DOGE Initiative & U.S. Government Downsizing: Lessons for India’s Governance Reforms

 DOGE Initiative & U.S. Government Downsizing: Lessons for India’s Governance Reforms

By Suryavanshi IAS

Introduction

The Department of Government Efficiency (DOGE) initiative under the Trump administration aimed to reduce federal spending, streamline bureaucracy, and cut deficits by shrinking the government. This reform holds key lessons for UPSC aspirants, especially in Indian Polity, Governance, and Economy, as India too faces challenges of fiscal deficits, bureaucratic inefficiency, and public debt.

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Why was DOGE Needed?

1. Rising U.S. Debt & Deficit

• Fiscal Deficit (TE 2024): -6.0% of GDP (U.S.) vs. -4.1% (other Major Advanced Economies - MAE).
• Public Debt: 119.5% of GDP (U.S.) vs. 108.6% (MAE).
• Low Tax Revenue: U.S. tax-GDP ratio (19.27%) is the lowest among MAE (OECD average: 32.74%).

2. Bloated Government Structure

• 400+ federal agencies → DOGE aimed to reduce them to 99.
• AI-based monitoring was introduced to track inefficiencies.

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Key Reforms Under DOGE

Initiative	Outcome
Termination of unused leases	Saved $190 billion ($1,180 per taxpayer).
Workforce optimization	2.6 lakh employees laid off/retired.
Deregulation	$30.1B saved, 1.8M words cut from federal rules.
AI-based monitoring	Detected fraud & inefficiencies in real-time.
Transparency portals	Public tracking of grants & workforce data.

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Challenges & Criticism

1.    One Big Beautiful Bill (OBBB) Controversy

o   Proposed tax cuts > spending cuts → Adds $3.2T to debt in 10 years.

o   Elon Musk opposed removal of EV tax credits, creating friction.

2.    Revenue Shortfall

o   U.S. has low corporate taxes and tax evasion issues.

o   Expenditure cuts alone won’t fix deficits without higher revenues.

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Lessons for India

1. Bureaucratic Reforms

• AI-driven governance (like UPSC’s DigiLocker) can reduce inefficiencies.
• Right-sizing government (Example: NITI Aayog replacing Planning Commission).

2. Fiscal Discipline

• India’s Fiscal Deficit (2024): ~5.8% of GDP (U.S. comparison relevant).
• Need for tax reforms (GST rationalization, curbing evasion).

3. Transparency

• DOGE’s public dashboards → Similar to India’s PFMS (Public Financial Management System).

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Previous Year UPSC Questions (2016-2024)

Prelims Questions

Q1. (2023) Consider the following statements regarding fiscal deficit:

1.    A high fiscal deficit always leads to inflation.

2.    Fiscal deficit can be financed through external borrowing.

3.    In India, the Fiscal Responsibility and Budget Management (FRBM) Act mandates a fiscal deficit target.

Which of the above is/are correct?
(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2, and 3

Answer: (b) 2 and 3 only

• Explanation:
• Statement 1 is false (high deficit can but not always causes inflation).
• Statement 2 is true (India borrows externally via sovereign bonds).
• Statement 3 is true (FRBM sets a 3% target, though often relaxed).

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Q2. (2021) Which of the following is/are measures to reduce fiscal deficit?

1.    Disinvestment of PSUs

2.    Increasing tax compliance

3.    Cutting subsidies

Select the correct answer using the code below:
(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2, and 3

Answer: (d) 1, 2, and 3

• Explanation: All three reduce deficit:
• Disinvestment (e.g., LIC IPO) → Raises revenue.
• Tax compliance (e.g., GST) → Boosts collections.
• Subsidy cuts (e.g., LPG reforms) → Lowers expenditure.

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Mains Question (GS-III: Economy)

Q. (2022) "Examine the role of fiscal consolidation in achieving macroeconomic stability. Discuss the challenges India faces in reducing its fiscal deficit." (15 Marks)

Answer Framework:

1.    Define fiscal consolidation (reducing deficits via spending cuts/revenue boosts).

2.    Macro stability benefits (lower inflation, sustainable debt).

3.    Challenges:

o   Populist spending (freebies, subsidies).

o   Tax evasion & narrow base.

o   Slow disinvestment & PSU losses.

4.    Way forward: GST reforms, AI-driven tax audits, privatization.

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Conclusion

The DOGE initiative highlights:
Leaner governance is possible via tech & transparency.
But without revenue reforms, deficit reduction is incomplete.
For India, balancing expenditure cuts with tax reforms is key.