Tighten those belts, tuck in that tummy
It is in the fitness of things that Prime Minister Manmohan Singh has asked his cabinet colleagues to cut down on foreign travel and wasteful expenditure. Given the relentless rise in global crude and commodity prices, there is tremendous pressure on government resources. To minimise the impact of costlier oil prices, the Finance Ministry decided to cut duties and taxes, forgoing revenue of Rs 22,660 crore this fiscal. Not surprisingly, it has issued guidelines on fiscal discipline to all departments to contain expenditure and ensure that adequate resources are available for priority areas like social sector and infrastructure. These include cutting down on overtime allowances, domestic and foreign travel, publications, professional services, advertising and office expenses. Even if the savings from this austerity drive is only Rs 5,000-6,000 crore, it sends the right signals that the Union government, too, is tightening its belt in these difficult times.
To be sure, this is not the first time that the Prime Minister has alluded to the need for greater austerity. In his address to the Confederation of Indian Industry’s annual general meeting in 2007, he appealed to captains of industry to desist from conspicuous consumption; that industry needs to be moderate in the emolument levels it adopts; that rising income and wealth inequalities, if not matched by a corresponding rise of incomes across the nation, can lead to social unrest. But such a message becomes more forceful if the government also walks the talk on austerity. How can business eschew a vulgar display of its wealth, when government functionaries splurge on junketing abroad and seminars in five-star hotels? It is also well known, that weddings of government functionaries are no less ostentatious than those celebrated by the rich and powerful segments of India’s society. “Such vulgarity insults the poverty of the less privileged, it is socially wasteful and it plants the seeds of resentment in the minds of the have-nots,” argued Singh.
While the call for belt-tightening is a step in the right direction, aren’t they a tad late in the day? These too-little-too-late efforts come when the UPA government has entered the home stretch of its five-year term. And there are no prizes for guessing that ensuring its re-election will be its biggest priority as important state polls and a national election in 2009 draw closer. For all the talk of austerity, these thoughts will be far from the minds of the ruling party campaign managers when they stump around in states like Rajasthan, Madhya Pradesh and Delhi later this year, promising free colour TVs, electricity and more farm loan waivers. Subsidies are already mounting, thanks to costlier oil, food and fertilisers. It is interesting that the ongoing efforts to reduce spending don’t touch such expenditures that are seriously straining the government’s finances. It is equally interesting that despite all such strains, the government maintains that it would stick to its fiscal deficit target for 2008-09. If it were so responsible, the big question is what this hullabaloo regarding austerity is all about?