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Growth in GDP by increasing cost of govt!

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12.07.2018

The truth is now staring us in the face. The latest breakdown of the sectoral contribution to growth is out. Get ready for this. Public administration, which somewhat perversely is classified as a part of services, has now grown by seven per cent over the previous quarter, making it the biggest driver of growth in India. Very simply, this means that as you keep paying government employees more, GDP will keep growing ever faster till one day you run out of breath and cash. In Q3 of 2018, public administration had contributed 17.3 per cent towards growth. In Q4 of 2018, it has grown to 22.4 per cent, making is a fraction smaller than the contribution of manufacturing, at 22.7 per cent.

But hold your breath. Not satisfied with the Seventh Pay Commission’s across-the-board hike of 23 per cent, government employees are hopeful that Prime Minister Narendra Modi will make an announcement on August 15 fulfilling the promise made by the finance minister to give Central employees a pay hike beyond the recommendations of the Pay Commission. They are also hopeful that the retirement age will be raised to 62 years, allowing them to serve this poor and hapless country even longer.

There had been a spate of commentaries about how beneficial the Seventh Pay Commission-mandated pay hikes, now approved by the Union government with retrospective effect, will benefit the economy. Despite this munificence, some government employees have called the 23.5 per cent across-the-board hike peanuts! Others have made comments like “you pay peanuts, you get monkeys” — as if you will now have earnest and honest public servants because the same fellows get more pay? The metaphor is unfortunate as well as illogical, as the “monkeys” are already in place, only now the diet has become much more richer. Fat monkeys are what you will........

© The Asian Age