A K Bhattacharya: Unmindful of the growing flab

NEW DELHI DIARY

Prime Minister Manmohan Singh has been laying a lot of stress on the need for strengthening the administrative machinery and thereby improving governance.

One would imagine that the administrative machinery could be strengthened by making the central ministries lean and more efficient. Reducing organisational flab by cutting down the ministries' manpower strength, therefore, should be on top of the government's agenda.

But that is not the impression you would get if you were to take a close look at Finance Minister Palaniappan Chidambaram's Budget for 2005-06, presented to Parliament on Monday.

The growing number of civilian employees in different central ministries and departments may well force you to believe that the government has taken the task of creating more jobs in the economy a bit too seriously.

The number of civilian jobs in different ministries and departments (including the Indian Railways) has grown by over 1.23 lakh in 2004-05. From 33.12 lakh at the end of February 2004, the total strength of civilian government employees went up to 34.36 lakh at the end of February 2005.

The United Progressive Alliance (UPA) government was formed in the third week of May 2004. So, it is reasonable to conclude that the bulk of the increase in the number of central government employees took place during the UPA regime.

And if you thought that the increase in the government employees' strength took place because of the Indian Railways and Railway Minister Lalu Prasad's liberal recruitment policy, you would be mistaken.

The railways did raise its strength from 14.45 lakh in 2003-04 to 14.67 lakh in the current fiscal, but this accounted for less than 18 per cent of the total increase in the year.

Which ministries accounted for the remaining 82 per cent of the increase? It turns out that the ministry of home affairs was the biggest culprit, as it added about 46,000 policemen during 2004-05 to take the total police strength under the central government to 7.54 lakh.

But the surprise is that if you exclude the Indian Railways and the home ministry, it is the finance ministry that made the largest number of recruitments in the current year. The revenue department recruited 7,000 employees to take its total strength to 1.3 lakh. The department of economic affairs did not want to lag far behind and recruited 1,000 employees during the current year to raise its existing strength of 22,394.

In one of his Union Budgets some years ago, former finance minister Yashwant Sinha had underlined the need for reducing the total strength of government employees and led from the front by abolishing a couple of senior posts in his own ministry. His was a desperate bid to set an example for other ministries to follow.

But no ministerial colleague of Mr Sinha made any attempt to emulate him. On the contrary, they made representations to the Prime Minister then to nip in the bud any move to abolish government departments or to reduce the number of employees in any ministry.

Today, the scenario has changed. Instead of advocating a squeeze on fresh recruitment, the finance ministry is busy recruiting more staff for its departments.

Even the department of posts maintained a slower pace of recruitment this year. It raised its total employee strength from 5.49 lakh last year to 5.55 lakh at the end of last month.

Other ministries that have increased their employees strength substantially during 2004-05 included the ministry of mines (by about 5,000) and the defence ministry, which added over 6,600 civilian employees.

The hard reality is that the government's total expenditure on salaries for its civilian employees is set to rise by 10 per cent to Rs 36,704 crore in 2004-05. The share of salaries in the government's total expenditure was estimated at 7 per cent in 2003-04. In the current year, it will go up to 7.2 per cent. But that is no consolation.

For, even though the total number of civilian government employees is projected to grow at a slower pace to 34.61 lakh by the end of February 2006, the salary bill for 2005-06 will rise by over 5 per cent to Rs 38,658 crore. And more importantly, the share of this salary bill in the government's total expenditure next year will once again inch up to 7.5 per cent.

You might argue that restricting the increase in the number of civilian government employees to less than 26,000 next year and containing the salary bill to an increase of 5 per cent are better than a runaway growth in expenditure under this head, as seen in previous years.

But then, don't forget that these are only budget estimates for the next financial year. What actually happens in 2005-06 can be anybody's guess, particularly when the finance minister has given no indication in his Budget speech of the government's plan to contain either the size of the ministries or the expenditure on salaries.

akb@business-standard.com