Bibek Debroy Committee on the restructuring of Indian Railways has submitted its final report

Bibek Debroy Committee on the restructuring of Indian Railways has submitted its final report to the Union Ministry of Railways. The committee has suggested measures for restructuring the Railway Board and its departments so that policy making is separated from day-to-day operations. Recommendations of Bibek Debroy committee Establishment of an independent regulator Railway Regulatory Authority of India (RRAI) with a separate budget and to be independent of the Ministry. RRAI will decide on tariffs to revamp the cash-strapped railways. Railway Budget should be phased out with gross budgetary support to Indian Railways. There is need to improve the internal resource generation and explore varied methods of financing but also to improve utilisation of available resources. No privatisation of Indian Railway but allowed participation of private sector in the railway projects. Separation of activities like running of hospitals, schools, real estate development, catering, manufacturing of locomotives, coaches and wagons from the core business of running trains. State governments should be asked to entirely fund the Government Railway Police (GRP). General Managers should have the freedom to choose between private security guards and RPF for security on trains. The recommended changes should be implemented only by Union Railways ministry in the first five years including the resolution of the social cost issue. Background Union government had constituted the high-level committee in September 2014 to restructure the Railways and suggest ways for resource mobilisation. It was seven-member panel headed by eminent economist and NITI Aayog member Bibek Debroy. The other 6 members are former cabinet secretary K M Chandrasekhar, Gusharan Das, Ravi Narain, Partha Mukhopadhyay, Rajendra Kashyap, Ajay Tyagi and Ajay Narayan Jha.

The Ukraine imbroglio

The G-7 nations put on a brave face against Russia at a summit held this week in the Bavarian Alps and decided to continue their sanctions against President Vladimir Putin for what they called his war in Ukraine. U.S. President Barack Obama in fact accused Mr. Putin of “wrecking his country in pursuit of a wrong-headed desire to recreate the glories of the Soviet empire”. Russia countered by warning that it would prolong its own counter-sanctions, indicating there would not be any change in its Ukraine policy. While all this is happening, a fresh outbreak of violence between government troops and pro-Russian separatists in eastern Ukraine is threatening to derail a tenuous ceasefire. Ukraine is paying a heavy price for this stand-off. It has lost Crimea to Russia, is fighting a deadly civil war in the east, and its economy is in a state of collapse, it having contracted by nearly 18 per cent in the first quarter of 2015.

The real crisis of Ukraine is that it is caught in a game of one-upmanship between the West and Russia. The West wants to punish Russia for its annexation of Crimea and for helping separatists in eastern Ukraine. Moscow, on the other hand, sees Western involvement in the ouster of Ukraine’s pro-Moscow President Viktor Yanukovych, and seems determined to resist the North Atlantic Treaty Organisation’s outreach to its backyard. If the West’s real intention is to get Russia to change its policy towards Ukraine, it should rethink its sanctions regime, which has been demonstrably ineffective over the past 15 months. Supporters of the sanctions might argue that those worked in the case of Iran and might work in Russia’s case as well. But Russia is not Iran. It is a geopolitical giant, a former superpower and a huge country that still has substantial leveraging power in Central Asia and Eastern Europe. Given the way policy-making works in the Kremlin, it is illogical to believe that any kind of coercion would work against Mr. Putin. Besides, there is little to suggest that the Western policy of isolating Russia is working at all. More than a year after Russia was suspended from the G-8 following its annexation of Crimea, the leading powers still need Russia to deal with pressing global issues ranging from the Iranian nuclear talks to the Syrian civil war. So a more pragmatic approach would be to start a diplomatic engagement in a mutually conducive environment. The inept handling by both sides of what was a domestic issue in Ukraine has turned it into a regional problem. Left unchecked, the problem could well turn into a war. It is high time the West and Moscow set aside rhetoric and started addressing the problem directly.

In (partial) defence of the IAS

There are four types of comments on the civil services. Some politicians are openly contemptuous of a lack of commitment to their policies on the part of civil servants. Retired officers are nostalgic about the 'good times' of the past and concerned about latter-day relations with the political executive. Analysts generally take a descriptive approach documenting institutional evolution with a focus on implementation failures rather than how policy is made. Then there are those, like this author, for whom the underlying issue is the changing role of the IAS with respect to governance.

