Bengali’s resignation

EDITORIAL: Noted and respected economist Kaiser Bengali’s decision to resign from the so-called austerity committee (High Powered Committee for Rightsizing the Federal Government), citing lack of official commitment to reduce expenditures, only strengthens the perception that the government was never really serious about checking its own fiscal excesses.

Indeed, the way Bengali’s suggestions were put aside in favour of protecting the bureaucratic elite that has become a black hole for so much of the state’s finances speaks for itself.

It turns out that of 70-odd government organisations reviewed, the committee recommended privatising 17 commercial entities and retaining 52 government organisations, and closing down only one of them.

This goes to show that the foremost priority is not stemming the fiscal haemorrhage that is fatal for the economy and hence the country, instead the main focus is on retaining almost all government entities and, by some miracle, making them more efficient.

This must be the same miracle that the government has been waiting for all these decades to somehow turn around all loss-making SOEs (state-owned enterprises), yet it hasn’t come so far.

Dr Bengali also very rightly challenged the committee’s recommendation to abolish 150,000 BPS 1 to 16 low-cost positions and privatise the Utility Stores Corporation.

This is a very important point, because it would really be a shame if the entire burden of this rightsizing exercise is placed on lower-income segments, since there’s no mention so far of any of the “high-cost secretary, additional secretary, joint secretary, director-general, etc., positions that would be eliminated”.

Dr Bengali’s own recommendation of abolishing 17 divisions and nearly 50 government organisations, which would have reduced a substantial number of BSP 20 to 22 positions and effected annual savings of more than Rs30 billion in non-salary costs, doesn’t seem to have impressed the people who make the final decisions.

That’s no surprise, because it would have shaken the civil service hierarchy, which is responsible for so much of official waste — even if you count only their perks and privileges — and they’ll fight any austerity drive that touches them personally tooth and nail, as always. This is also why not many people believed the prime minister or his aides when they came up with the austerity plan in the first place.

And such waste, and its acceptance at the highest level, is one of the main reasons that we’re stuck in the classic debt trap, surviving from bailout to bailout.

Yet history is full of examples of the tap eventually running dry, and countries addicted to aid to survive failing to adjust and ultimately defaulting. If the administration was serious about cutting costs, it would realise that most of our problems are self-created, and the bunch that is trying to keep itself isolated from the austerity programme is responsible for a big part of the mess.

But if the government puts them in the lead when it comes to trimming costs, while experts like Dr Bengali are forced to walk away, then those doubting the intention behind the whole exercise would be vindicated.

It says a lot about the people running this country that even this close to complete economic/financial collapse, they are bent upon extracting whatever they can from the middle- and lower-income groups and small entities, while continuing to protect the big fish that have been eating off the fat of the land for decades.

This is not how it is done. If the government does not cut its own fat budget, no meaningful change will ever come.

And people who have studied similar cases very closely, just like Dr Bengali, can already tell you how this effort is going to end. That is why they’d rather walk away from such programmes than be associated with hollow slogans meant to fool the people.

Copyright Business Recorder, 2024