Introduction

No careful account of India's political economy is complete without reckoning with the size and composition of public sector employment, invariably described as a leviathan, bloated, dysfunctional and inefficient – and, as caricatured in R. K. Laxman's countless cartoons in The Time of India for decades (Picture 7.1 and 7.2 for illustrations). These workers form a vital constituency in electoral politics, as they are well represented in the trade union wings of most political parties. Moreover, unity of this section of the organized working class – cutting across party lines – is also evident in how it manages to protect its interest in securing periodic pay rise under the Central Pay Commission.2

That the white-collar workers form a significant constituency in varied accounts of India's political economy is widely acknowledged. If they were part of the ‘intermediate regimes’ in K. N. Raj's (1973) account, they were also a constituent of Bardhan's (1984) ‘professional in the public sector’ as a propertied class; they were the salariat in Patnaik and Rao's (1977) formulation of a mixed underdeveloped economy (emphasis as in original); and, they were among the rent-seekers in T. N. Srinivasan's (1985) neo-classical political economy story.

Most scholars, in line with their preferred view, have too readily accepted the above characterizations as self-evident, without being obliged to examine the evidence. It was perhaps Ashok Desai and Ena Desai, from a libertarian political perspective, made the only careful and critical analysis of public sector employment – in a multi-country volume edited by Gus Edgren (1986) for the ILO-ARTEP, titled The Growing Sector. Piecing together evidence from diverse sources, Desai and Desai explained the growth in public sector employment by India's ability to tax and spend.

If there was one aspect of the market-oriented reforms that had wide appeal, cutting across theoretical perspectives and political persuasions, it was to curb the size of the bureaucracy to reign in the fiscal deficit. While the political right advocated shrinking the state as an end in itself, many others made a case for modernization and decentralizing the bureaucracy for better services delivery – a political imperative in a deepening democracy. This was argued to be feasible by replacing the “unproductive” army of unskilled and semi-skilled office workers, by qualified professionals and by investment in office automation.