The Indian Civil Service, not the army, constituted the "steel frame" of the Empire, and the primary task of the district magistrate (DM) was to secure the public interest. A provision was made in the Criminal Procedure Code, Section 144, providing for overriding powers to give any direction to persons in the district in the public interest. This extended to institutions of the central government. For example, any resolution of the Cantonment Board could be stayed in the public interest and referred to the central government. Similarly, under the Railways Act traffic could be restored after an accident only after the DM concluded relief work. The DM also had superintendence over the police and powers of conservator under the Forest Act in community forests. The Police Commission of 1902 records that the inspector general of police was equivalent in rank to the DM. A small group of civil servants were the 'guardians' because that is where the buck stopped.

The situation is different now, as it should be, in a democracy seeking rapid economic and social change with the pivotal role of the DM replaced by dual leadership of a department by the minister and the secretary, making the relation between them of crucial importance. However, even after 65 years the roles of the political executive and the permanent executive have not been clarified. Defining the 'competent authority' is a key issue now before the courts in the coal scam.

The prime minister has rightly focused on transforming an agrarian economy into an industrial, urban and knowledge economy which is expected to be at 10 times the speed and 100 times the scale of what happened during the industrial revolution in Britain. China did this over a 20-year period of continuous and rapid growth in an authoritarian set-up. We will have to chart a very different course.

Administration is an evolving process, responding to the transformation of a diverse country and requiring the civil service to constantly re-invent itself to meet new challenges. First, positive steps are needed for the discharge of statutory responsibilities and duties of the administration so that it becomes accountable to the law of the land and to the people. Second, the civil service needs to deliver better service through a digital platform where citizens can access all services; a system that is more trusting of citizens can deliver better service. Third, leadership has to be devoid of management jargon and focus on stating views with clarity, inspiring others and moving away from managing departments to building skills to steer systems that overcome fragmentation. Government is being challenged to do more by the public themselves, and they do not distinguish between the political and permanent executive.

The core of this issue was examined by the Administrative Reforms Commission (ARC) in 2009. It stressed the need to prepare a Civil Service Act. The Government of India agreed with the recommendation and decided on a Civil Services Performance Standard and Accountability Bill.

The proposed Act is to include (i) a vision for civil services, (ii) a code of ethics for civil servants, (iii) principles for civil services management, (iv) a framework for performance management for civil services, (v) civil services management - organisation, structure and functions, and (vi) an implementation mechanism for the Act. The Government of India also decided the state governments would be advised to take similar action after the proposed Act is passed by the central government. This exercise is still on-going.

The ARC has also examined the relations between the political executive and civil servants, and pointed out that "there is need to safeguard the political neutrality and impartiality of civil services, and the onus for this lies equally on the political executive and the civil services", and suggested that this aspect should be included in the code of ethics for ministers as well as the code of conduct for public servants.

The Commission has also recommended that "abuse of authority unduly favouring or harming someone" and "obstruction of justice" should be classified as an offence, and this recommendation has not been accepted by government.

Another issue that has yet to be adequately addressed is the training of senior IAS officers for their role in policy development, because relations with the political executive are considered a sensitive matter. Policy development often starts with an ideology or an insight that the political executive is advancing. The questions the bureaucrat then has to ask are: 'how good are these insights?' and 'what does the ideology tell us, and what does it not tell us, about a sound policy?'

Successful governments around the world have a clear understanding of the importance of appropriate evidence. It requires a comparative understanding of how policy can make a difference as well as how to evaluate the many different forms of evidence available. Routine work is declining and knowledge-based work is increasing, for both ministers and secretaries.

The buck now stops with the minister. The prime minister should review their performance against three elements - setting direction, engaging people and getting results. The secretaries must also provide their objectives for review. New systems are needed, and here the IAS has not done enough; but there is no option to a civil service based on merit.

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Farm sector growth at 0.02%; rural-urban divide widens

India’s agriculture growth rate dropped to 0.02% in the last quarter of 2014-15, according to the latest government data, compounding predictions of a bad monsoon ahead.

