Decades ago, the redoubtable US Senator Adlai Stevenson aptly remarked: “Bad administration, to be sure, can destroy good policy; but good administration can never save bad policy.” In India, many are tempted to tamely accept that it is because of both bad policy and bad administration that India ranks 84th (effectively 86th) in Transparency International’s Global Integrity Index 2009, and 134th in UNDP’s Human Development Index 2007. India ranks number one only when it comes to remittances from its citizens living abroad. Why do such dubious rankings plague this noble land?
The Public Finance Statistics from 1990-91 to 2007-08 portray an alarming picture of the quality of governance and accountability in India, and perhaps help explain the poor rankings.
Of about Rs 623,000 crore spent for non-development purposes by the Centre and states, a major portion was used for administering various organs of state, pensions and food subsidies in 2007-08. In stark contrast, development expenditure of about Rs 685,000 crore was only about 10 per cent more than non-development expenditure. Once you reduce this to 1990-91 prices, the real value of the government’s developmental expenditure in 2007-08 is only Rs 320,000 crore.
Of the Rs 685,000 crore spent on development, social and community services accounted for about Rs 288,000 crore. Reduced to 1990-91 prices, the real annual expenditure falls to about Rs 134,000 crore or Rs1,116 per head or Rs 3 per day! If this were reduced by a fourth, a figure which is very conservative given the levels of corruption, the per capita development expenditure outlay collapses to even more ludicrous levels. More so when you juxtapose this with the fact that arhar lentils retail at nearly Rs 100 a kilogram or sugar at Rs 50 a kilogram. And as has been pointed out, the cost of government is almost the same as that of governance (development).
Adding to the diminution is the inability of government departments to use allocated funds. In 2007-08, total surrenders by the Central government departments added to around Rs 108,000 crore. While this may not add up to a very large amount in percentage terms, the impact of this is quite substantial. Such surrenders include money for modernisation of police forces; maintenance of sugar buffer stocks; Sarva Shiksha Abhiyan; scholarships; education and court infrastructure; immunisation programmes; and international cooperation, notably Indian Technical And Economic Cooperation (ITEC). Funds are surrendered because of several reasons, such as grandiose populist plans not too facile to be implemented; release of funds even on the last midnight of the financial year; lack of capabilities in contracting and identifying vendors and oft-disputed and whimsical qualitative requirements; delays inherent in the centralised procurement of stores; poor coordination between administrative departments and their expenditure-sanctioning authorities, inter- and intra-ministerial wrangling over directions, targets and implementation methods and year-ending real-time monitoring by expending departments — all controllable phenomena.
For all such failures, the government borrows money and this consumes 43 per cent of its annual Budget, maybe about Rs 7,000 crore in 2007-08 on surrendered Central funds alone, without any return for itself or by way of service to citizens. The future benevolence of governance must, therefore, necessarily overshadow government’s antediluvian processes if, as Will Durant said, “government is not to perish by excess of its basic principles”.
Even if one were to assume that with better monitoring, surrender of funds would be reduced by 75 per cent to about Rs 80,000 crore, this alone would yield 22 million jobs at Rs 100 per day for 365 days a year — under the National Rural Employment Guarantee Scheme (NREGS), which promises jobs for just 100 days a year, the bang for the buck would be a lot greater. India could get millions of NREGS jobs plus perhaps four-five AIIMS-like hospitals per annum; or an AIIMS in Nepal, Bhutan or the Maldives in furtherance of our national interests in the neighbourhood every year.
Indeed, the definition of the poverty line would change dramatically if such rampant surrenders of funds were sternly penalised by the government’s principal Budget, finance and administrative officers acting in tandem.
Every Rs 100 crore saved from non-development expenditure translates into over 27,000 year-round jobs. This is when the Census 2001 shows that about 45 million rural people are seeking or available for work. And to provide for this, an additional Rs 70,000 crore is required every year, part of which is already available in the NREGS budget. Aggregating similar surrenders and interest payouts by states, part of the two crore urban unemployed people may be covered under a similar scheme.
As if this were not enough, non-development expenditure consumed 60 per cent of the total revenues. The Controller General of Accounts (CGA) in the Appropriation Accounts for 2007-08 informs us that the government’s tax revenues have risen four-fold in the last decade — this, too, appears inaccurate as it is based on a simple linear calculation without accounting for inflation. In the same breath, the CGA also informs us that revenues have trailed expenditure by providing only 82 per cent of the feedstock for the Central government, the rest being presumably left to currency printing presses to make good in paper. This has left the government with an illusory cash balance of Rs 230,000 crore, neutralised nearly seven times over by an accumulated deficit of Rs 15,87,156 crore in 2007-08 — the price for government over governance.
Suggestions for direct cash transfers to citizens and communities in the form of self-help loans/grants for specific purposes are pertinent in this context — more bang for the buck without pilferage or overheads leading to empowerment of citizens. Every rupee surrendered or wasted enhances alienation of the rulers from those ruled and strikes at the core of our nationhood and national pride. The NREGS bridges the rural-urban poverty-centric tensions and makes our cities liveable. Equally, the ITEC enhances our “sphere of influence”. The NREGS and the ITEC are only two examples that money is not in short supply as is the public perception. Government budgets and accounts can sharpen focus manifold on all major policy issues and increase accountability in government for governance. Government is the benefactor; therefore, as Thomas Jefferson aptly remarked, “The care of human life and happiness and not their destruction is the first and only legitimate object of Government.”
The aggregated annual average inflation rate from 01/04/90 to 31/03/2009 has been used in computing figures of 2007-08 at 1990-91 prices.
Views expressed are personal
