Friday, June 1, 2012

Austerity Measures by Govt of India

Yesterday it was the news that Government of India has implemented Austerity Measures to cut the Government Spending for unplanned expenditure.  The motive behind that is to reduce the fiscal deficit of over INR 97000 Crores. The news should be receiving a lot of praise from the economists "May Be".

But when reading through the various expenditures by the Top Government officials, I was surprise to note that Mr. Motek Singh Ahluwalia, the Vice Chairperson of Planning Commission was on Foreign tours for almost 220 days in the previous year. With avg expenditure of about 18 lakhs a day, this expenditure would be roughly around 40 crores.  

Another expenditure that was widely discussed in the public domain by the fellow countrymen in India is the whopping 205+ Crores by the President of India on her foreign trips.  

So interestingly, if we sort of average it out for the various ministers and member of parliament, then we can arrive at a figure of roughly 20 crore per head in a year, that would mean for the contingent of MPs itself that counts to 543 in loksabha and 250 seat in rajyasabha, the exchequer coughs up roughly 16000 crores in a given year. That should be roughly 15% of the Fiscal deficit.  So if we extrapolate the figure to the rest of the IAS cadre contingent estimating them to be around 1000 and roughly 10 crore per head per year, it would add up to another 10000 crore that would be another 11% of the Fiscal deficit.  So all in all the these Austerity measures should reduce the Fiscal Deficit by at least 25%, provided the Ministers and the MPs would abide by the orders as released.

There are certain more aspects to the Austerity Measures that should be implemented by the Government and that should be the usage of Army /Airforce Choppers / planes by the ministers and the MPs.  This should be further restricted as at times the facility is misused by the Public Servants.  

I would though be skeptical if the Austerity measures would help reduce fiscal deficit by more than 10%  for the way our MPs and Ministers are and the way the Official Cadres enjoy Bypassing the orders due to their closeness to these MPs and Ministers......

We have a long way to go and see if the Austerity Measures are really a success or not!!!!

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