The meteorological department on June 2, 2015, lowered its rainfall projections, predicting the monsoon rainfall would be 88% of normal. If this prediction pans out, 2015 will officially be a drought year, declared when monsoon rainfall shortfall exceeds 10%.

Unseasonal rains caused crop damage and a farm crisis this year, forcing wheat imports from Australia.

While agriculture–which supports 600 million Indians–faces significant distress, the warning signs have been evident for many years. Over the past 20 years, the farm sector has experienced negative growth during five years, three of those being drought years.

Two indicators of India’s struggle to keep its people fed are foodgrain production and per capita availability of foodgrain.

Although foodgrain production increased 32% over the past two decades, the population has increased by roughly 42% over this period. Per capita availability of food grains has increased marginally, from 471 gm in 1994-95 to 511 gm in 2013-14.

With final figures for the financial year 2014-15 awaited, here is a look at India’s agriculture sector over the past 20 years.





Agriculture in India is mostly weather dependent, and that is a major reason for the fluctuations in farm growth.

The year 2014-15 has not been a good year for agriculture and productivity. Our recent report shows how hunger and malnourishment are growing in India, and why agriculture needs a boost in innovation for better productivity.

Instead, India’s farmers are sinking deeper into distress.

Why farmers are becoming workers
 

Data gleaned over last three census periods–1991, 2001 and 2011–indicate that the population of cultivators has declined and farm labourers have increased.
 
This indicates that more people engaged in agriculture are landless and work on other people’s land for wages.
 
The census defines two categories of workers engaged in farming: cultivators and agricultural labourers. While cultivators own land, agricultural labourers work on farms.
 
People engaged in the farm sector are mostly unskilled workers.
 
 

Meanwhile, India’s urban-rural divide appears to have widened between 1993-94 and 2011-12, according to this IIM Ahmedabad study, which indicated two trends over this period:
 
•     Per capita GDP for rural India increased 7 times and for urban India by 8 times.
 
•     Urban per capita GDP was 2.3 times more than rural in 1993-94; this difference was 2.5 times in 2011-12
 
The increasing gap shows that instead of moving towards greater economic productivity, rural India is engaged in low wage-earning activity on farms.

Plans to set up a centre “Hall of Nuclear Power” at the New Delhi Science Centre at Pragati

Plans to set up a centre “Hall of Nuclear Power” at the New Delhi Science Centre at Pragati Maidan , says Dr Jitendra Singh

Addressing a press conference in New Delhi today to highlight the achievements of the Department of Atomic Energy during one year in office of the present Government, Union Minister of State (Independent Charge) Development of North-Eastern Region (DoNER), MoS PMO, Personnel, Public Grievances & Pensions, Atomic Energy and Space, Dr Jitendra Singh disclosed that decks have been cleared for the first-ever atomic energy plant to be set up in Haryana. He said that the northern States of Jammu & Kashmir, Punjab, Haryana and Himachal Pradesh were so far somehow not actively involved in the atomic energy programme of India which was hitherto confined mostly to other parts of the country and therefore, with this new initiative, India’s atomic energy programme has assumed a pan-India visibility.

Dr. Jitendra Singh said that during his first-ever visit to Bhabha Atomic Research Centre (BARC) as Prime Minister in the month of July last year, Shri Narendra Modi had set a target before the scientists for increasing India’s nuclear energy capability to three times within next ten years and with the new Pressurized Heavy Water Reactor to be set up under Gorakhpur Haryana Anu Vidyut Pariyojana (GHAVP), a rapid step forward will be accomplished in the direction of achieving such similarity in the times to come. He said that only yesterday, the Department of Atomic Energy succeeded in launching an insurance pool of Rs.1500 Cr and with this, the decks have been cleared for further progress in installing a Pressurized Heavy Water Reactor with a capacity of two units of 700 MW each in Gorakhpur, Haryana. This reactor is expected to get commissioned by 2022 or 2023, he added.

