Reinventing govt

While many will be tempted to look at the attempt to downsize government as a cost saving measure, the savings are unlikely to be very large, especially if you consider that, salaries of government staff are around Rs 33,000 crore out of total government expenditure of Rs 4,39,000 crore.

It is true, of course, that if the government is to shed ministries and then consolidate the remaining ministries in existing buildings, the value of the real estate freed would be large.

The biggest benefits from the exercise, however, will flow from the second round efficiency gains. The Drought Prone Area Programme and the Desert Development Programme, to name just a couple, are administered by several ministries.

Apart from increasing the staff costs for government, what this does is to ensure no ministry is really in charge, and hence responsible, and that probably explains why projects in India remain incomplete for decades at a stretch, and why just a fraction of the money spent for the poor really reaches them.

In many other cases, having government departments and ministries simply means work gets created for the babus, and that in turn means delays and related corruption "" this is probably the reason why the prime minister made a pitch the other day to cut the huge number of development schemes run by central and state ministries and to simply hand them over to the district/panchayat level.

All this, however, requires completely reinventing government. The good news, of course, is that this has already been done in some areas, and the results have been good. When state and central public works departments were in charge of building the country's highways, a princely 11 km were laid out each year.

When this task was handed over to the National Highways Authority of India, a small and dedicated team of government officials decided to outsource most of the functions of the PWDs "" so, instead of government supervisors, globally bid supervisory contractors were hired and consultants were asked to prepare feasibility reports.

In the case of the income tax department, as long as it was issuing PAN cards, the project never got implemented. Once this was outsourced, the backlog disappeared. Putting in more transparent and automated procedures also reduces the scope for delays and speed money which, in the case of direct taxes, was as high as 48 per cent of the total tax paid, to cite the figure from the Kelkar report.

In the case of the customs department, since a computer randomly decides who the assessor will be for a particular batch of imports, it is obvious that the scope for discretionary payments reduces. Allowing electronic filing of applications, and clearing them in the same manner, similarly, has reduced delays considerably for the country's importers.

Finally, reducing the number of ministers in government is a great idea (except for coalitions that need to buy support through ministerial berths), but unless accompanied by reinventing government, it will make little difference.