CII will write to each MP of Lok Sabha and Rajya Sabha in the next few weeks, detailing how the government expenditure does not benefit the most disadvantaged sections of the society.

CII deputy director general M Roy said that the chamber was in the process of preparing a detailed note on the nature of government expenditure and its impact on the economy.

"CII will take up the issue strongly as there is an immediate need to reduce the wasteful expenditure, which does not result in asset creation", Roy added.

The establishment cost (money spent by the government on salaries and allowances) has more than doubled from Rs 15,208.62 crore in 1993-94 to Rs 31,285.95 crore in 1998-99. It is estimated to further increase to Rs 32,722.13 crore in the current fiscal.

CII feels that there is a possibility of up to 30 per centreduction in administrative expenditure without hampering the efficiency of the government machinery in any way. "To start with, maybe a 10 per cent cut in administrative expenditure could be carried out and subsequently the cut could be increased", said Roy.

CII suggests that there should be a freeze on fresh employment in the government. There is also a need to bring about a three per cent cut in staff strength through natural attrition as also rationalisation of staff deployment.

"If the private sector can restructured, why cannot it be replicated in government departments", said Roy.

Though the establishment cost has grown over the years, the capital expenditure -- which leads to asset creation -- as a percentage of GDP has been declining over the years, from 6.93 per cent in 1986-87 to 2.94 per cent in 1997-98.

According to the CII, the capital expenditure as a percentage of total expenditure has also come down, from 34.7 per cent in 1980-81 to 30.2 per cent in 1990-91 and to 22.6 per cent in1998-99. It is projected to decline further to 16.5 per cent in 1999.

"Capital expenditure should be stepped up. There is also a need to improve tax administration", said Roy.

CII is also in favour of phasing out subsidies in a calibrated manner and an improved focus on public sector reforms and privatisation.