NEW DELHI: While Indian finance minister Manmohan Singh stormed meetings of the International Monetary Fund with all kinds of reform-oriented promises, back home the vast government bureaucracy staged a coup against him by announcing a Rs 1000 crore annual bonanza by way of bonus and dearness allowance for itself. Loosening of bureaucratic controls is one of the important themes the finance minister has been dwelling on. Manmohan Singh announced a cut in the number of senior posts in the government of India but the latest hike in benefits to the bureaucracy virtually nullifies the effort. The manner in which the new financial commitments have been made is regarded by many observers as unprecedented. The Indian government summoned a meeting of chief ministers to discuss the country’s economy and the growing deficit of the central and state governments. The chief ministers formed a sub-committee headed by Orissa chief minister Biju Patnaik to recommend austerity measures.
This committee suggested that wages and allowances of government and private sector employees should be frozen for one year to improve the finances of the central and state governments. But with in hours of the announcement of the committee’s suggestions came a statement from the Indian government raising additional dearness allowance and bonus to government servants, The government also postponed a meeting of the chief ministers who meed under the banner of national development council, In disgust, the Orissa chief minister resigned from the austerity committee and accused the Indian government of serving the vested interests of “two percent of country’s population” at the cost of crores of poor people. According to a modest estimate, the decision saddles India’s exchequer with an additional annual burden of Rs 1000 crore but certain non-official estimates put the liability at Rs 1500 crore per annum, enough to substantially erode the new commitments made to India by the I.M.F. Any money that is still left to be spent is likely to be used by India to buy weapons systems from France and other European countries in the course of the prime minister’s visit to Paris.
Article extracted from this publication >> October 9, 1992
