Long View: Union Govt's Salary Bill Jumps 9-Fold In 20 Years Even As Staff Strength Shrinks

And, even as the staff strength came down, the salaries and perquisites of government employees have increased year after year, registering a nine-fold increase over the past two decades.

The first seven years of the UPA regime saw the staff strength of the Union Government steadily decline from 33.12 lakh in 2004 to 31.53 lakh in 2010. The trend reversed through the last three years and the number climbed back to 33.28 lakh at the beginning of 2014. Once the BJP-led NDA came to power in 2014, it chose to follow a similar course. 

During the tenure of the NDA, the staff strength of the Union Government has seen a secular decline, from 33.28 lakh to 31.67 lakh in 2023 – the election year of 2019 being an exception when there was a year-on-year spurt in the number (see chart). 

The two regimes taken together, the staff strength of the Central government stands reduced, from 33.12 lakh in 2004 to 31.67 lakh in 2023. That points to a negative CAGR of (-) 0.6 per cent in government employment.

Broadly speaking, such a trend in government hiring may hinder the broader objective of inclusive development as the “shrinking state’s” capacity may have reduced, forcing it to outsource too many functions to private players. 

At all times, social scientists believe, there exists an unwritten contract between the state and private individuals, which allows the state to levy taxes, make rules while giving to the citizenry safety, security, rule of law and social, in modern times redistributive, justice. 

India, which is federal in structure but with unitary features, requires a huge federal workforce as the Central government holds more powers and discharges more functions than the states.

The Central government decides the overall direction of economic progress, social development, and citizen welfare in the country. The implementation and delivery of governmental efforts and schemes, therefore, are crucially dependent on the size of the government.

As the numbers above show, both the UPA and the NDA governments started with relatively bigger workforce in central ministries and departments. Subsequently, both the governments started cutting down, possibly to reduce government expenditure and adhere to lower fiscal deficit targets.

However, as the economy hit a roadblock after the 2008 global financial crisis, the government’s thinking on hiring changed. From 2011, it started hiring more people. 

This trend changed again after the 2014 elections brought in a new NDA government, which tried to cut back on hiring with renewed vigour as it promised “maximum governance, minimum government”.

Going by the estimates provided in budget documents, it seems this may be reversed. Hiring numbers have already gone up this year and may be ramped up after the 2024 elections, according to estimates contained in the Interim Budget documents.

NDA Tenure: Number of Tax Collectors Up, Railwaymen Down

Between 2014 and 2023, the Ministry of Finance hired the most as the Department of Revenue was bifurcated into two separate departments – Direct Tax and Indirect Tax. The introduction of GST and emphasis on raising direct tax collection necessitated this transition. The largest hiring happened in these two departments, followed by the Ministries of Defence and Home Affairs – read police.

The Ministry of Housing and Urban Affairs, the Ministry of Agriculture and Farmers Welfare, and the Ministry of Statistics and Programme Implementation also added more than 1,000 jobs each.

The largest cut in workforce, to the tune of more than 1.4 lakh jobs, was in the Ministry of Railways, followed by the Department of Posts, which shed nearly 43,000 jobs.

The Indian Audit and Accounts Department, the Ministry of Health and Family Welfare, the Ministry of Science and Technology, the Ministry of Commerce and Industry, the Department of Atomic Energy, and the Ministry of Mines also reduced their respective staff strength by more than 2,000 jobs each.

UPA Regime: Spurt In Police Hiring Offset Cuts Elsewhere

The period between 2004 and 2014 was marked by a reduction of about 3.7 lakh jobs in the central government, excluding the Ministry of Home Affairs that hired nearly 3.9 lakh additional personnel for the Central Armed Police Forces.

If the hiring of additional personnel for CAPF is set aside, it could be seen that the size of the government was cut by a sizable number.  Railways, Finance, Commerce, Science and Technology, Housing, Culture, Mines and Agriculture are among the ministries that saw the steepest cuts. There were minor additions in other ministries such as External Affairs and Civil Aviation. 

But the real difference was in paramilitary police hiring, partly on account of an intensified counter-insurgency programme by the government against militant groups and left-wing extremism. 

“The trend towards a leaner bureaucracy was visible since the year 2000. For example, the induction of computerised reservations resulted in a cutdown in railways jobs, said Ranjan Chatterjee, a former secretary to the Government of India.

 “We wanted to cut down human interface with the public as consumers by shifting to an electronic interface to cut down corrupt practices. That is also why gradually some government work, including implementation of social welfare schemes, are now handed over to the private sector and NGOs,” Chatterjee said.

Explaining the increase in central police hirings, Chatterjee said: “More than the civil departments, police need more manpower to maintain law and order in the face of changing scenarios. Going ahead policing may be complemented with more gadgetry”.

Costlier Workforce

Compensations paid to central government employees include pay, allowances, and travel expenses. Adding up all the three shows that the cost of the central government workforce has steadily increased over the past two decades, with Pay Commissions raising salaries twice during this period – in 2008 and 2016. 

As the government grapples with managing its finances to keep a lid on the fiscal deficit, this cost consideration seems to have been the primary driving force behind frequent job cuts in the Central bureaucracy.

“Fiscal deficit rose to a higher level during 1999-2000. As a result, the central government made a two-pronged effort to bring it down, by raising revenue and cutting expenditure. So, creating contractual employment, instead of permanent ones, was seen as a measure to ‘right-size the workforce’," said Tapas Sen, a former professor of National Institute of Public Finance and Policy (NIPFP). “A recent example of this thinking would be the Agniveer appointments under the Ministry of Defence,” Sen added. 

Regardless of how small the reduction in the size of the government is, it characterises a shrinking state. In social contract theory of economics, this results in restructuring of the original social contract between the government, the citizenry and the private sector.

In simple words, at any point of time, there exists an unwritten social contract or general agreement that the government would collect revenues from the citizens to regulate economic growth and promote the redistribution of wealth gained. 

A shrinking state changes the balance of this contract, leading to decisive shifts in state capacity and policy orientation. In turn, these shifts jeopardise the original intent of redistribution.

The Union Government, over the last decade, has undertaken a slew of social welfare schemes, aiming at reducing inequality and poverty. A shrinking or stagnating government size does not bode well for that broader socio-economic vision.