Trimming the Fat

The Department of Government Efficiency (DOGE), commissioned by President Trump, aimed to streamline the US government into a leaner and more efficient organisation by modernising IT systems, addressing bureaucratic red tape, and downsizing the establishment. Even as protests and rallies are already taking place across the US against the severe cutbacks in social welfare programs by DOGE, it has apparently triggered a global debate on adopting the US model elsewhere to reduce “wasteful” expenditure and ensure efficiency in governance.

As a matter of fact, India has been a forerunner to the US in governance innovation, as it could soon be in voter identification systems, which the US is now planning to emulate in its elections. The drive to reduce unproductive government expenditure and increase delivery efficiency in India dates back to the 1990s when the Disinvestment Commission was constituted with GV Ramakrishna as its head to suggest ways to monetise non-profitable PSU assets. The recommendations were implemented earnestly, leading to the first-ever privatisation of a PSU—BALCO in 2000. Incidentally, I was the District Collector of Korba, involved in the proceedings at ground zero. Later, in the early 2000s, the Expenditure Reforms Commission, headed by Geeta Krishnan, was constituted to examine wasteful government expenditure and recommend remedies.

The implementation of the recommendations of the Second Administrative Reforms Committee (2005) on the Right to Information, Ethics in Governance, Promotion of E-Governance, and Citizen-Centric Administration, among others, marked the beginning of a citizen-friendly work culture in government service delivery. For the last ten years, good governance has been the central theme of public administration across the country. India introduced the Direct Benefit Transfer (DBT) in 2015 to eliminate fake beneficiaries and middlemen who siphoned off huge sums from welfare schemes. Reportedly, this helped save around Rs 3.48 lakh crore of public money. Similarly, by eliminating 7.1 lakh false job cards under MGNREGA and 4.15 crore fake LPG connections, Rs 42,534 crore and Rs 73,443 crore were reportedly saved, respectively. Most schemes in recent years have focused on improving the ease of doing business, emphasising “minimum government and maximum governance.”

The drive against wasteful expenditure, which DOGE is mandated to undertake, was, in fact, a popular mission in most nations in the aftermath of the 2008 economic meltdown. When Italy’s public debt crossed 120 per cent of its GDP, the government announced a three-year freeze on public salaries, restricted recruitment to 20 per cent of vacancies, cut pensions, increased healthcare fees, and imposed higher tax rates on the wealthy. In 2011, Ireland, as part of a deal for an EUR 85 billion bailout from the EU and IMF, decided to cut its deficit by EUR 6 billion through reductions in hourly minimum wages, a 5 per cent cut in public-sector wages, cuts in social welfare benefits, a 25 per cent increase in capital gains tax, and the imposition of a carbon tax. Greece, too, as a precondition for a EUR 110 billion bailout package from the IMF and EU, froze civil-service hiring until 2014, increased VAT rates by 4 per cent, and cut allowances and bonuses for public sector employees. In 2010, the UK, to address its budget deficit of around 10 per cent of GDP, implemented severe cuts in government spending, reducing more than 400,000 jobs over four years and cutting all departmental budgets by 25 per cent. In 2011, Germany, aiming to reduce its budget deficit by EUR 80 billion, decided to slash its armed forces by 40,000 troops and cut 10,000 civil service jobs. Spain, as part of its cost-cutting measures, imposed a tobacco tax of up to 28 per cent and reduced its infrastructure budget by 30 per cent.

Reducing wasteful spending and enhancing efficiency are of utmost importance for any government. However, unlike in developed countries, cutting down government expenditure suddenly and in bulk in developing countries like India would be too radical a measure to pursue, as it would mean winding up numerous welfare schemes. Besides, it would also be impractical since the political economy is governed by the principles of a welfare state under the constitutional framework, in stark contrast to capitalist economies. For example, in Australia, governance follows a business model by engaging corporate agencies in various public service schemes, including water supply, on the basis of profit-sharing. This model, called New Public Management, leaves little or no room for welfare schemes or entitlement regimes.

However, customised models may help countries like India address issues of extravagance, cost overruns, and lack of accountability, which are the chief reasons for wasteful expenditure. For example, many state departments surrender substantial portions of their budget allocations every year as unspent. Hundreds of audit paras in various departments highlight that government spending often violates financial discipline or is outright wasteful. Delays in execution frequently lead to cost overruns up to ten times the original sanctioned costs, resulting in a colossal waste of public money. The selection of viable projects, timely reviews of spending, constant monitoring of progress by third-party agencies, and strict accountability should be non-negotiable, similar to the approach followed in the private sector.

The Comptroller and Auditor General of India’s 2021 report revealed that Central Public Sector Enterprises (CPSEs) incurred losses of up to Rs 1.5 lakh crore between 2015 and 2020. To ensure efficiency in PSUs, it is crucial to strike a balance between passive ownership and excessive interference while ensuring equitable treatment of all stakeholders—the entities, the public, and the markets. For example, in France, the objective is to maximise the value of government shares in PSUs, while in Sweden, it is to create value for the owners. In the UK, the focus is on ensuring that government shareholdings yield sustained returns.

Basic professionalism and accountability have long been concerns in government machinery. Reportedly, over 20 lakh applications were received on the Centralised Public Grievance Redress and Monitoring System (CPGRAMS) in 2020, compared to 18,67,758 in 2019 and 15,86,415 in 2018. Additionally, over 60 lakh complaints were registered from states and union territories between 2020 and 2022. A multi-layered power hierarchy with duplication of work continues to obscure individual accountability, showing little regard for performance audits. For lower-level functionaries, work often means mere attendance from ten to five rather than a quantifiable contribution to the delivery system. Public holidays account for almost a quarter of total working days in a calendar year, with dozens of festivals and regular weekends, not to mention long lunch breaks and periodic strikes by unions that paralyse the entire system for days.

Thanks to the digital revolution, most tasks in the delivery mechanism are now outsourced, leaving a limited role for government functionaries. Resizing and reconstituting ministries, departments, and the bureaucracy will not only enhance efficiency but also save significant wasteful expenditure. Similarly, several redundant bodies, such as boards, regulatory authorities, and commissions—many of which serve either as punishment posts for “unsuitable” officers or as rewards for “suitable” politicians—must be wound up to conserve the state's precious resources.

The writer is a former Addl. Chief Secretary of Chhattisgarh. Views expressed are personal