Administrative Reforms and the Budget

Last year, trying to manage a heavily indebted Kerala economy, CM AK Antony imposed cuts on government employees privileges. Government employees including teachers immediately went on indefinite strike as protest. The strike went on for more than a month even after AK Antony refused to pay salaries to striking employees. He hired temporary workers to take care of govt. process during the strike(which finally ended without his conceding anything).

But here the thing, inspite of the strike, the sales tax collection actually ROSE during the strike! Halfway through the strike there was this report:

``..The sales tax collection, on the other hand, has witnessed a phenomenal increase if the figures furnished by Finance Minister K. Shankaranarayanan at a Press conference here yesterday are any indication. The collection during the 16 days of strike has been Rs3.7 billion. The total collection of tax during the whole of last year was Rs36.68 billion.

Though the government had targeted tax collection of Rs47 billion for the current year, it could collect only Rs37 billion till January this year. The finance minister has expressed the hope that he would be able to achieve the target for the year if the collection continues at the present rate.

He said that the tax during the strike period from February 6 to 21 was collected with the help of only 67 officials as against 4600 officials employed in normal circumstances. The traders have mostly deposited the tax in banks. In fact, several traders have found this system so convenient that they have asked the government to continue with it even after the strike.

Many see the improved tax collection as an indication of the corruption prevailing in the tax department. A report from Palghat said that the tax collection from about 12 check posts in the district had gone up substantially following the strike. While the average tax collection from the main Walayar check post on the Tamil Nadu border before the strike was only Rs225, 000 per day, the collection during the period of the strike was above Rs500, 000 daily.

Trade sources said that the net collection from all the check posts in the district was only about Rs100 million a year. If the collection goes at the present rate it would touch Rs500 million. The sources said that free flow and under-valuation of taxable goods were rampant in the check posts in the normal circumstances.

They said that the strike had clearly exposed the large-scale corruption indulged in by officials posted at the check posts. The check posts in the State are manned by ex-service men and excise officials ever since the strike[began] ..``


No wonder the Chief Minister said that even if government offices remain closed there would be no loss.

After decades of experience with development, there is a clear agreement around the world that civil service reform is a critical factor. Trouble is, that while nearly every developing country has a civil service reform project, very few have the political will to implement it.
The argument that civil servants in developing countries have no alternative means of employment and would therefore starve is a fake argument. Since public sector employment simply takes resources away (directly or indirectly) from someone else. It would if fact be much better to pay these redundant civil servants to stay away from their offices. Aside from the additional hands they extend for taking bribes and harassing private entrepreneurs (who create real jobs in the economy), these redundant civil servants make government processes mroe complex and consequently the indirect losses to the economy are even greater (due to higher than market prices for goods and services purchased by the government in developing countries like India and Pakistan, whereas in countries like the US the government actually buys at lower than market prices).

This article mentions that if the strength of the civil servants was cut, they may be re-employed elsewhere. The truth of the matter is that most officers would not be able to deliver within the private sector. Unfortunately, the bureacracy sees itself as masters of the nation and instead of taking decisions based on merits and efficiency, tries to delay decision making for personal gain. In fact the actual work of decision making in many government offices is carried out by the clerical staff and the officer simply signs the document.

On the other hand the article mentions that about 50% of the staffing consists of clerks, drivers and peons. Some of these persons may be able to find jobs within the private sector.

However, the idea of maintaining high levels of government employment is purely political and does nothing but create inefficiency and expense.