<b>Reclassify expenditures in public, private categories</b>

Reclassify expenditures in public, private categories

Dr Bharat Jhunjhunwala

$img_titleOne factor fuelling corruption by government servants is the undertaking of non-essential functions by the Government. Education, for example, can be provided by the market or the community. A huge army of government employees has been raised to doubly supply this goods. Government employees are becoming rich in the process. They command a huge premium in the marriage market nowadays. Taxes are being imposed on the common man to pay salaries to these government servants. The common man is becoming poorer while government servants get richer. One factor behind this dichotomy is the classification of government expenditures in ‘plan’ and ‘non-plan’ categories. This classification does not tell whether the expenditure is being made on an essential service like defense, currency and regulation; or a non-essential service like education, health and scholarships.
The unsaid objective of making this classification is to hide expenditures on decadent welfare bureaucracy. The Government has created a huge army of government servants in welfare sectors in the last sixty years. This was started with the Community Development Programme in the fifties. It caught speed during Indira Gandhi’s Garibi Hatao in the eighties. The Government now seeks to take this approach forward by removing the roadblock of non-plan categorisation. A committee headed by Shri C Rangarajan has suggested that this classification be done away with.
The real objective of welfare expenditures is not to reach relief and development to the poor. Rather it is to lock the poor into poverty. The best youth among are employed in these jobs. That leads to a huge increase in the number of supporters of government programmes. Simultaneously the capacity of the people to resist tyranny of government servants is reduced because the best youth are co-opted in the government machinery and become agents of impoverishing the rest. This can be seen in operation across all social sectors. Government teachers draw four times salary of private teachers but produce one-half results. People feel their children are getting free education while actually they are being locked into poverty by imparting of poor quality education. Patients are regularly asked by Government hospitals to buy medicines from outside while the government supplies are sold in the black market. Village Pradhans have to pay 20 to 30 per cent commission to these government servants for obtaining sanctions and payments under National Employment Guarantee Scheme. Instead of empowering people to engage in self-earning vocations, they are being made dependent on government doles through this scheme.
The game begins with implementation of economic policies that create poverty in the name of growth. For example, promotion of large textile mills has impoverished crores of weavers who now eke out a sorry existence under Employment Guarantee Scheme. Gurudev Rabindranath Tagore had said in 1904: “Today the thoughts of the Bengali people have been separated from the villages. Today the responsibility of providing water is that of the government. The burden of health provision is upon the government. For learning also one has to knock at the door of the government. The tree that flowered itself today begs the sky for a rain of flowers with its naked branches.” The same message was given by Gandhi when he said that give the naked work, not cloth. The teaching is that the job of the government is to provide infrastructure and law and order so that people can flourish. But the Government of India is being guided by three lifelong bureaucrats—C Rangarajan, Manmohan Singh and Montek S Ahluwalia. The unsaid objective of these gentlemen is to promote the interests of their clan. Hence they implement policies that expand the army of government servants, kill employment of the people, co-opt the best talent and ensure the rest remain locked in poverty.
The distinction between plan and non-plan should indeed be removed. But instead of leaving the government expenditures unclassified, they should be classified in ‘empowering’ and ‘disempowering’ categories. The BJP Government had set up a Committee under chairmanship of Mr Vijay Kelkar to draw a roadmap for the implementation of the Fiscal Responsibility Act. Kelkar had suggested that the plan non-plan categorisation should be replaced with ‘public goods’ and ‘private goods’ categories. Public goods are those services which a citizen cannot obtain even when willing to pay. These can only be provided by the Government. These include defense, currency, rail, canals, roads, law and order, justice, anti-malaria spraying, making curriculum and conducting exams, etc. These functions can only be done by the Government. Kelkar wanted the Government to increase these expenditures and, implicitly, reduce those on education, health and employment guarantee. The idea was that people will be employed and be able to buy good quality health and education from the market if roads and law and order were suitably provided.
The positive impact of expenditures on public goods is well established. Noted health economist K N Reddy concluded that expenditures on ‘public goods’—mass education, research, Public Health Laboratories, and prevention & control of diseases—were more significant in bringing about a reduction in the Infant Mortality Rate than private goods. Yet, only 18 per cent of the Indian government’s health expenditures went to the provision of these goods. In contrast, the provision of private goods like curative care in government hospitals consumed 57 per cent of government expenditures but contributed very little to people’s health.
The classification of government expenditures in plan non-plan should be replaced with a new classification of ‘public-’ and ‘private’ goods as suggested by Kelkar. The primary responsibility of the Government is to provide those facilities which people cannot obtain on their own—employment-oriented economic policies, roads, law and order and canals. But this policy is not beneficial for government servants. They will have fewer jobs if government monies are spent in making roads and people become prosperous. There will be less malaria if village ponds are sprayed with anti-malaria insecticides and the need for appointing large number of government doctors will vanish. Hence the strategy is to cut expenditures on public goods, worsen the health and welfare of the people, then co-opt the bright boys into keeping rest of the people impoverished.
Leaders of the Opposition must ask what economic policies are being implemented to empower the people into making self-respecting jobs. What is the government doing to arrest the eating of jobs by big industries; and what is the increase in government expenditures on public goods? Economist Prime Minister Manmohan Singh must follow principles of true welfare economy.

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