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The Austerity of the Affluent


Finance Minister Pranab Mukherjee’s stirring call for austerity tugs at the national tear ducts.  Prime Minister Manmohan Singh has pleaded for it in the past and watched his flock embrace it creatively. With the finance ministry even acting on Dr. Singh’s call in 2009 (economy class air travel, spending cuts)  —  we are now in the fourth year of our noble quest.

There are, of course, several kinds of austerity. My pick would be the variety practised by Planning Commission Deputy Chairman Montek Singh Ahluwalia. No one can challenge Dr. Ahluwalia’s commitment to austerity. Look at the way he’s stood up to the populist demand for a poverty line that makes sense.  No pampering people here. Spend 55 cents a day in urban India or 45 in rural India and you are not poor. He’s even asked the Supreme Court to uphold the imposition of such rigor on hundreds of millions of his fellow citizens. One affidavit filed by the Planning Commission defended a line of Rs. 32 (urban) and Rs. 26 (rural) a day. Since then, the Padma Vibhushan awardee and some of his colleagues have stuck their necks out to lower that further.

That Dr. Ahluwalia practises austerity  himself is evident from two RTI queries. Both fine examples of RTI-based journalism, but failing to get the attention they deserved. Both exploring the anatomy of his austerity. One was a story  in India Today (covering Ahluwalia’s foreign trips between June 2004 and January 2011) by Shyamlal Yadav. This journalist (now with the Indian Express), has done outstanding RTI-based stories in the past, as well. The other, in February this year, came from The Statesman News Service (reporter unnamed). This one took out details on Dr. Ahluwalia’s global forays between May and October 2011. In that period, he undertook “four trips covering 18 nights (which) cost the exchequer a sum of Rs 36,40,140, an average cost of Rs 2.02 lakh a day,” says the SNS report.

At the time this happened, that Rs. 2.02 lakh would have been worth US $4,000 a day. (Gee! Lucky for us Montek was into austerity. Imagine what his expenditure might have been otherwise). That is a daily spend almost  9,000   times greater than the 45 cents cut-off point at which rural Indians would be doing okay, in his view. Or over 7,000  times greater than the  55 cents cut-off point for urban Indians that Dr. Ahluwalia would find “normatively adequate.”

Now his spend of Rs. 3.6 million (or $ 72,000) in 18 days might well have been his personal stimulus to global  tourism in that year. After all, the industry in 2010 was still recovering from the ravages of 2008-09,  as the United Nations World Tourism Organisation points out. The UN agency found, on the other hand, that 2011 saw global tourism receipts cross $ 1 trillion. The largest revenue increases were seen in the US and Europe (where most of those 18 days were spent). The Indian public can rejoice over their money playing a humble part in that recovery even while scorched by austerity at home.

The stats from Shyamlal Yadav’s RTI are fascinating. To begin with, his findings show Dr. Ahluwalia made 42 official foreign trips  and spent 274 days overseas during a seven-year tenure. That is “one in every nine days” abroad. And that’s excluding travel days. The India Today story found that his excursions cost the exchequer $ 468,000. However, it points out that they received three different estimates of the costs of his trips and charitably went with the lowest. Also, said the India Today story, “it is not clear whether the figures include the expenses incurred by Indian embassies abroad on frills such as hiring limousines. The actual costs could be a lot higher.”

Since the post he holds does not require so much foreign travel  —   all of it done, though, with “the permission of the prime minister”  —  this is puzzling. That 23 of the 42 trips were to the United States, which does not believe in planning (but then, perhaps, neither does Dr. Ahluwalia), is even more puzzling. What were these trips about? Spreading global awareness on austerity? If so, we’ll have to spend more on his travel: look at those revolting Greeks killing the Cause in the streets of Athens.

And we’d have to spend even more on his trips to the United States where the austerity of the affluent is striking. CEOs in that country took home billions in bonuses even in 2008, the year Wall Street tanked the global economy. This year, even the media journals of the super-rich in the US write about CEOs destroying their companies, jobs and more  –  and gaining personally from it. Millions of Americans, including many who suffered home mortgage foreclosures, saw a different kind of austerity. The kind the French increasingly fear and have voted against.