Another major announcement made by Dr. Jitendra Singh was that, since Department of Atomic Energy was one of the rare departments of Government of India which had its headquarters in Mumbai and not in the Union Capital of Delhi, it has been planned to shortly set up a centre called “Hall of Nuclear Power” at the New Delhi Science Centre at Pragati Maidan in the heart of the Union Capital. This will not only establish the visibility of Department of Atomic Energy in the national capital, but will also help in spreading public awareness about the kind of work and accomplishments being done by the Indian nuclear scientists.

Giving credit to extraordinary patronage and encouragement to science activities from Prime Minister Shri Narendra Modi, Dr. Jitendra Singh said, it was during Prime Minister’s recent visit to Canada that a deal was accomplished to obtain 3000 tons of uranium over the next five years and during his earlier trip to France, a pre-engineering agreement was signed between NPCIL of India and Areva Company of France while another one between Larsen & Toubro and Areva, which would greatly improve India’s capability to develop its own indigenous components and heavy water reactor in line with “Make in India” goal.

It was a coincidence, Dr. Jitendra Singh said, that he was destined to be a part of the Department of Atomic Energy during the year when Bhabha Atomic Research Centre (BARC) is observing its Diamond Jubilee having been established by the legendary scientist, Dr. Homi J. Bhabha 60 years ago. It is a tribute to Dr. Bhabha and a credit to Prime Minister Narendra Modi that during the last few months, Department of Atomic Energy has enabled India to assume a leadership role in the Southeast Asia through a series of landmark developments, including an atomic energy agreement with Sri Lanka in February 2015 and very recently last month, the decision to set up tele-therapy facility for cancer patients in Mangolia.

Secretary Department of Atomic Energy Dr. R.K. Sinha, Director BARC Sekhar Basu, CMD NPCIL K.C. Purohit and DG PIB Frank Noronha were also present at the conference. 

राज-काज और पीएमओ का विकास

पिछले कुछ समय में एक बड़ी सहमति यह बनी है कि एक साल पहले के मुकाबले देश की अर्थव्यवस्था सुधरी है। इसके अलावा, शासन की मोदी शैली पर ध्यान अधिक केंद्रित हुआ है। मोदी-केंद्रित शैली प्रधानमंत्री कार्यालय के कामकाज से जुड़ी है। हाल के वर्षों में प्रधानमंत्री कार्यालय इतना सक्रिय व निर्णायक कभी नहीं रहा, जितना पिछले एक साल में रहा है। इस तरह की भी धारणा पैदा हुई है कि प्रधानमंत्री कार्यालय (पीएमओ) अधिक सतर्क हो गया है, वह मंत्रालयों की भूमिका में कतर-ब्योंत करता है और मंत्रियों के अधिकारों को भी कम कर रहा है। पीएमओ अधिक सत्ता केंद्रित है।

इस मसले को समझने के लिए प्रधानमंत्री कार्यालय के विकास पर गौर किया जाना चाहिए और यह भी कि कैसे यह पहले से अलग है। इससे भी महत्वपूर्ण यह कि पीएमओ से क्या उम्मीद रहती है? केंद्र सरकार में हर मंत्रालय के कामकाज केंद्रीय सचिवालय द्वारा जारी 'ट्रांजेक्शन ऑफ बिजनेस रूल्स, 1961' से निर्धारित होते हैं। इसके तहत पीएमओ से पहली उम्मीद यह होती है कि प्रधानमंत्री के सामने जो मुद्दे आएं, उनसे वह नियमानुसार निपटे। दूसरी, सरकार के मुखिया के नाते प्रधानमंत्री के ऊपर जो सारी जिम्मेदारियां हैं, उनमें वह मदद करे। इसमें केंद्रीय मंत्रियों से लेकर राज्य सरकारों से संपर्क साधना भी शामिल है, जिनमें प्रधानमंत्री रुचि दिखाते हैं। तीसरी, नीति आयोग के अध्यक्ष के तौर पर प्रधानमंत्री की जो जिम्मेदारियां हैं, उनको पूरा करने में मदद करना। चौथी, प्रधानमंत्री के दफ्तर की तरफ से जन-संपर्क को देखना, यानी प्रेस व जनता से संबंध बनाना। पांचवीं, तय कानूनों के तहत प्रधानमंत्री के सामने पेश मामलों को परखने में उनका सहयोग करना।

