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The Farce Of Transparency

It was a promising time. There were talks about downsizing, rationalizing the administered prices and introducing accountability and transparency. The various committees of the state planning board had deliberated on perspectives of the impending tenth five-year plan, measures for resource mobilization and extent of surplus in government staff.

A fiscal reforms commission was about to be set up. No overnight solution was expected. When the salvage operation was being initiated, it was the responsibility of the state government not to rock the boat. Then enter the dare-devil-firefighters who unknowingly added fuel to the smothering fire. Everything was blacked out. The gradual unfolding of an accountant’s policy matrix was there for everyone to see.

What can we say of the bureaucratic mindset, which declares with pride the savings achieved by tinkering with employees` salaries? Additional allowances can be done away only when inflation is controlled. Otherwise allowances are integral part of salaries to offset the effect of rising prices on the employee’s standard of living.

Every government must work and every worker should be adequately compensated. There is something sacrosanct about these compensations? The government should not deny the contractual obligation to give the compensation. Where is the credibility of the government whose top bureaucrats openly declare the bankruptcy of the government? What a time for transparency!

Let us look at the finance department’s diagnosis of the problem. A statement issued by the finance department says that the financial crisis faced by Manipur is primarily due to the revenue deficits and fiscal deficit (particularly the pay revision of the fourth pay commission’s recommendations).

It is implied that the revision is the main culprit.  But why should we be deprived of the benefits of the revision when the center and almost all the states have done so?   Besides much of the revision simply took care of the rising cost of living. The arbitrary withdrawal of allowances amounts to foisting the burden of so-called development on undeserving shoulders. Not only that, the revision was implemented after the authority gave careful thought to it. Due consideration of these points could have averted much of the current heart burning.

Either reducing our expenditure, increasing our resources or both, can eliminate our deficits. In our case the important determinants of non-plan revenue expenditure are real per capita income, total population, urban population and structure of the economy. The growth of real per capita income, urban population and total population and the decline of the share of the primary sector are associated with economic development.

Non-plan expenditure has come to be classified as non-development in character. However non-plan expenditure may be developmental in character but classified as non-plan either because it is committed expenditure on completed schemes of earlier plan or are a spillover from the earlier plan or is outside the plan allocation agreed to be paid by the Planning Commission. Plan revenue expenditure is incremental expenditure under heads of account, which are considered to be developmental heads in the revenue budget. Base level expenditure even under such developmental heads of account is considered to be non-plan expenditure.

All expenditure under non-developmental heads, base level and incremental is non-plan. The non-developmental revenue expenditure heads are interest payments, appropriation for reduction or avoidance of debt, defense services, administrative services including police, pension and other retirement benefits, relief on account of natural calamities, compensation to local bodies and Panchayati Raj institutions. Social security, the nature and correlates of non-plan revenue expenditure show that these heads cannot be reduced across the table. Interest rates also have increased due to liberalization of the money market.

The challenge is how to ensure an uninterrupted flow of funds for our ever-growing public expenditure needs. Any attempt to raise the efficiency of public expenditure will have similar effect as raising more resources. There is a false notion among our bureaucrats that there is surplus staff only in the lower rungs of administration. However the issue of downsizing along with quantitative and social aspects has never been properly discussed. Since employment creation has also been an objective of our plans, the large number of government employees can be regarded as a plus point.

However the employees should be productive enough and the appropriate work environment should be created, internal resource mobilization cannot take off due to the backwardness of the economy and inefficiency of the revenue collecting machinery. The fiscal crisis has been gradually building up in the last few years.  In the process it has developed its own momentum. Now it is the responsibility of the bureaucrats to explain to the Center the diagnosis of the problem and convince the central authority that stopping payment is not the solution.

The irregular payment of salaries and the consequent irregular disbursements have nearly destroyed the socially popular household saving institution known as Marups. The people can no longer repose their confidence in the leadership role of the government. This is bound to affect the investment climate adversely. Instead a regular payment of salaries and disbursements would be more beneficial for the economy. However everyone wants to shift the responsibility.

The central government has its own reasons for directing Manipur to mind its business itself, washing its hands of a crisis in which it is equally responsible. The successive governments in Manipur also have failed to convince the Center and now it has decided to shift the burden on the helpless state government employees. They in turn will shift the burden till it rests on the lowest rung of the society from where there is no more scope for any shifting.

We are not convinced that everything will be all right by April 2002. The paradoxical stance of the policy makers underscore the apprehension that there is a vested interest in keeping the financial system in this mess. The delaying tactics will be very costly. There is no attempt to strike at the root of the problem. Then, is there any hidden agenda in maintaining the status quo?  The assertion that the authority is neither capable of understanding the various facts of the problem nor willing to implement the remedial measures is simply unbelievable. If it is, it is simply intentional.

*The article is written by E Bijoykumar Singh

*The writer is an Associate Professor in the Department of Economics, Manipur University

(Courtesy: The Imphal Free Press)

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