<p>The package of austerity measures, unveiled by the Centre on Tuesday, is a result of the growth of public expenditure in the last few months, partly because of circumstances and partly because of the government’s spending culture. The economic slowdown forced the government to resort to stimulus packages which involved slashing taxes, loan waivers, aid to industries and salary hikes which also had the aim of increasing people’s spending power. At the same time, it had to resort to increased spending on infrastructure and rural employment and other social development programmes. The steps to tackle the impact of drought will also take a toll on the exchequer. The pincer effect of reduced revenues and higher expenditure was a financial squeeze which has now prompted the government to direct all ministries and departments to effect a 10 per cent cut in non-Plan expenditure.<br /><br />Since expenditure that creates productive assets and income and boosts demand is necessary to keep the pace of the economy and to mitigate the slowdown’s social impact, there is scope only to reduce wasteful expenditure to which government functionaries, including ministers and officials, are accustomed to. It is well-known that much public money is wasted on unnecessary foreign travels, inflated fuel bills, advertising and publicity and other administrative activities. These are the areas which the austerity drive will concentrate. But proposing a cut in expenditure is one thing, and implementing it is another, and the more difficult, part, given the lack of scruples and a sense of public responsibility that the ruling class is known for. There must be targets in terms of time and results, and penalties for failure to achieve them.<br /><br />Cutting down of wasteful expenditure should not be a one-time initiative. It should be a continuing feature of the administration. The recommendations of administrative reforms and pay commissions to reduce manpower and rationalise the functioning of departments have not been implemented. Computerisation and modernisation of procedures have made many sections of the government redundant. Improvement in efficiency and productivity can save a lot of money. Committed action to prevent tax evasion and collection of arrears can also ease the pressure on the exchequer. State governments are more lax than the Centre in financial discipline and management. They should also avoid wasteful spending, like junkets to China by groups of farmers and a chief minister’s party.</p>
<p>The package of austerity measures, unveiled by the Centre on Tuesday, is a result of the growth of public expenditure in the last few months, partly because of circumstances and partly because of the government’s spending culture. The economic slowdown forced the government to resort to stimulus packages which involved slashing taxes, loan waivers, aid to industries and salary hikes which also had the aim of increasing people’s spending power. At the same time, it had to resort to increased spending on infrastructure and rural employment and other social development programmes. The steps to tackle the impact of drought will also take a toll on the exchequer. The pincer effect of reduced revenues and higher expenditure was a financial squeeze which has now prompted the government to direct all ministries and departments to effect a 10 per cent cut in non-Plan expenditure.<br /><br />Since expenditure that creates productive assets and income and boosts demand is necessary to keep the pace of the economy and to mitigate the slowdown’s social impact, there is scope only to reduce wasteful expenditure to which government functionaries, including ministers and officials, are accustomed to. It is well-known that much public money is wasted on unnecessary foreign travels, inflated fuel bills, advertising and publicity and other administrative activities. These are the areas which the austerity drive will concentrate. But proposing a cut in expenditure is one thing, and implementing it is another, and the more difficult, part, given the lack of scruples and a sense of public responsibility that the ruling class is known for. There must be targets in terms of time and results, and penalties for failure to achieve them.<br /><br />Cutting down of wasteful expenditure should not be a one-time initiative. It should be a continuing feature of the administration. The recommendations of administrative reforms and pay commissions to reduce manpower and rationalise the functioning of departments have not been implemented. Computerisation and modernisation of procedures have made many sections of the government redundant. Improvement in efficiency and productivity can save a lot of money. Committed action to prevent tax evasion and collection of arrears can also ease the pressure on the exchequer. State governments are more lax than the Centre in financial discipline and management. They should also avoid wasteful spending, like junkets to China by groups of farmers and a chief minister’s party.</p>
