Vantage point

Friday, July 09, 2004

Destruction of Public Money

I have read some extremely naive comments on my blog in the last few days. A few excerpts -

- The money being spent especially the amount for rural irrigation and infrastructure would yield rich dividends if used properly.

- developmental expenditure is always a postive sign because it is something that would improve the standard of living in rural India..

- Forget about the fiscal deficit its not a big problem at the centre its the states that has to watch out.

It is common knowledge that Rajiv Gandhi said that only 15% of the money earmarked for the poor actually reaches the poor. Such is our government machinery. Not just our machinery, but any government machinery, always has inefficiencies. The simple reason is the people in charge of spending the money are not accountable to anyone. It is not their money. Which is why socialism has been such a big failure in all countries it has been implemented in.

The state can not be trusted to use our money properly. The emphasis should be on reducing the state's role.

To those who naively believe that public investment is a good thing, let me ask you this. What has public investment done for the country since independence? Nothing. Then what has changed that makes us think that things will be any different from now on? It is the same kleptocratic set-up.

Those who think fiscal deficit is a non-issue and compare it with the United States, let me add a few more things that are different. India sets very low targets of revenue collection, since it does not tax most of its citizens. Even these low targets, it fails to meet. Plus a huge chunk of the government's expenditure goes into paying salaries for its huge inefficient machinery. Just throw your mind back to 1991 if you think central fiscal deficit is not a matter of concern.