GLOBALISATION AND DOWNSIZING OF GOVERNMENT

*K Vijayachandran

State is an object of resentment, irrespective of ideologies. Anarchists see it as the origin of crimes, businessmen blame it for economic sins, socialists see it as an instrument of coercion, and religions had always resisted its influence over human psyche. Market economists as well as Marxists had wished its withering away, for long. But the institution continues to grow and expand its role in human development.

World Development Report 1997 of the World Bank had its focus on 'the State in Changing World' and noted: Over the last century the size and scope of government have expanded enormously, particularly in the industrial countries. According to its estimates, total government expenditure in OECD countries was less than ten percent of their GDP in 1870. This had steadily grown five fold, to nearly fifty percent by 1995. Critics of market economics had pointed out even earlier that, State had continued to grow in these countries even during eighties and nineties, despite the tall talks of Thatherism and Reagnomics and had held this in support of their theories on State Monopoly Capitalism and Industrial-Military complexes. Expansion and enrichment of the role of State on either side of the cold war however, was characterised as proof of convergence of socio-political systems, by Professor Galbrieth and others of the liberal tradition.

In developing countries, that took to mixed economies, State was seen as a critical resource for socio-economic development, as a matter of political consensus. According to WDR-1997, central government expenditure in developing countries was just fifteen percent of their GDP in 1960 which had nearly doubled up by 1990. In the Indian economy, total government expenditure had peaked to 26 percent of GDP by 1991 and then started declining, thanks to economic reforms. It was argued that, due to economic planning and growth of public sector organisations, India was over-administered and down-sizing of Government at every level was the first step toward faster development.

Fallacy of this argument will be even more clear, when we consider the numerical size of Governments in industrial countries. USA with a population base of 265 million had 24 million Government employees in 2002, including its armed forces, or some 91employeess per 1000 population. India with 1100 Million people, had only 13 million Government employees or about twelve per thousand people. India is a very thinly administered country and combined with the lower efficiencies at every level, Indian State is no match to that of USA. Even a casual look at the two societies will reinforce this statistical evidence. But, public opinion in India had accepted uncritically the prescriptions for the downsizing of Indian State, when industrial countries, including USA, continues to move in opposite direction.

Further, more than 16 percent of the working people in USA were directly employed by Government in 2002, the corresponding figure for India was less than 4 percent. Relative sizes of public employment and distribution of employees at various levels of governance in the two countries, make interesting comparisons. Data compiled by US Labour Bureau and Economic Review of Indian Government are analysed in table below:

PUBLIC EMPLOYMENT AT DIFFERENT LEVELS OF GOVERNMENT: YEAR 2002
	USA	INDIA
Employees per 1000 Population
Federal/Central	20	3
State Governments	19	7
Local Governments	52	2
TOTAL	91	12
Percent Distribution
Federal/Central	22	25
State Governments	21	58
Local Governments	57	17
TOTAL	100	100

The table throws some light on the structural efficacy of Indian State, compared to its US Counterpart: Governance at all levels is week in India, compared to that in USA. In terms employees per 1000 population, US Federal Government was nearly seven times stronger. State Governments in USA had nearly three times more employees compared to Indian States on a population basis. State and Federal Governments were thus of nearly same size in USA whereas, State Governments in India had more than double the strength of Central Government.

Local Self Governments, with less than two employees per thousand people, are the weakest links of State power in India. They are mere pigmies compared to their US compartments, which constitute a formidable part of US State power. With 52 employees per 1000 population, local governments in USA, are the providers of a variety of community services at the street level: education, health, social security, human resources development, local transport, trade, tourism atdl.

Despite Gandhian dreams of Gram-Swaraj, JP movement of seventies, constitutional amendments of 1991 and repeated demands and promises by the Left and the Right, Local Governments were a virtual non-starter in our Union Republic. And now, we are downsizing Government as a whole. Is it the right response to the second wave of globalisation, triggered in by countries, far more powerful than ours?

*Former Secretary to Government of Kerala, Department of Public Enterprises.