When Dr. Singh pleaded for austerity in 2009, his cabinet rose handsomely to the call. Each member added a modest million rupees a month thereafter, on average, to his or her assets over the next 27 months. All the while, hard at work as ministers. ( The Union Cabinet gets healthier , The Hindu, 21 September, 2011). Praful Patel excelled, adding on average, half a million rupees to his assets every 24 hours in that period. Workers in Air India, under a ministry he headed much of that time, struggled to get their salaries  for weeks on end. Now with  Pranab cracking the whip, there’ll be even more austerity going around.

Note the bipartisan spirit of this austerity: in the past few years Praful Patel (UPA-NCP) and Nitin Gadkari (NDA-BJP) have hosted two of the costliest weddings ever, with far more guests than seen at any IPL final. Gender-balanced Spartanism, too. That was for Patel’s daughter and Gadkari’s son.

Their corporate counterparts take it further. Mukesh Ambani with his 27-floor  (but higher than 50 storeys)  costliest residence in living memory. And Vijay Mallya  –  whose employees in Kingfisher struggle for their salaries  –  who tweeted on May 5: “Having dinner at Atmosphere on the 123rd floor of the Burj Khalifa in Dubai. Never been so high up in my life. Awesome view.”  That’s probably higher than Kingfisher is flying right now. Both own teams in the Indian Premier League cricket circus. Which body has received public subsidies (by way of entertainment tax waivers, for example). That is, until the matter went to the Bombay High Court. There are other public-funded austerities linked to the IPL  –  watch this space.

The corporate world here generally follows the austerity model of Wall Street. There, nine banks including Citigroup and Merrill Lynch “paid $ 32.6 billion in bonuses in 2008, while receiving $ 175 billion in taxpayers funds,” reported Bloomberg in 2009. It quoted New York Attorney General Andrew Cuomo’s report on the subject: “When the banks did well, their employees were paid well. When the banks did poorly, their employees were paid well. When the banks did very poorly, they were bailed out by taxpayers and their employees were still paid well. Bonuses and overall compensation did not vary significantly as profits diminished.”

Note that Pranab’s austerity prayer last week saw the soothsayers of the super-rich raging on TV that the deficit was all due to “one populist measure after another.” That is, stupid things like trying to give people work, reduce hunger or send children to school.  No mention of the Plutocrat Populism which saw about Rs. 5 lakh crore (roughly $ 100 billion at the time) being gifted mostly to the rich and the corporate classes by the same Pranab budget in concessions on Corporate Tax, Excise and Customs Duties. Sitaram Yechury pointed out in Parliament that these write-offs for the super-rich exceed the fiscal deficit by $1.6 billion. But it is the ‘populist measures’ aimed at the poor that get panned.

Amartya Sen (The Hindu, Jan 7, 2012 )  ruefully asks “why there is hardly any media discussion about other revenue-involving problems, such as the exemption of diamond and gold from customs duty, which, according to the Ministry of Finance, involves a loss of a much larger amount of revenue ($10 billion) than the additional cost involved in the Food Security Bill ($5.4 billion).”

Indians outside the charmed circle of the meritorious know a different austerity. Food inflation in double digits. Vegetable prices rising 60 per cent in a year. Child malnourishment double that of sub-Saharan Africa. Families cutting back sharply on milk and essentials. Massive increases in health costs bankrupting millions. Farmers unable to afford inputs or access credit. A drinking water scarcity for many, as more and  more of that life-giving substance gets diverted for other purposes. How much nicer to practice the austerity of the elite.

P. SAINATH is the rural affairs editor of The Hindu, where this piece appears, and is the author of Everybody Loves a Good Drought: Stories From India’s Poorest Districts. He can be reached at: 


P. SAINATH is the rural affairs editor of The Hindu, and is the author of Everybody Loves a Good Drought. He can be reached at:

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