Is Maharashtra, once known as one of the richest states in the country, spiralling into a dangerous and vicious debt trap?
The Comptroller and Auditor General certainly thinks so.
In its latest report for the year ended march 31 2010, the CAG slams the state government for gross mismanagement of its funds.
Nearly 20 per cent of the state’s total debt will have to be returned in coming five years, which might force the state to take another loan to repay the earlier loan.
The main reason for this dismal situation is that the government gets a meagre 0.13 per cent returns on its investment, while it pays 8 to 8.5 per cent interest for debt servicing.
So unless drastic changes are made, this could soon spiral totally out of control.
One key area which requires a major rethink is the government’s salary expenses. The state is expected to spend Rs 48,761 crore on salaries this financial year, which is 13.79 per cent more than the previous year.
Salaries thus eat up a whopping 40.13 per cent of revenue receipts. With other administration expenses taking up another 20 per cent, there is barely 40 per cent of the state’s revenue left for development work. Yet even after spending 40 per cent of its income on salaries, the services provided by the state are abysmal, and getting worse by the day.
The Mantralaya needs a new mantra
To address this issue on a war footing, the government will have to revamp and rethink several methods, keeping in view various factors that impact the working environment like technology, output audit, and the redundancy of certain positions.
But fundamentally, a cap on recruitment and reduction in workforce are the only options to reduce salary expenses, since unlike in the corporate world, the government cannot stop DAs, bonuses, increments or impose wage cuts.
Apart from legal issues, such acts require guts and political will which no recent government has shown so far.
One step that could yield instant rewards is the removal of personal assistants, or PAs. In our bureaucracy, it is not just the chief secretary, but all secretaries and deputy secretaries are alloted PAs. These assistants not only consume financial resources but also occupy space in Mantralaya, the state government headquarters.
And what do they do? They basically screen visitors and phone calls to the boss, take dictation and maintain an inward/outward register. Personal computers and modern telecommunication systems have made their role totally redundant. PAs can thus be removed in phased manner starting from the lower levels, ie the deputy secretaries first.
In 1995, on a trip to Washington DC, I called a Maharashtra state government secretary I knew, who had been posted there on deputation to the World Bank. The call went to an answering machine, but the moment I introduced myself, he picked up the phone to speak with me. So a secretary at the World Bank can do without a PA, but a deputy secretary, three rungs below him in the state government, cannot?
Mantralaya is full of deputy secretaries, additional secretaries, and joint secretaries, apart from other senior officials and ministers who enjoy the privilege of not just one, but at times several PAs. Laws restricting this remain on paper, but are blatantly waived, increasing the financial pressures on the state and of course, the tax payer.
Maharashtra is also home to the Bhabha Atomic Research Centre (BARC). Here, bar the top two or three positions, everyone else shares a secretarial pool, which is equipped with PCs and other modern equipment. If the country’s premier nuclear research centre can do this, why can’t the state government?
Besides, the government has been spending a lot of money over the years on PCs, laptops, hardware, software, networking and computer training. It has even been giving incentives to officers and staff for taking computer training, and talking about promoting e-governance. But if the officers still depend on PAs to get their work done, e-governance will remain just a dream.
Then there are the peons, another legacy of the British Raj. Our government offices are full of them. Some officials have more than one peon assigned to them. Basically, their job is to carry their bosses bags or briefcase and screen visitors.
Thus the government needs to seriously review not just the manpower perks and privileges currently available to its officials, but also the responsibilities of these personnel. If a PA is provided to the officer, he or she should not be paid for swatting flies most of the time, and be worth his or her salary.
Another major area to cut costs is space utilization. Every senior government official is provided with big cabin, huge tables, chairs and other furniture occupying large amounts of space. Do they all need so much of space and furniture? In modern private offices, barring a few top officials, all others are given open cubicles with a small worktable and two chairs. This also promotes an open culture and transparency, which the government desperately needs.
During British rule, the English used the system of PAs and peons to impress and intimidate the natives. Independence should have changed it, but instead, the white sahibs were replaced by brown ones.
Post globalization and liberalization, our babus who wish to enjoy corporate luxuries and perks must also learn to function in the same manner. If they want sleek cars, air-conditioned offices, and the benefits of technology, they must give up on unnecessary luxuries like PAs and peons. They can’t have their cake and eat it too.
But as always, the question remains: Who will bell the cat?
Such decisions will always be very difficult for any government to take, since it involves a) asking babus to sacrifice perks and privileges hitherto taken for granted, b) loss of jobs, and c) Union anger over job/position cuts.
But if planned expenditure, which ideally should be 35 to 40 per cent of the budget, keeps on reducing due to hikes in unplanned expenditure, the state’s growth will be affected, which in turn will hit revenues.
The government cannot increase revenue by hiking tax rates, since the state already has the highest taxes in the country, and any increase would prove counterproductive. A drop in revenue coupled with mounting debts is a one way ticket to a debt trap.
Caught between a rock and hard place, the Maharashtra government has two clear options before it.
One, cut unnecessary expenses now, and face the consequences.
Two, continue with these expenses, and prepare for bankruptcy or worse.
Which one will it choose?
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