How About An Outcome Budget Before Budget 2017?

Thought Capital | Shankkar Aiyar

BloombergQuintOpinion |October 20, 2016, 2:12 pm

Twitter: @ShankkarAiyar

How does the government run the government? This year the government hopes to earn Rs 14.4 lakh crore in revenue, will borrow Rs 5.3 lakh crore and spend Rs 19.7 lakh crore. Translated, every day the Government of India earns roughly Rs 3,956 crore in tax revenue, borrows around Rs 1,462 crore and spends around Rs 5,419 crore — or Rs 225 crore every hour. Indeed, between them, the Centre and the state governments raise roughly Rs 28.4 lakh in revenue and spend around Rs 37.8 lakh crore every year — that is, Rs 10,370 crore per day or Rs 432 crore per hour.

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Why An Outcome Budget?

Suffice to say that the government spends more money than it earns and faster than can be counted. The moot question being asked by tax payers — those paying income tax as also those paying excise on match boxes and service tax on the mobile recharge coupons — is where is the bang for the buck?

Yes, it is true that the government presents an Annual Financial Statement. Fact is, it hides more than it tells.

Frequently the answer to what the money was spent on is lost in translation. There is also the saga of spending that is lost in transmission. On an annual basis, India loses around Rs 90,000 crore in transmission and distribution losses which is a euphemism for power theft, around Rs 40,000 crore in leakage in the public distribution system, about Rs 25,000 crore in losses racked up by public sector units. And these are just the headline numbers.

A modern democracy deserves better. How about a state of the union report — an outcome budget on what the last budget delivered? The idea has political legitimacy. World over, better governed nations present to the citizens a fact sheet — year-end report, outcome report, performance report et al — on how money raised from the people has been deployed and to what end. Indeed, a review of the literature would validate the potential for economic and political dividends.

Bang For The Buck?

The government has taken steps to redesign the Budget and its processes. The Railway Budget will be now part of the main Budget, the nomenclature of plan and non-plan expenditure has been junked and Budget 2017 is to be presented earlier so as to improve allocations and expenditure. Given the context, why not leverage the momentum for change and consider presenting a ministry-wise objectives and outcomes report before the Budget is presented. The scrapping of the annual ritual — the presentation of the Railway Budget — affords a window of opportunity to institutionalise the idea — the day now made available could be designated as the Outcome Report Day.

The structure could be simple. Allot a fixed time — perhaps 30 minutes to an hour — to ministers (with major responsibilities, if not all) to present their report on promise and performance. The base template for discourse could be the allocations and promises made in Budget 2016. The slogan of Budget 2016 was ‘Transform India’ — to deliver a significant impact on the economy and on the lives of the people. Through the Budget, the government promised to boost demand, focus on enhancing expenditure in priority areas and empower the vulnerable sections through programmes. Have the promises made been delivered? How is India doing?

Suresh Prabhu, minister for railways, having lost his airtime slot, could open the innings. He could elaborate on improvements, induction of private solution providers. He could also inform if the loss of market share in freight and passenger volumes to road transport and airlines has been stemmed and detail the progress on the implementation of the Debroy Committee report.

The 2016 Budget allocated Rs 35,984 crore for agriculture. Agriculture Minister Radha Mohan Singh could list how it has been spent, the progress of the soil health cards programme, the many irrigation schemes, the national market for agri produce. He may also explain why India fares so poorly — worse than Myanmar — on the Global Hunger Index rankings!

Nitin Gadkari could list progress in investments on roads, shipping and ports. More specifically, he could tell India about performers and laggards among states in highways and rural roads as also the progress on inland waterways project. Piyush Goyal, the minister for power, coal, mines et al could present how many villages have been electrified, how much more coal has been produced, how much power is being generated and indeed why despite lower tariffs and surplus power state electricity boards keep large geographies in the dark. He could also elaborate on what the response of states has been to his suggestions on curbing power theft.

This year’s Budget allocated over Rs 1.5 lakh crore for the social sector — for education and healthcare. It would be an opportunity for Human Resources Minister Prakash Javadekarto inform India how the idea of Right to Education is faring across states, and specifically, why in his home town Pune RTE seats are lying vacant. The big push this year in healthcare was about insuring vulnerable sections. Health Minister JP Nadda could elaborate on that and on the programme for affordable medicines distribution and the national dialysis services programme.

The government liberalised investment across sectors. Nirmala Sitharaman, minister for commerce and industry, could reveal if this has translated into inflows. She could also elaborate on improvements in ease of doing business rankings, on the volatility in industrial growth. Exports have been in a rut — hope now rests on the newly devised phraseology of “slowing decline”. It would be interesting to know if the commerce ministry has had the benefit of advice from the deputy chairman of NITI Aayog and renowned trade economist Arvind Panagariya.

The state of defence under the UPA was indefensible. Has the process of defence procurements improved? Defence Minister Manohar Parrikar could claim/apportion credit for lowering the cost of acquiring Rafale fighter jets and share the progress on indigenisation programme for aircraft carriers and submarines. He could also inform Parliament why it is such a challenge to procure bullet-proof jackets, thermal imagers, snow boots which jawans frequently prefer to source from private markets and when the issue of new assault rifles, pending for decades, will be resolved.

The rural development ministry for instance has a huge portfolio of schemes. This year Rs 87,765 crore was allocated for the rural sector and Rs 2.87 lakh crore was to be given as grant-in-aid to gram panchayats as per the recommendations of the 14th Finance Commission. How has that panned out? And yes, the ministers for skills and jobs could clarify the state of job creation.

Maximum Governance

It could be argued that the government already gives quite a lot of information on its programmes, expenditure and performance when answering questions in the Lok Sabha and Rajya Sabha. Fact is, the answers are responses to sectional concerns. The government could claim that information is made available online and on social media. Again these posts — 140 characters or more — do not give a consolidated picture. The idea of outcome reporting is to get a wholesome picture of allocations and spending — about the efficacy of public services delivery.

The Opposition will want to weigh in and contest claims. There are two ways to deal with this. One is to allow the Opposition the opportunity to question claims. The other is to refer the outcome reports to both the ministry-specific Standing Committees of Parliament and to the Comptroller and Auditor General for their views. Since the session is telecast live, claims will for sure be fact checked and contested or validated in the media. Dissemination of videos of the outcome statements will help widen the discourse on governance.

India is wracked by multiplicity of layers in governance. The Centre designs the fiscal anatomy of governance. The biggest allocations in the Union Budget are for subjects that rest squarely with the state governments — education, health, women and child development, agriculture and rural development. The outcomes report will therefore also shed light on how states are delivering on critical programmes.

It is now well validated that transparency and participative policy process improves efficiency and equity. The premise of the massive mandate of 2014 was maximum governance. The unstated message was that good governance is good politics. Why not tell the voters what the government has delivered on?

Shankkar Aiyar, political-economy analyst, is the author of Accidental India: A History of the Nation’s Passage through Crisis and Change.

The views expressed here are those of the author’s and do not necessarily represent the views of BloombergQuint or its editorial team.

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