There is a welcome realisation on the part of the Central government on the bloated nature of employment in the government sector. In the first four decades after independence, the economy witnessed a massive increase in government employment. The impact was not felt much as the salary levels were low and the outgo on pension was small. Post the 1990s, several developments contributed to a humongous increase in salaries, wages, and pensions of government employees. These include:
Recommendation for successive finance commissions suggesting steep increases in salaries.
Increased longevity of the population, plus indexation of pensions resulting in rapidly ballooning outgo.
Participation of the leftist parties in governance that emphasised pro-employee biases.
Thus over the last 25 years, salary levels of government employees have increased manifold widening the gap with average wage levels. Therefore, we have two distinct levels: employees of the government or flourishing organised sector at the one end and those in the medium, and small industries sector and the unorganised sector. The gap in wage levels has been widening. The salary of a car driver, for instance, varies from Rs 15,000 per month to Rs 50,000 per month. Organised industry tackled this by outsourcing several of its requirements to medium and small industrial units and through automation.
The government has been late in the following suit. The recent announcement of merging BSNL and MTNL by providing liberally for voluntary retirement scheme (VRS) for thousands is an offshoot of this realisation. The two PSUs together employ 1.82 lakhs. The liberal VRS package is expected to be availed by nearly half of the total employees of the two organisations.
…the Tamil Nadu experience
With differing political parties in power in the states and the Centre, it has not been easy to look at economic issues in unison.
There are some welcome signs of the need for a quick change in the approach to government employment. As a political expedient, TN Chief Minister Karunanidhi opened the floodgates of employment, totally unconcerned with its deleterious impact on its finances. The result is a large increase in employment in government service with little improvement in outcomes. With the state opting for parity with Central government pay scales, salaries and other employee compensations and pensions together are budgeted to account for nearly 70 per cent of the total state revenues in 2019-20.
K Shanmugam, who has had a long stint as finance secretary, (now Chief Secretary), had expressed concern over this issue. In recent years, the state has been frugal to go for a replacement for retired staff. There also seems to be the realisation to go for outsourcing and contracting jobs wherever possible. The current team of senior officers well-exposed to global practices could be expected to address this issue. The BSNL-MTNL scheme of rationalisation will be watched with interest. The state could adopt the lessons of such reforms to benefit.
Kudos to ex-Chief Justice
Chief Justice Ranjan Gogoi deserves the gratitude of the citizens for setting a tough goal to decide on several famous court cases pending for long and achieving it. In the last week of his tenure, 9-15 November, in quick succession, the benches of which the chief justice was part, came out with judgments on several landmark cases. These included the Ayodhya land dispute, the ban on women worship at Sabarimala, bringing the office of CJI under the ambit of the RTI, review of the Rafale deal and a contempt plea filed against Rahul Gandhi.
Except for the Sabarimala case, the court had been decisive in regard to the other judgments. For the Sabarimala case with a 3:2 split verdict, the court has committed the case for review to a new seven-judge bench.
Happily, there was wide acceptance of the judgments by vast sections of the country.
Such determination to clear cases pending for long with well-set timelines should continue to dispose of a large number of cases pending with the courts.
Should higher education be subsidised so much?
Delhi seems to be returning to its morcha days. Soon after the lawyer-police confrontation had exploded, the Jawaharlal Nehru University (JNU), students’ protest over increase in tuition fees, hostel rent, food, and service charges began. In line with the past reputation of left-orientation and agitations, JNU students had gheraoed the minister, vice-chancellor and other administrators. Some sections also vandalised the statue-to-be-unveiled of Swami Vivekananda.
Look at the issues involved: an increase in the room rent from Rs 10/20 per month to Rs 300/600 per month with an added service charge of Rs 1700 per month totaling hostel fees up to Rs 2000-2300 per month. And an increase in mess charges from Rs 5500 to Rs 12,000. It is gathered that there had not been changed since the 1980s.
