Scrambling to raise finances for meeting essential public services in the post Covid-19 scenario, the cash-strapped Maharashtra government has lifted all curbs on remuneration and hiring of outside consultants. Despite stiff opposition from within its ranks, the Chief Minister Uddhav Thackeray-led coalition has revoked its own order that had capped the number of consulting firm that departments and their sub-establishments were permitted to hire.
While the 67 per cent cut of development spend remains in place for all non-revenue generating departments, the state government has also withdrawn the 30 per cent cut it had imposed on the remuneration of consultants.
Earlier on May 4, Maharashtra, the worst-hit Indian state by the Covid-19 pandemic, had announced the deepest cutback in expenditure in its history, projecting the economic situation to be gloomy this fiscal. The austerity measures included strict curbs on the use of private consultants.
Restricting the number of consulting firms that departments and their sub-establishments could hire in the ongoing year to just two per department, it had also slapped a 30 per cent cut on the “professional fees” or remuneration paid to the already hired consulting firms.
However, on December 22, the state finance department issued fresh orders announcing withdrawal of the restrictions placed on consultants. Just as a dwindling income has forced the government to borrow money to pay its own wage bill, the consultants will now enjoy unhindered access.
Sources confirmed that a section within the bureaucracy had strongly questioned the move, but that there was intense pressure from big, expensive consultants for easing the curbs. The latter managed to have it their way in the end. Ironically citing the post Covid-19 recessionary trend, several of these consulting firms have announced pay cuts for their own staff.
With consulting firms creeping in areas of government service that were once off-limits to the private sector, the state government’s use of consultants has soared in past decade or so.
At present, Maharashtra has 400-odd consultants including big, diversified consultants such as Deloitte, Ernst and Young, Grant Thornton, PricewaterhouseCoopers, KPMG, Wipro, McKinsey, among others.
With the average remuneration ranging between Rs 1,98,000 and Rs 3,56,400 per person per month, the state’s annual outgo towards the “professional fees” of consulting firms is currently around Rs 400 crore, said sources. Contracts of a majority of the consultants would not have been renewed if the curbs imposed in May had continued.
With consultants stepping into roles traditionally filled by public servants, supporters of the move cite cost benefits and improved service quality, while critics say that over-reliance on private companies erodes state’s own capacity.