The Centre’s intent on curbing non-Plan expenditure by 10 per cent by cutting down on travel expenses, foreign trips and 5-star stays of senior officials is unexceptionable, but the exercise is neither substantive nor novel. It has become a routine, if not token, exercise for governments to announce ‘austerity’ moves to meet the fiscal deficit target, which stands at ₹5.3 lakh crore or 4.1 per cent of GDP for this year. The UPA government did so in 2013, but regrettably squeezed Plan spending to contain the fiscal deficit. This Government, however, has the mandate to go for the jugular. The problem areas are not merely the subsidies on food, fertiliser and employment (fuel is out of the equation thanks to the fall in global prices), but one that is less talked about: the pay, allowances and pension of Central Government staff. If a reduction of ₹1.2 lakh crore (about 10 per cent of annual non-Plan expenditure) is to be achieved on a lasting basis, some of it can happen here. While subsidies run up a bill of over ₹2.6 lakh crore, the outgo on salaries and pensions is about ₹2.2 lakh crore (pensions accounting for ₹90,000 crore), a sum that may rise sharply after the Seventh Pay Commission award.

This context perhaps explains why the Finance Minister, in his Budget speech, announced the setting up of an expenditure management committee led by Bimal Jalan. There are two aspects to administrative reform: scrapping redundant posts and linking pay to performance. The first requires attention to detail. The Centre has said that posts that are vacant for over a year need not be filled, apart from ruling out the creation of new posts. This is a hurried, mechanical approach. Today, more than 16 per cent of the 36.8 lakh Central Government posts lie vacant. It is possible that some of these actually need to be filled. To fuse ‘minimum government’ with ‘maximum governance’, it is necessary to assess the gain or loss arising out of these vacancies. Redundancies are a feature not only among Group C and Group D categories of employees; it can be pretty crowded at the top as well. But scrapping posts is easier said than done. The Geethakrishnan Committee, set up by the Vajpayee government, suggested doing away with 50,000 posts — only to raise the hackles of trade unions and officialdom. The Centre has since gone for the easier option of keeping posts vacant.

As for linking promotion and pay to performance, former Prime Minister Manmohan Singh had rightly suggested that gazetted officers should be subject to periodic tests to separate the good from the inadequate. Expenditure reform also entails scrapping redundant, overlapping schemes. The proliferation of centrally sponsored schemes at the State level is a case in point. And, finally, ‘Plan’ and ‘non-Plan’ are not the best indicators of the usefulness of a particular item of expenditure. A government that is unimpressed by the role of the Planning Commission should know better.

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