News television channels had a field day presenting some of the alumni that included activist Kanhaiya Kumar and actor Swara Bhaskar. There was a demand that higher education should be totally free. Look at the table: fees charged are so ridiculously low that they don’t cover even the cost of collecting these! The concern should be more on offering quality education at the primary, middle and secondary school levels. The quality has been mediocre if not outright poor in government-run schools that account for close to 80 per cent of school education. For higher education, liberal facilities are available in terms of scholarships and bank loans.
The alumni of JNU include celebrities like Nobel Laureate Abhijit Banerjee and Finance Minister Nirmala Sitharaman. Can one include these as students belonging to the poorest of the poor? There is justification for subsidising higher education for the poor and those who cannot afford it, but can it be universal?
The prestigious IITs have been successful in enhancing the tuition fee (to over a lakh of rupees) and hostel charges of over Rs 5000 per month. In Tamil Nadu, fees charged for government-run medical colleges are a small fraction of the exorbitant fees charged by the private colleges. It is time some rationale is brought into the tuition fees and hostel charges for higher education.
Rafale deal vindicated
The Supreme Court has given a clean chit to the Modi government on the Rafale deal. The three-judge bench headed by the Chief Justice dismissed the review petitions filed by a team of three advocates led by Prashant Bhushan and former BJP leaders, Arun Shourie and Yashwant Sinha. The unanimous judgment held that the price of the Rafale jet finalised by the NDA government was marginally lower than the one negotiated by the UPA government! Comparing the costs of a bare aircraft with a fully loaded aircraft was like comparing apples and oranges, observed the court. The court declined to embark on a ‘roving and fishing inquiry.’
The strident chowkidar chors hai allegation by Congress leader Rahul Gandhi and the investigative reports by N Ram and The Hindu have thus fallen flat.
IE had pointed to the indecision of the then Defence Minister A K Antony. Several reports had been pointing to Indian Air Force not upgrading its combat aircraft for decades.
The judgment was forthright: “we cannot lose sight of the fact that we are dealing with a contract for aircraft pending before different governments for quite some time. The necessity for these aircraft has never been in dispute.” The court also pointed to the petitioners construing themselves as an appellant authority to determine each aspect of the Rafale deal.
The Congress party that ruled the country for decades has the responsibility to accept the verdict of the highest court with grace and move on.
Welcome initiative by OPS
Deputy Chief Minister, O Panneerselvam recently visited the US. His programme included meetings and interactions in Chicago, Washington, and Houston. OPS interacted with the large Tamil diaspora in these metros as also met with prospective investors. Principal Secretary, Finance, S Krishnan, accompanied OPS and facilitated meetings with the International Monetary Fund, World Bank and other lenders. These have been liberally funding several projects in Tamil Nadu.
IE welcomes the efforts of the state government to attract investments projecting the several attractions of the state in terms of its rich infrastructure, a long coastline, an abundance of skilled manpower, and the profitable record of existing enterprises. Such efforts should expand.
Tribute: R Balasubramanian
R Balasubramanian (Balu) graduated in mechanical engineering from the College of Engineering, Guindy. Tall and well built, he worked in a couple of companies before moving to Simpsons. At the latter, he rose up in the hierarchy to become Executive Director.
In the turbulent times of the early 1970s, the DMK aggressively captured trade union leadership in industrial units. There was a bitter fight between the Congress/Communist-controlled unions and the DMK’s. This led to prolonged strikes and lockouts of several units. Simpsons Group was the largest in Chennai at that time employing over 16,000 and faced severe disruptions. Several units of the group concentrated at Huzur Gardens, Sembium, remained closed for months.
Balu established rapport with the employees and helped the IR team to crack the trouble. He visited the houses of many of the employees, attending functions, and standing by them at times of their distress.
Gregarious, witty and quite systematic, Balu had the noblesse oblige spirit in abundance. He codified the process of planning and conducting a wedding right from the start to finish!
Balu assisted his daughter Himaja to evolve as a brilliant danseuse. He also groomed his nephew Madhusudan with parental care. Madhu, a brilliant alumnus of the College of Engineering, Guindy, and IIM-Kolkata, is presently the Country Manager, P&G.