इस तरह से, ये कामकाज कई राज्यों के मुख्यमंत्रियों के कार्यालय से अलग नहीं हैं। वर्षों से, पीएमओ अलग-अलग नियुक्तियों और तत्परता के साथ इन कामों को देर-सबेर करता आया है। आजादी के बाद पंडित नेहरू के समय में प्रधानमंत्री को संयुक्त सचिव स्तर के अधिकारी सहयोग करते थे। विदेश महकमे व राष्ट्रमंडल महकमे के प्रधान सचिव विदेश मामलों पर प्रधानमंत्री का मुख्य सलाहकार होते थे और घरेलू मामलों पर कैबिनेट सचिव। कैबिनेट में सरदार वल्लभभाई पटेल, मौलाना अबुल कलाम आजाद और चिंतामन डी देशमुख जैसे वरिष्ठ मंत्री थे। किसी भी कामकाज में अपनी शक्तियों के कमजोर पड़ने की बात उन्होंने कभी स्वीकार नहीं की।

प्रधानमंत्री का सचिवालय फैसले लेने के मामले में निकास-द्वार का काम करता था, जिसमें मंत्रालय महत्वपूर्ण भूमिका निभाते थे। जब लाल बहादुर शास्त्री ने नेहरू की जगह ली, तो प्रधानमंत्री के निजी दफ्तर को प्रधानमंत्री सचिवालय का नाम देने के अलावा, उन्होंने एक सचिव नियुक्त करके इसके नेतृत्व को मजबूत किया। इस पद पर सबसे पहले बिहार कैडर से एक अधिकारी लक्ष्मीकांत झा आए। वह मेरे पिता के बैचमेट थे। प्रधानमंत्री के सचिव के तौर पर उनकी नियुक्ति पर मेरे पिता ने बताया था कि कैसे उनकी पदोन्नति ने कैबिनेट सचिव के कामकाज को प्रभावित किया। पारंपरिक रूप से कैबिनेट सचिव प्रधानमंत्री का अंतिम सलाहकार होता था और अब यह काम प्रधानमंत्री के सचिव का था।

जब इंदिरा गांधी, शास्त्री की उत्तराधिकारी बनीं, तो कुछ समय तक एलके झा और बाद में उनकी जगह पीएन हक्सर आए, जो पहले सचिव और बाद में प्रधान सचिव बने। यह एक बड़े बदलाव का संकेत था। दरअसल, राजनीतिक घटनाक्रमों को देखते हुए उन्हें प्रशासनिक ढांचे पर अपने नियंत्रण को मजबूत करने की जरूरत पड़ी थी। वाम पार्टियों के सहयोग को भी उन्हें बचाए रखना था। इस तरह से प्रधानमंत्री सचिवालय आर्थिक, घरेलू व विदेश नीति मामलों के बीच तालमेल बनाने और उसके विकास का एक शक्तिशाली केंद्र बन गया।

आपातकाल के बाद मोरारजी देसाई ने, जो नए प्रधानमंत्री बने थे, प्रधानमंत्री सचिवालय का नाम बदलकर प्रधानमंत्री कार्यालय कर दिया, क्योंकि इसके अधिक सत्ता-केंद्रित होने की खूब आलोचना हो रही थी। यह सिर्फ नाम बदलना नहीं था, बल्कि इसके अधिकार और किरदार को घटाना भी था। इसके बाद तो पीएमओ आने वाले प्रधानमंत्रियों की शख्सियतों, वरीयताओं और धारणाओं के आधार पर खुद को बदलता रहा। राजीव गांधी के कार्यकाल के दौरान प्रधानमंत्री का दफ्तर मंत्रालयों के साथ नीतिगत ढांचा तैयार करने में महत्वपूर्ण भूमिका निभाता था।

