Mr FM, stop chasing corporates, trim govt staff strength instead

In his scramble to meet the fiscal deficit target, Finance Minister P Chidambaram has cut spending by many ministries drastically upsetting his colleagues and also sent tax notices to various corporates irking the business community.

But if only he would take a look at the cash-strapped government’s ever-expanding list of ministries and regulatory agencies, he would realise that by just downsizing the government staff strength by 5 percent, he can save nearly Rs 6,000 crore.

According to a calculation by Times of India, the government roughly spends around Rs 2 lakh every month on each middle-level officer (the government employs 32.2 lakh people). If Chidambaram manages to trim their expenditure by even 10 percent, he can save Rs 12,000 crore, which is more than 6 percent of its budgeted income tax mop-up.

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[caption id=“attachment_630778” align=“alignleft” width=“380”] Why is the cash-strapped government not talking of downsizing the government’s staff budget?[/caption]

But here is the real clincher. An investigation by India Spend revealed that the total number of Government employees had actually come down from 2.8 million in 2005-06 to 2.5 million in 2009-10. But government spend on employees has actually gone up from Rs 39,239 crore in 2005-06 to Rs 85,963 crore in 2011, excluding incentives. Incidentally, the total number of employees came down from 2.7 million in 2007-08 to 2.5 million in 2009-10 but total salary expenditure increased by Rs 21,728 crore and average remuneration more than doubled to Rs 3.4 lakh. See the rise in payouts here.

Kikrit Parikh, former Planning Commission member and member of the Expenditure Reforms Commission has blamed coalition politics for the bloated size of ministries and departments.

“Everyone likes a PSU (public sector undertaking) under their wings. Slashing any government department will trigger stiff opposition.To accommodate coalition partners, there is a bloated council of ministers and layers of junior ministers. This has also meant carving out ministries from existing ones or creating fresh departments,” he has been quoted as saying in the newspaper.