This week began with tabling of SPC report in the Parliament. Speculations were rife about the salary hike recommended in the report. As expected, the hike came in the range of 40-60% of the current take home. The percentage varied for different scales of entire central government cadre. Media - print, electronic or Internet based - is abuzz with the expert discussions about the feasibility, impact, worth and ilk of the SPC award. It's sorry to note that the word 'experts' has, sort of, lost its meaning.
Talking of feasibility of the SPC award, the monetary size is trifle looking at country's GDP (circa 0.5%). Government has buoyant revenue collection in last few fiscals, thanks to the booming market conditions. Based on this premise, government has formulated umpteen social schemes, NREG being the prominent. The annual outlay of NREG (2007-08: 12k cr) itself well exceeds the annual SPC award amount (8k cr).
The impact of SPC award, nevertheless, has been met with all but negative sentiments. Everyone is suddenly talking of spiralling fiscal deficit; the SPC worsening it furthermore. Interestingly, the award amount is visualised only as fiscal deficit! It's sounds more like the amount being poured straight into the drain. Arithmetic total of the political largess like farm loan waiver (50k cr) and failed schemes like NREG, and the oil and fertiliser bonds (54k cr and 7k cr, resp.) is many times higher than the SPC award amount. How fair and valid are farm loan waivers, from the view of economics, is a separate issue. Bailing out oil companies by issuing oil bonds is, certainly, regressive economics. Not only it keeps the oil companies artificially out of the red, it fails to dissuade people from cutting oil consumption. Moreover, such naively imprudent fiscal policies and measures, done mostly for immediate benefit, hamper the economy in the long run. Given the high percentage of anti incumbency voting trend in the country, if the current government gets voted out, the following one gets an overhead of such bonds, totally uncalled for. The SPC award (and arrears) would come with TDS, meaning almost a third of the amount never leaves the government coffers. The lump sum amount received would go into purchases ranging from car to house, providing additional taxes. Rudimentary estimates assure that the government would get back around 40% of the SPC award amount. Any of this won't happen in the aforementioned politically motivated actions.
The issue of worth of SPC award, however, has got the most banging. All and sundry have come out unanimously stating that the award is worthless - unjust, in view of some - for it manures the perfunctory government machinery. Another case of extremism. No so longer, the very same government job was considered coveted, given its security and associated 'luxurious' life. The present generation scathing the government machinery may first ponder over the fact that it's the immediate two generations - of their fathers and grandfathers - they are calling defunct, as government was - and is - the biggest employer in the organised sector. It's not about disrespecting. It's more of being careful while uttering such generalisation. It isn't a great situation being into, if one has to swallow ones words back. Accusations of bribery, pilferage and tax evasion are being slammed with vengeance. It's amusing to note the innocent take of the common masses in this regard; bureaucracy as the dark side, private enterprise as spotless charactered heroes. One can be amazed to note the novel ways devised by the private enterprises to evade taxes, just to spill the truth.
The point is not to defend the award or the awarded. It's to highlight such points which never see light of the day. Does government need to sell grains at discounted price and recover the deficit by taxation? Even better, does government need to buy the grains, store them and sell it, in the first place? Should government be into the business of producing fabric and sitcoms, both, and at the same time? Should government ply buses and run railroads? Does government need to continue sending postal mails in the age of mobiles, SMS, emails and IMs? Does government need to conjure up textbooks? Government is supposed to govern; frame and enforce laws, regulate - not run - the businesses, fostering competitiveness, while ascertaining fair play for all players - startups or otherwise - and, ensure law and order. That surely require manpower. As much as the present? Unlikely.
Talking of feasibility of the SPC award, the monetary size is trifle looking at country's GDP (circa 0.5%). Government has buoyant revenue collection in last few fiscals, thanks to the booming market conditions. Based on this premise, government has formulated umpteen social schemes, NREG being the prominent. The annual outlay of NREG (2007-08: 12k cr) itself well exceeds the annual SPC award amount (8k cr).
The impact of SPC award, nevertheless, has been met with all but negative sentiments. Everyone is suddenly talking of spiralling fiscal deficit; the SPC worsening it furthermore. Interestingly, the award amount is visualised only as fiscal deficit! It's sounds more like the amount being poured straight into the drain. Arithmetic total of the political largess like farm loan waiver (50k cr) and failed schemes like NREG, and the oil and fertiliser bonds (54k cr and 7k cr, resp.) is many times higher than the SPC award amount. How fair and valid are farm loan waivers, from the view of economics, is a separate issue. Bailing out oil companies by issuing oil bonds is, certainly, regressive economics. Not only it keeps the oil companies artificially out of the red, it fails to dissuade people from cutting oil consumption. Moreover, such naively imprudent fiscal policies and measures, done mostly for immediate benefit, hamper the economy in the long run. Given the high percentage of anti incumbency voting trend in the country, if the current government gets voted out, the following one gets an overhead of such bonds, totally uncalled for. The SPC award (and arrears) would come with TDS, meaning almost a third of the amount never leaves the government coffers. The lump sum amount received would go into purchases ranging from car to house, providing additional taxes. Rudimentary estimates assure that the government would get back around 40% of the SPC award amount. Any of this won't happen in the aforementioned politically motivated actions.
The issue of worth of SPC award, however, has got the most banging. All and sundry have come out unanimously stating that the award is worthless - unjust, in view of some - for it manures the perfunctory government machinery. Another case of extremism. No so longer, the very same government job was considered coveted, given its security and associated 'luxurious' life. The present generation scathing the government machinery may first ponder over the fact that it's the immediate two generations - of their fathers and grandfathers - they are calling defunct, as government was - and is - the biggest employer in the organised sector. It's not about disrespecting. It's more of being careful while uttering such generalisation. It isn't a great situation being into, if one has to swallow ones words back. Accusations of bribery, pilferage and tax evasion are being slammed with vengeance. It's amusing to note the innocent take of the common masses in this regard; bureaucracy as the dark side, private enterprise as spotless charactered heroes. One can be amazed to note the novel ways devised by the private enterprises to evade taxes, just to spill the truth.
The point is not to defend the award or the awarded. It's to highlight such points which never see light of the day. Does government need to sell grains at discounted price and recover the deficit by taxation? Even better, does government need to buy the grains, store them and sell it, in the first place? Should government be into the business of producing fabric and sitcoms, both, and at the same time? Should government ply buses and run railroads? Does government need to continue sending postal mails in the age of mobiles, SMS, emails and IMs? Does government need to conjure up textbooks? Government is supposed to govern; frame and enforce laws, regulate - not run - the businesses, fostering competitiveness, while ascertaining fair play for all players - startups or otherwise - and, ensure law and order. That surely require manpower. As much as the present? Unlikely.