राजीव गांधी ने पीसी एलेक्जेंडर के नेतृत्व में एक कुशल टीम बना रखी थी, जिसमें बड़े-बड़े विशेषज्ञ और नौकरशाह थे। मोंटेक सिंह अहलूवालिया और मणिशंकर अय्यर उनमें ही थे। पीवी नरसिंह राव के कार्यकाल के दौरान अमरनाथ वर्मा के नेतृत्व में पीएमओ 1991 के मुद्रा संकट से निपटने का केंद्रबिंदु बना था। आईएमएफ और विश्व बैंक की शर्तों के साथ प्रभावी तालमेल बनाना इतना आसान नहीं था, लेकिन यह हुआ। वाजपेयी के दौर में पीएमओ ने उत्प्रेरक की भूमिका निभाई।

विदेश नीति, अर्थव्यवस्था और आंतरिक मोर्चे पर यह दफ्तर काफी सक्रिय रहा। उस दौरान अर्थव्यवस्था के मुद्दे पर प्रधानमंत्री के सचिव के तौर पर काम करने का मुझे भी सौभाग्य मिला। पाकिस्तान के मामले में नई सोच बनी। दूरसंचार, राष्ट्रीय राजमार्ग कार्यक्रम, ऊर्जा क्षेत्र, बैंकिंग और वित्तीय बाजार क्षेत्र में सुधार किए गए। इन सबने आर्थिक तरक्की को महत्वपूर्ण रफ्तार दी। मनमोहन सिंह के समय में पीएमओ की भूमिका में संयम देखा गया। यह साफ हो चला था कि महत्वपूर्ण नीतिगत मुद्दों और नियुक्तियों पर फैसले पीएमओ के बाहर लिए जाते हैं। यह विडंबना ही थी कि वित्त मंत्री के तौर पर 1991 में मनमोहन सिंह बड़े आर्थिक सुधार लेकर आए, लेकिन दस साल के अपने प्रधानमंत्रित्व में वह शायद ही कोई निर्णायक आर्थिक बदलाव ला सके।

यूपीए-एक के दौरान सरकार वाम पार्टियों पर निर्भर थी, जिनका आर्थिक सुधारों पर गंभीर ऐतराज रहता है। यूपीए-दो के कुछ गठबंधन साझेदारों ने महत्वपूर्ण आर्थिक सुधारों को रोके रखा। कई लोग यूपीए-एक और दो के कार्यकाल को भारत का बेकार गया दशक बताते हैं। मोदी सरकार अपनी पूर्ववर्तियों से कई मायनों में अलग है। पहला, देश  के हालिया राजनीतिक इतिहास में ऐसा आम चुनाव देखने को नहीं मिला था, जो प्रधानमंत्री पद के उम्मीदवार के नेतृत्व पर काफी हद तक निर्भर रहा हो। दरअसल, यह मोदी-केंद्रित जीत थी, भारत के लोगों ने उनके नेतृत्व पर अपना भरोसा जताया था।

मोदी ने भी महसूस किया कि जनादेश उनके और प्रशासनिक नतीजों के लिए है। इस तरह, पीएमओ ने मोदी विजन को पाने के लिए अपने को फिर से गढ़ा है। भारत के लोगों के लिए यह कम अहमियत रखता है कि मोदी अपने पास ज्यादा शक्तियां रखते हैं या नहीं, बल्कि उनके लिए महत्वपूर्ण है कि वे निर्णायक बदलावों को महसूस कर सकें, अधिक सुरक्षा पाएं और आखिर में भविष्य के प्रति आशावाद का माहौल बने। इस मामले में मोदी का प्रधानमंत्री कार्यालय विशिष्ट है। 

FM's wage bill worries

In less than three months from now, the Union governmentwill have to contend with a difficult fiscal challenge. Though not entirely of its making, the National Democratic Alliance government can hardly excuse itself for not taking necessary advance steps to withstand the adverse impact of the time bomb that is ticking away and in all likelihood will explode before the end of August. Yes, we are talking about theSeventh Central Pay Commission and the implications of its recommendations.

In one of the rare policy actions initiated in the latter half of its second term, the United Progressive Alliance government had ordered on February 28, 2014 the constitution of the Seventh Central Pay Commission to review the pay packages for all central government employees including those belonging to different all-India services, and personnel of governments in union territories, regulatory bodies (excluding the Reserve Bank of India) set up under an Act of Parliament and the Supreme Court of India. The Commission, headed by Justice Ashok Kumar Mathur, was also asked to recommend a suitable structure of pay and benefits for the defence forces.

