MARIAN PINHEIRO
Prime Minister Naren dra Modi’s recently an nounced austerity meas ures mainly aim at conserving fuel, reducing import pressure and saving foreign exchange—a wise step considering the West Asia conflict and the oil-price crisis. But in a democratically elected government, the aus terity measures should begin with the government, because the government is the largest spender and many of its ex penditures are unnecessary and does not affect good governance India needs disciplined, se lective and intelligent auster ity: cutting waste, postpon ing non-essential spending, improving subsidy targeting, protecting capital expenditure, and preserving essential wel fare. The purpose should not be to shrink the economy, but to protect public finances, reduce avoidable imports, conserve foreign exchange, and create fis cal space for national priorities such as food security, energy security, defence preparedness, employment, infrastructure, health and education.
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Auster ity should be seen as a fiscal prudence, import conservation, better governance and pub lic-sector discipline. A crude reduction in public spending can reduce demand, hurt jobs, delay infrastructure and increase inequality. There fore, austerity must distinguish between four categories of spending: Essential expenditures like food security, health, education, defence preparedness, policing, disaster response, pensions for the vulnerable, and targeted in come support. These should not be cut arbitrarily. Secondly, productive capital expenditure like roads, ports, railways, logistics, energy infra structure, irrigation, water sys tems, digital public infrastruc ture and urban transport. These should largely be protected be cause they improve long-term productivity and employment. Thirdly, inefficient revenue expenditure, excessive admin istrative costs, duplication of schemes, poorly targeted sub sidies, ceremonial expenses, avoidable travel, unnecessary publicity, advertisements, un derused buildings, loss-making public entities and politically motivated giveaways. This is where austerity should be con centrated. Fourthly, import-intensive discretionary consumption, non-essential foreign travel by official delegations, imported luxury items for government use, avoidable procurement of foreign goods where domestic alternatives exist, and excessive fuel consumption by govern ment fleets.
These should be restricted immediately. The correct policy is there fore quality-of-expenditure re form, not mechanical expendi ture compression. The Government of India should impose a one-year re straint on non-essential admin istrative spending across minis tries, departments, autonomous bodies and public sector un dertakings. This should include government conferences in lux ury hotels should be reduced unless unavoidable. Meetings should be held in government buildings, public institutions, video-conferencing platforms or low-cost venues. Foreign travel by ministers, officials and delegations should be restricted to cases involving treaty obligations, major in vestment negotiations, security matters, trade negotiations or essential multilateral commit ments. Delegation sizes should be capped. Domestic air travel should be rationalised. Officials should use economy class except where security or medical conditions justify otherwise.
Purchase of new official vehicles should be frozen for one year, except for defence, police, emergen cy services, field inspections, disaster relief and operational requirements. Government ad vertisements, commemorative publications, public-relations campaigns and branding ex ercises should be cut sharply unless they serve a public-infor mation purpose such as health, tax compliance, safety or disas ter warnings. The Centre should not slash infrastructure spending indis criminately. However, every capital project should be re viewed through a “priority fil ter”: Prestige projects with lim ited economic or social return should be deferred. India should not abruptly re move subsidies in a way that hurts vulnerable households. But subsidies should be more precisely targeted. The govern ment should conduct a subsidy audit in food, fertiliser, LPG, electricity-related transfers and other major schemes. The key principle is, subsidise the vulnerable, not the wasteful consumer. A mandatory 10–15% reduc tion target in fuel consumption for non-emergency government fleets, work-from-home or hy brid systems for departments where physical presence is not essential as this will save fuel, reduce import pressure and set an example for the public. Many departments spend heavily on construction, renova tion, furnishing and ceremonial infrastructure. Austerity should include, no luxury renovation of offices, guest houses or official residences, standardised pro curement norms for furniture, electronics, interiors and man datory use of existing govern ment properties before leasing private spaces. State governments often spend large amounts on pub licity, events, anniversaries, inaugurations, cultural shows, hoardings, media campaigns and official hospitality. During a period of fiscal pressure, such expenses should be reduced sig nificantly.
Chief Ministers and ministers should voluntarily cap official convoy size, reduce chartered aircraft use, limit delegation size and reduce ceremonial ex penditure. Symbolic restraint matters because public coop eration is easier when political leaders show discipline. Given the present external uncertainty and oil-price risk, India needs targeted foreign exchange conservation. All official foreign travel should be screened by a central or state-level expenditure commit tee. Travel should be approved only where the expected benefit is clear. Government departments and PSUs should avoid import ed luxury vehicles, high-end electronics, foreign furniture, imported decorative materi al and non-essential imported equipment where Indian alter natives are available. Basic public services should remain affordable. But high er-income users can pay realis tic charges for premium public facilities, commercial water use, parking, luxury events in public venues and high-end municipal services.
India’s present situation re quires discipline, not panic. The country still has strong growth prospects and continues to in vest heavily in infrastructure, but fiscal space is not unlim ited. States also need to act responsibly because many of their budgets are burdened by subsidies, salaries, pensions, power-sector losses and debt servicing. The best austerity strategy for India is therefore to cut waste, not welfare. Protect productive capital expenditure, but defer prestige projects, target sub sidies to the genuinely needy, reduce fuel consumption and avoidable imports, control pub licity, travel, vehicles, events and administrative luxury, reform power subsidies and loss-mak ing public bodies, improve tax compliance without burdening honest citizens. Make every ru pee of public spending measur able and accountable. In a nation where more than 90 %, of the population live at subsistence levels, often strug gling for basic essentials, aus terity should not be presented as sacrifice by citizens alone. It must begin with government conduct. If ministers, depart ments, PSUs and state govern ments visibly reduce wasteful spending, citizens will be more willing to cooperate in fuel conservation, reduced import consumption and responsi ble economic behaviour. The goal should be a leaner, more disciplined and more credible state—not a weaker state. (The writer is a professor of law & an education consultant)
