Meena auntie and the fiscal deficit

Meena auntie died a few months ago after a prolonged battle with throat cancer and asthma. She had a tough life and the end wasn't much better. I have thought of her quite a bit in the last few months.

Every time I think of her, I think about the fiscal deficit. The International Monetary Fund (IMF) and gang (various economists affiliated to colleges, think tanks, financial markets) have been pressuring the Indian government to reduce the deficit.

One way to reduce the fiscal deficit is to let go a number of government employees since a significant component of the deficit goes towards their salaries. These employees are widely perceived to be very inefficient.

If the government reduced their number, it could spend those funds more productively by investing in education, building roads and so on. Economists also claim that the distribution of LPG and food subsidies is wasteful. They would like the LPG subsidy to be scrapped and the food subsidy to be radically altered. Meena auntie would have been horrified by all this talk.

She married Prem uncle in the early 1950s. She was still in her teens and hadn't finished school. Uncle's family emigrated from Lahore to Delhi just a few years earlier and he worked in the Public Works Department as a clerk. I imagine life was more or less ok for them at the time.

They weren't rich but Prem uncle had stable job -- quite valuable after the dislocation after partition. They rented a small house in west Delhi and raised a family. They had three sons -- Chattu, Mattu and Peter. I don't know what sort of dreams they had or what plans they had for their lives. In any case, those dreams were probably shattered. Prem died of a kidney failure in 1961.

The extended family came around for a bit to help Meena auntie carry on. But they had their own lives to lead. However, one of auntie's brothers-in-law -- the resourceful Kaka uncle, really did help. Kaka uncle, also a clerk in one of the Central government ministries, understood the functioning of the government like few people could.

He knew exactly how to get files moving, the right loopholes and the right people in the right department. So he helped Meena take her school-leaving exam. Grapevine has it that all the questions she'd prepared for "miraculously" appeared on the exam. She passed and the uncle arranged for her to join the PWD as a clerk, on compassionate grounds.

The PWD job gave her a steady income in addition to her husband's pension (which was dutifully paid for 40-odd years). In time, she was allotted a house, had access to healthcare and all the sundry perks that came with a government job. I can't imagine her being terribly productive, but in those days there was no downsizing/VRS/exit policy, no consultants and no IMF pressure.

So Meena pottered along. The stability allowed her to raise her three sons. They are now all married and have families of their own and no doubt Jagdish Khattar will be pleased to know that Chattu, Mattu and Peter come to all family functions -- births, marriages and mundans -- in their respective Maruti cars.

Life was hard managing a job, three kids and loneliness is tough. But she got by thanks to you -- the Indian taxpayer. The next time you moan about 40 years of Nehruvian socialism, think of Meena auntie.

So are the economists wrong? Is the moral of the story that we should ignore the IMF about controlling our fiscal deficit in general and government downsizing in particular? Well, not quite.

There were costs to helping Meena auntie. For one, there was the efficiency loss of a harried, under-qualified worker in the PWD -- perhaps some road work was delayed because Chattu wasn't well and auntie had to take him to the doctor, with the office file cupboard keys in tow.

The contractor's interest burden increased, and he charged the government more than it had budgeted. The government squeezed the public health programme to pay the contractor and so we now have unhealthy, inefficient workers.

But from my perspective -- and this is a neo-liberal speaking -- the real cost of looking after Meena auntie was the opportunity cost lost -- by not spending enough public money on education. What would have happened if India had, instead, spent the money on educating its citizens?

Maybe some dalit girl in Bulandshahr (a district in Uttar Pradesh) in the 1970s would have studied microbiology and escaped from nauseating social structures of Bulandshahr. She would have come to Delhi and started a biotech firm -- employing Meena auntie as a secretary.

Since the Bulandshahr girl had risked so much to start this firm, she would have all the incentive to make it work. The firm would blossom into a competitive "bio-tech solutions provider" through the 1980s.

Finally the roaring 1990s would give the Bulandshahr girl -- now a lady -- a chance to make it big. The biotech start up would have a Nasdaq IPO. Naturally, Meena Auntie, the loyal secretary, would be given stock-options (properly accounted for). And Meena auntie would cash out at the height of the dotcom mania. It's possible -- certainly it's nice to think so!

But what if India had invested in the education of the girl in Bulandshahr, but she didn't have the courage to leave her village for the big city? What would happen to Meena auntie and her sons not to mention Jagdish Khattar and his Marutis? I don't know -- but it's certainly something that economists should be thinking about.

It is really difficult to know what would have happened if we had followed a different path of development. In any case, it doesn't matter.

What I do know, is that it's now time for Chattu, Mattu and Peter to stop expecting subsidies from the government. They don't need it. It's time they stop looking to the government for jobs or cheaper LPG cylinders. And it's time they pay for their kids' higher education.

The government could use the money saved to increase public expenditure on health and education. It's only fair to the millions of poor who need that help. What holds for Chattu, Mattu and Peter, broadly holds for the middle class. For 50 years the Indian state has helped them make ends meet. It's now someone else's turn.

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