DELIVERING PROMISES
A see-through Budget!
Sray Agarwal, Deputy Editor, The IIPM Think Tank New Delhi 3/1/2011 1:48:39 AM
There is no denying to the fact that there exists a symbiotic relationship between “good governance” and “social development.” And this relation between these two factors largely depends on how the policies are formulated and then implemented. In most of the democratic countries, India included, policy formulation is generally done annually some of which are implemented through the Union Budget. When it comes to budget and policies in the backdrop, what plays a vital role are how well are these policies implemented and executed. However, it is here that the real malaise creeps in. Budget being one of the single most significant policy document of the policy makers speaks volumes about the objective and reconciliation efforts. But then, in India, most of the time, this “single most significant policy document” fails to sync with social development and very often confines itself as a tool (for corporate and powers that be) for filling coffers for a select section of the society.
Given such a gloomy scenario, it’s very important for the government to make proper disclosure of budget document even before officially declaring the budget. This not only allows proper scrutiny of the policies and above all allows people’s participation at various levels. In simple words, higher budget transparency is the fundamental essence of democratic-budget. According to the OECD’s recommendation of best practices “governments should produce the general intent document” and should come out with a pre budget report — that would encourage debate and clarify the objective of the annual budget — followed by monthly reports — that tracks the implementation of the policy announced — and then a mid-year report — that reveals comprehensive analysis along with economic forecast. Finally there should be a year-end report — that checks government accountability and is essentially audited by a supreme body. Along with these a pre-election and long term report would make the whole procedure more transparent.
On Open Budget Index, one of its kind survey that measures the transparency of budget, India features as among those nations that provide only significant information to its citizens during budget. Further, it scores 67 (out of 100) in budget transparency.
Taking numbers into perspective, except for enacted budget document India fails to produce any other important report. Still, our budget doesn’t have a custom of producing pre-budget statement that further impacts citizens’ participation. Citizen participation is largely confined to lobbying done by corporate and industrialists and the entire idea of civil society’s participation is kept at bay. Even the important reviews are ignored and if produced are most of the time either sub-standard or remains unaudited.
When it comes to allocating resources for social sector development, India either creates development schemes and/or provides the target audience with sops and subsidies. After a few mathematical calculations it would be really vivid as to how these sops and subsidies never reach the target audience, mainly because of opaque and leaking supply chain management. For instance, if 
the Central government distributes its entire allocation (given to subsidies) directly to the beneficiaries, they would have received nothing less than Rs. 2000 per family. This would have eventually brought them out of poverty line. For instance, if the total allocated money (Rs. 31,036 crore as per the budget 2010-11) for Sarva Siksha Abhivyan (SSA) were to be to be distributed directly to 192 million children (or 19.2 crore children) who officially come under the ambit of SSA, then each student would receive more than Rs. 1600 each year! Same is the case with PDS, NREGA and other similar developmental schemes. Corruption at different level (among these developmental schemes) forces the BPL people to bribe the administrations for basic necessities. As per recent survey, poor in India pay Rs. 8000 million to access basic necessities and services — which is again equal to more than Rs. 12,000 per family. Going by the fact that a family needs 35 kg of food grains per month, then the food wasted over the years (since 1997 till 2010) could have fed 25,000 lakh families in one year, or 2500 lakh families over the last 10 years! This would have also been enough to feed 830 lakh BPL families (with 35 kg grains per month) over the next thirty years! Even the 61st National Sample Survey shows that merely 44 percent of the BPL families have BPL cards and ironically 17 percent of the families in the rich group too have BPL cards.
These budgetary leakages not only echo how the entire budgetary exercise is highly perforated and allow blatant corruption practices but also as to how it is really non-democratic. Corruption in health care schemes, mid-day meals schemes, NREGA and almost all possible schemes are omnipresent. This brings me to an interesting analysis. When I regressed OBI (open budget index scores) of various countries with their CPI (corruption perception index scores) produced by Transparency International, I found a positive relation. A country with high OBI fares very well in CPI and same is the case with democracy. Similarly, a simple linear regression using Ordinary Least Square estimators tells us that countries with high OBI scores have very high scores on democratic index of the Economist. The same holds true for HDI index. A regression analysis shows R value of 0.64 between OBI & CPI, 0.36 between OBI & HDI and 0.59 between OBI & Democratic index. Take for instance, the United States, which has a high OBI score of 82 also fares well in HDI with 0.902, CPI with 7.1 and Democracy Index score of 8.18 out of 10 while India manages to get an OBI score of 67 and poor HDI score of 0.519 and a very low score of 3.3 on CPI and 7.28 on Democracy index.
This empirically proves that a transparent budget goes a long way in improving human development status of the nation along with checking corruption in the nation. And above all, a transparent budget is a democratic budge! Our budget fails to obtain a “Pareto-Optimal scenario” (given an initial allocation of goods among a set of individuals, a change to a different allocation that makes at least one individual better off without making any other individual worse off) as it dents the budget and expenditure of the great Indian middle class and is highly non-transparent when it comes to corruption and black money.
(The views expressed in the write-up are personal and do not re?ect the official policy or position of the organization.)
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