You are here: Rediff Home » India » Business » Special » Features
Search: The Web
  Discuss this Article   |      Email this Article   |      Print this Article

What happened to slashing govt jobs?
George Iype
Related Articles
6th Pay Commission may derail economy
Pay Commission: The Election Angle
Will new pay panel proposals bankrupt India?
 · My Portfolio  · Live market report  · MF Selector  · Broker tips
Get Business updates:What's this?
July 31, 2006
A drastic downsizing of the government staff strength becomes necessary not only for securing modern and professional governance as visualised by the Fifth Central Pay Commission, but also to ensure that the burgeoning salary bill does not pre-empt scarce resources, that could otherwise be applied to priority areas like infrastructure development, human resource development and poverty alleviation.'

This is what the 10th Expenditure Reforms Commission Report on OptimiSing Government Staff Strength said in 2001.

Last fortnight, the Manmohan Singh Cabinet constituted the Sixth Pay Commission that will recommend, in the next 18 months, new salaries for millions of government employees.

Economists and experts now warn that the decision to set up a new Pay Commission might stifle India's economic growth down the line, as the government is yet to fully implement many of the recommendations of the previous Pay Commission.

Did the previous Fifth Pay Commission recommend only the hiking of salaries of government employees?

No. And that is the biggest problem.

Some of the Fifth Pay Commission's important recommendations included slashing the government workforce by 30 per cent; abolishing 350,000 vacant posts and reducing the number of pay scales from 51 to 34.

Not one of these was implemented.

The Commission also suggested that the grant of salary hikes to employees should be linked to issues of downsizing government staff, efficiency, and administrative reforms.

The government only implemented the monetary benefits part: like wages hikes.

So what has happened to the downsizing of government machinery that the Fifth Pay Commission recommended?

"That is the real issue we need to look at. In fact, the politics behind the whole Pay Commission effort is that over the years nothing really has been done on downsizing the government," points out Bibek Debroy, economist and secretary general, PHD Chambers of Commerce and Industry.

He says one reason why the Fifth Pay Commission recommendations completely ravaged the finances of the central and state governments is that many of the other recommendations, like downsizing government, were simply ignored.

In fact, then finance minister Yashwant Sinha was so concerned about the slack downsizing attempt by various departments that in 1999, he set up an Expenditure Reforms Commission to recommend ways to downsize government in a systematic manner.

'The high rate of growth of non-developmental expenditure by government is a growing and critical source of concern. The most effective and lasting solution to this problem is to begin the process of downsizing the government,' Sinha had then noted, while setting up the Expenditure Reforms Commission.

The task before the Expenditure Reforms Commission was to recommend ways to reduce the roughly 4.2-million-strong central government staff, which would have then helped even state governments to downsize its 20 million employees.

So what were the Expenditure Reforms Commission's recommendations?

  • A 10 per cent reduction in central government staff as on January 1, 2000 to be carried out by 2004-2005.
  • A screening committee consisting of the secretary of the concerned ministry, a representative of the department of personnel and training, and a representative of the department of expenditure should be set up.

    This committee should prepare the annual direct recruitment plans for all cadres, with approval -- in respect of group 'A' posts -- being accorded by a committee consisting of the Cabinet secretary, concerned secretary, secretary (DOP&T) and secretary (expenditure).

  • There should be a total ban on creation of new posts for two years.
  • Staff declared surplus should be transferred to the Surplus Cell to be redesignated as the 'division of retraining and deployment,' which will pay their salary, retirement benefits, etc. In these centres, where the number of surplus staff is quite small, the present practice of the parent organisations making these payments may be continued.
  • Surplus staff should be made eligible for a liberal voluntary retirement scheme (VRS) recommended by the Fifth Pay Commission, with the exception that commutation entitlements will be as at present and the ex gratia amount will be paid in monthly installments covering a five-year period.
  • Those who do not opt for VRS and are not redeployed within one year will be discharged from service.

The Expenditure Reforms Commission further said that computerisation, office automation, creation of paperless offices and changes in office systems and file management would considerably reduce the government's staff strength.

Moreover, the Commission also put before the government a 10-year manpower plan.

'If we have to plan for a 30 per cent across-the-board cut, within a time frame of ten years, it would amount to 3 per cent reduction in manpower levels every year. As this is the normal attrition rate due to retirements, deaths, resignations etc, a total freeze on fresh recruitment alone can achieve the 30 per cent reduction within ten years,' the Expenditure Reforms Commission said.

Thus, the core of the Expenditure Reforms Commission recommendations was that there should be a complete freeze on all new recruitments and no vacant posts should be filled up.

Has the government heeded these crucial recommendations?

Officials at the finance ministry say the recommendations have remained only on paper.

"The government has not even cared to issue orders to any department asking it to completely ban all new recruitments. Vacant posts are getting filled up in every sector," one finance ministry official told

Currently, 3.5 lakh (350,000) posts lie vacant in the central government alone.

The best solution for downsizing, the Expenditure Reforms Commission recommended, is to abolish all these 3.5 lakh posts at one stroke. But the government has not done so.

Officials say there is a tendency on the part of departments to send proposals for creation of new posts every now and then.

The result is that, even if some jobs are cut or abolished, the government is back to square one if as many fresh jobs are created in the meantime.

'This has been the fate of all the 10 per cent cuts that are ordered: sometimes by the Union ministry of finance and sometimes by the prime ministers over the years. Parkinson's Law operates, inviolate,' the Expenditure Reforms Commission had pointed out.

But it seems the Indian government will never bother about Parkinson's Law which states, 'Work expands to fill the time available for its completion.'

More Specials
 Email this Article      Print this Article

© 2008 India Limited. All Rights Reserved. Disclaimer | Feedback