The proposed measures include a 10 per cent cut in non-Plan expenditure to be effected in various ways. There will be a ban on holding of conferences in five star hotels and purchase of new vehicles, discouragement of holding seminars and the like abroad and a reduction in the size of delegations going abroad. No funds will be released to any entity which has defaulted in furnishing utilisation certificates. While the aim of rationalising expenditure and optimising the use of available resources sounds good, no one would think that the government, as it works, would be able to accomplish this. For example, the misuse of government vehicles for personal purposes is rampant in the country. Will there be any check on that?
What ails the economy is the high level of fiscal deficit and inflation, diminishing purchasing power and consumption and a fall in investment and investor confidence. Economic activity is sluggish with all important sectors taking a hit. Making announcements of remedies with unproved merit and almost nil practical value will only expose the poverty of thought of the government. The government machinery anywhere in the country is not geared to the idea of economy and avoidance of wasteful expenditure. Why deceive ourselves then?