“Minimum government, maximum governance’ is all well. But how big should GoI ideally be? : 14-02-2019

In a per-capita basis, the US has about 668 employees per 100,000 of its population. According to the Seventh Pay Commission, India has about 139. About 4% of all workers are employed by GoI. In comparison, 34% of all workers are on Sweden’s government payroll. On a spending basis, India spends 12.74% of its GDP on its government, compared to the US’ 37.80%, the EU’s 45.80% and Japan’s 39.39%.

Typically, the richer the State, the more the government employees, with citizens trusting the government to offer quality public services in an accountable and transparent manner.

While the idea of ‘minimum government, maximum governance’ is very much needed in India, we must explore what the ideal size of GoI truly should be .

More importantly, where and how government employees should be deployed. While the US has over 34% of its employees in defence, and about 29% in the treasury (finance), homeland security and veteran affairs, India — excluding Indian Railways and India Post — has about 55% of its government employees in the home ministry. The central government, as according to ministry of finance 2016 figures, had 36,810 posts in atomic energy, 585,476 in defence (civilian jobs), 1,020,631 in the home ministry,  The central government, as according to ministry of finance 2016 figures, had 36,810 posts in atomic energy, 585,476 in defence (civilian jobs), 1,020,631 in the home ministry, 193,811 in India Post, and 1,314,773 in the ministry of railways.

At the state level, Himachal Pradesh has about 3,700 public employees for every 100,000 of its population .

Comparatively richer states like Gujarat and Maharashtra have fewer — 1,000-1,300 for every 100,000. There is a significant dearth of State capacity leading to consequentially slower progress in development indicators and poor delivery outcome. We cannot continue to be constrained by the rhetoric of having a large government when we have such significant gaps in public service delivery. The Indian State must grow, along with the productivity of government employees.

Our policy landscape also automatically assumes that any capital expenditure in infrastructure investments is healthy, while any revenue expenditure isn’t. Such a mindset leads to a large number of roads, schools, universities and hospitals, without a concomitant increase in the number of staff — teachers, doctors, etc — manning them. And, then, we question why progress is slow on meeting our human development indicator targets.

Think of a No., Any No.
The Indian State’s capacity is relatively limited. We have never had enough people to provide reasonable quality public services to our citizens. This is additionally hobbled by low productivity and corruption.

No government has ever had a fixed idea of how many employees work for it. There have always been significant inconsistencies. According to the Seventh Pay Commission, data of personnel from various ministries before 2014 is inconsistent with the census of government employees prepared by the ministry of labour and the expenditure budget provided by the finance ministry.

Figures of civil employees in the defence ministry also don’t match. The directorate general of employment and training put this number to be about 380,000, while the finance ministry counts just 34,500. Standardisation of data on a robust platform is needed to ensure consistency.

Where reforms are fundamentally needed is in the distribution of government employees. The Second Administrative Reforms Commission highlighted top-heavy government departments, with overstaffing at the headquarters for most institutions and ministries, and shortage at the field level.

There is lack of mobility between different arms of the civil services. Vertical mobility between lower to higher in specific arms is significantly restricted, while lateral entry from other civil service arms remain limited. The focus is still on keeping most civil servants as generalists, instead of making them choose domains after, say, 10 years of service. We should focus on mainstreaming lateral entry from the private sector, while increasing attention to soft skills and mid-career training .

There has been an ongoing debate on the optimal size of the government.

The Institute for Market Economics in Bulgaria has estimated that its economy needs a government spending of about 25% of the GDP, requiring a reduction from about 36% currently. Many other studies have highlighted ranges between 17% and 30%, depending on the homogeneity of the country’s population. Even by this measure, India falls significantly short.

Many politicians and policymakers have sought to transplant ideas associated with the West, particularly in the US, about the size of the government being a symbol of inefficiency and a bureaucracy’s sclerotic nature. Many have advocated a shrinking of the government footprint, both in the number of people employed and that of sectors the government regulates.

Money in Every Basket 
As such, an announcement of a rise in government recruitment numbers is greeted with an outcry about how such steps will add to a bloated government. The debate in the West is largely about how to shrink the State in a non-recessionary environment. India’s fundamental challenge, however, is how to ensure that government can provide quality public services

While following the theme of minimising government and maximising governance, we must ensure that there is enough government expenditure to meet the country’s defence, law and order, healthcare, nutrition and education needs. The focus must remain on maximising governance.

Source : PTI

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