There was, however, one aspect of that order that got largely ignored in the debate over the need for constituting a new pay commission a few months before the general elections were due. And that pertained to the government notification's mandate that the Commission would submit its recommendations within 18 months of the order. In other words, the recommendations would be made public before August 31, 2015, unless of course Justice Mathur decided to seek an extension of the term of the Seventh Central Pay Commission. So far the Commission seems all set to present its recommendations before the August-end deadline. This would mean that it is the NDA government that will have to take a call on these recommendations.

The prospects of an increased burden of pay and allowances on government finances, however, cannot be wished away, even if the Commission takes a few more months to complete its work. Finance Minister Arun Jaitley, therefore, would do well to keep in mind at least three lessons from the manner in which governments have faced up to the challenge of managing the recommendations of past central pay commissions.

One, apart from raising the pay and allowances for employees, the recommendations of most pay commissions in the past have also suggested measures to rationalise and reduce the government's staff strength. Invariably, all Union governments in the past have accepted the recommendations for salary revision, but have ignored the more difficult and unpopular ones on staff rationalisation. The Seventh Central Pay Commission too is expected to make some suggestions on downsizing the government's manpower strength. And Mr Jaitley should seriously consider making the acceptance of higher pay and allowances conditional to a reduction in the size of the bureaucracy as may be recommended by the Commission.

Two, the impact of recommendations of all past central pay commissions on the government's public finances have been adverse. These have always led to a significant deterioration in the fiscal deficit for the years immediately following the acceptance and enforcement of higher pay and allowances as recommended by the commission. The impact of the central pay commission recommendations is also felt on the finances of state governments, which invariably accept the new pay scales. The Seventh Central Pay Commission has been given a specific mandate that it should keep in mind the impact of its recommendations on state finances. The Centre's response to the Commission's suggestions for pay revision should, therefore, be guided by the impact they would have on state finances. If necessary, Mr Jaitley should consider the feasibility of postponing the implementation of the recommendations or other steps to reduce its impact on public finances.

Three, it is widely recognised that there has been a steady deterioration in the quality and competence of government employees, in spite of periodic salary revisions at all levels. The salary revision at the lower level of employees has mostly raised their wages to levels that are much more than what the market or the private sector pays. This has resulted in a huge rush for government jobs at the lower level of bureaucracy. Unfortunately, however, this has not led to any qualitative improvement in skills at this level because of lack of adequate and proper recruitment and screening methods. Nor has the absence of upward mobility at this level helped in getting quality manpower, since all-India services in any case block almost all avenues of promotion above a certain level.

In contrast to what has been ailing the process of government recruitment of junior employees, the salary levels for the higher levels of staff in the government has been much below the market or what the private sector pays to people with similar profiles. This has resulted in an exodus of talent at the top end of the pool of government employees, undermining the overall quality of employees at senior levels in government departments. The fear now is that the Seventh Central Pay Commission's recommendations could make the situation worse. Mr Jaitley should go beyond what the Commission says in this respect and devise methods to attract better talents at the higher level even while reducing the overall size of the government.

The current government manpower numbers are revealing. In March 2014, the total number of employees for the central government was estimated at 3.32 million. By March 2015, the employees' strength increased by five per cent to 3.5 million and by March 2016, it would go up further to 3.55 million, though at a lower rate of 1.5 per cent. In the last three years, the Union government's expenditure on salary, allowances and travel has seen a steady rise - from Rs 1.21 lakh crore in 2013-14 to Rs 1.5 lakh crore in 2014-15 - an increase of 14 per cent. For the current year, the salary bill would go up by about nine per cent to Rs 1.5 lakh crore. Taken together with the combined wages burden of close to Rs 5 lakh crore for all states, the total wage bill to be impacted by the Seventh Central Pay Commission is estimated at over Rs 6.5 lakh crore - close to five per cent India's gross domestic product. For Mr Jaitley, therefore, the challenges from what the Seventh Central Pay Commission recommends will be formidable and he needs to prepare for the consequences it will have for his fiscal consolidation plans.