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Mainstream, Vol XLVII, No 50, November 28, 2009

Austerity: Is it a Drive or the Usual Practice?

Saturday 28 November 2009, by Pankaj Naithani


The recent appeal for austerity due to the hike in oil prices has become a burning issue to discuss and deliberate upon. Whereas a number of sensible reasons can be attributed for such calls in our country, some of them are obvious. Any country where income is unevenly distributed, poverty is prevalent, illiteracy and ill-health of people is persistent has to have austerity as part-and-parcel of its socio-economic policies. It is imperative for institutions and individuals to practice austerity customarily. Therefore, there seems to be no logic to have an austerity-drive with an overcoat of hike in oil prices in the international market. Actually, such a cover would reinforce the discrimination between an ‘austerity-drive’ and ‘austerity as a practice’.

Though the socio-economic conditions of the country have changed over a period of time, various scarcities continue to co-exist. This is evident from the fact that percentage share of agriculture, industry and services sectors in the national economy has shifted from 38.1 per cent, 25.9 per cent, and 36.0 per cent in the year 1980-81 to 19.6 per cent, 26.4 per cent, and 54.0 per cent in 2005-06.1 Industrial development has taken place, production has also gone up and benefits of technological advancements have reached the people. In fact, growth of the service sector has resulted in a change in the traditional form of employment and employability. However, the bulging population, 683 million in 1981 to 1029 million in 2001,2 has always been a hurdle to overcome. Whereas the purchasing power of households has improved and they have easy access to various services, medical and educational services are still not available to a number of people living in the rural and remote areas. Power-cuts or power-rosters have continued making life bitter for them. And, worst of all, safe-drinking water is still a big challenge to be met. Thus, it can be easily inferred that benefits of the economic growth have not been dispersed evenly. Otherwise, the poverty estimates of 44.5 per cent in 19833 would have certainly gone down considerably rather than increasing from 21.8 per cent in 2004-05 .4

So, what has gone wrong? It is difficult to answer straightaway but some of the indicators can give an idea. Incomes are not evenly distributed. Salaries of many CEOs are in glaring contrast with the wages being paid under the NREGS. Subsidised power is being supplied to the rural areas with low voltage and frequently reported power-cuts, while there is illogical consumption reported in the urban areas during marriages, festivals and various other occasions. Diesel subsidy is being consumed to run luxury cars or jeeps rather than tractors and jugar or maruta. Plan outlays are being diverted for political planning rather than development planning. There is hardly any mechanism put in place to ensure preferential returns for remote or deprived areas out of the expenditure being incurred on engineers, doctors and scientists. The system has failed to arrest tax evasion and forging of balance-sheets or similar frauds. Damages due to terrorism and separatism and threats from neighbouring countries continue unabated. Consequent to high-voltage professional competition, the media has started running away from its social responsibilities. And most importantly, primary producers are getting considerably less than value-adders in the agri-industrial chain. Well, this list is remarkably long; so one must stop with these meaningful ones only.


Let us peer into some historic facts about austerity. Observing poverty and the pathetic situation of the downtrodden and deprived sections of society, Gandhiji himself thoughtfully practised austerity. During the drought and famine of the sixties, the call from Shastriji to fast on Mondays had solid reasons behind it. At times, calls for sacrificing one-day salary had been meaningful to help the calamity affected people. Financial sieges and blackouts during wars were obvious requirements and safety measures. However, the call for austerity-drive due to the hike in oil prices is difficult to under-stand since it complementarily communicates that once strategies help overcoming such situations, there is no need for austerity. It is definitely not so. All of us can reminisce on the lessons we have learnt during our school days to recycle plastic, glass or paper, distribute clothes for second-use, save paper, fuel, power or drinking water etc. Everyone has been taught to practise austerity rather than becoming part of special drives. Thus, the main question is: are we really practising it? One will get mixed answers since ours is a country where micro-financing is being practised along with the IPL’s extravaganza. To cut it short, one simply says that there is utter need to practise austerity routinely.

In a country where it is said that:

“saien itna dejiyae,

ja me kutumbh samanyae,

main bhi bhookha na rahooun,

sadhu naa bhookha jayae”


“poot kapoot too kuen dhan sanchayae,

poot sapoot too kuen dhan sanchayae”,

there seems to be no logic why someone prefers earning what he can’t plausibly consume in his life-time. Why does he accumulate for his next four generations when people in his surroundings have difficulties earning two-square meals a day? Therefore, the case is not for austerity in spending, it is more for austerity in income accumulation. Power, fuel and drinking water are in scarcity. Then, why are these being wasted and not rationally utilised? Why are the benefits of the policies and schemes not reaching the potential beneficiaries? Why is a well-organised and properly managed system not being put in place to impede forgery, frauds and tax evasions?

One of the scientific thinkers and philosophers has rightly pointed out that scientific advance-ments cause repulsive developments as well. Technological advancements have led us to overuse them beyond the purpose of comfort and ease. There seems to be no harm when money is being utilised but the situation becomes alarming on vulgar spending. The travelling of Ministers in higher classes of trains or aeroplanes has genuine meanings attached to it. It ensures ease and safety for them and the convenience of fellow-passengers. But, lavish welcomes, hefty road-shows and reckless spending at dinners certainly appear vulgar.

The trend set by seasoned business houses like the Tatas, Birlas, Modis and various individuals to contribute for social causes, building schools, hospitals, dharamsalas and provide housing is critically missing from the agenda of the comparatively newer groups. Where is that money going? It is being spent in buying gifts, building hefty mansions, having a fleet of luxury cars and costly motorbikes, accumulating stylish wardrobes, purchasing designer jewellery, getting listed in Forbes Magazine and many more. Even the expenditure pattern of newer trusts reflects that they are now less concerned about deprived and weaker sections. They raise huge infrastructures to prove their might and strength. Many of them are trapped in charms of celebrities and potential donors.

But, it is undoubtedly clear from the current drive for austerity that the debate initiated as an outcome of it, is bound to bear fruitful results. The purpose is solved if it could lead us to practise austerity in its real sense. Generous expenditure for poverty reduction and austerity for immoral actions can bring forth a better India! A true India!

Though hypothetical, just think of the primary producers going on strike for unjust distribution of profit earned out of their labour and hard work. All will die of hunger. Alas, they themselves commit suicides and we are discussing ‘cattle-class’, ‘pelting of stones’, ‘cancellation of foreign trips’ and ‘salaries of CEOs’ rather than making strides for justifiable distribution of income. Why anyone earning above Rs 5 lakhs has to pay only 30 per cent as tax and not 50 per cent-70 per cent? Just think, re-think and think again on how to plough back even a part of this huge money to rural India!


1. Figures shown here are the shares of the agriculture, industry and service sectors in the total GSDP at constant prices. Please refer second edition of Domestic Product of States of India: 1960-61 to 2006-07 published by the EPW Research Foundation in April 2009.

2. Website of Census of India, Office of the Registrar General and Census Commissioner of India, Government of India.

3. ‘Poverty Estimates in India: Some Key Issues’ by Savita Sharma, ERD Working Paper No. 51, Asian Development Bank, May 2004.

4. Press release on ‘Poverty Estimates for 2004-05’ by the Press Information Bureau, Government of India, March 2007.

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