The Rediff Special

The bonus brouhaha

Every government makes a first mistake. The charitable say the payment of bonus to some government employees which led to a strike of telecom workers demanding the same rates of bonus was a mistake. Those not so well disposed towards the government say it was a sign of incompetence and weakness.

The drama lasted over a week. At the end of the week, the prime minister admitted before the Cabinet that he'd made a mistake: that he should have listened to his finance minister, rather than to the rest of the government.

By then it was too late. The government had committed itself to paying a bonus which it really can't afford. The inside story of how the decision to pay bonus was taken illustrates the fundamental problem with the government: How can a council of ministers work collectively when all its members are busy building their own constituencies?

When Surface Transport Minister T G Venkataraman brought his Transport Secretary S Sunder along with him to a Cabinet meeting in September, everyone knew they were in for a prolonged session. The Port Trusts had reached an agreement with workers promising them productivity-linked bonus: and every employee, including the Port Trust chairmen, was to be paid. What Venkataraman sought was a Cabinet endorsement of the decision.

Finance Minister P Chidambaram was the first to object. How could the government first do a deal and then look for ways of paying for it? The transport secretary piped up. The payment secretary piped up. The payment of bonus was outside the budget. Moreover, it was linked to productivity.

This itself was contestable. The Port Trusts have an installed capacity of 170 million tonnes - last year it cleared 220 million tonnes. So while it was true that it had improved its performance, the formula governing productivity is not a standard one. The finance minister's argument was that a marginal increase in output should not be counted as an increase in productivity.

And then there was the question of who should be paid bonus. He warned that paying everyone a productivity-linked bonus, chairman downwards, would be a dangerous precedent.

However, he was overruled. Home Minister Indrajit Gupta, who was the president of the Calcutta Port Workers Union many years ago and continues to be an honorary office-bearer, argued for the bonus. Industries Minister Murasoli Maran felt obliged to support his DMK colleague, Venkataraman. The Cabinet meeting in Parliament that day broke up with a complacent surface transport minister and a worried finance minister.

Courtesy: Sunday magazine