'Expenditure Does Not Lend Itself To Serious Scrutiny': N K Singh

There is a long way to go in better classifying Government expenditure as there is in understanding and evaluating how Government funds are spent after they've been allocated. This in turn leads to challenges in fixing accountability. Before accountability, you need accounting and perhaps the best way to enforce accountability was to make it demand-based, down to the individual citizen.

These were some of the observations at the first IndiaSpend Debate held in New Delhi on April 30 at the India International Centre (IIC). The theme of the Debate was, “How Governments and Citizens Can Work Together For Efficient Expenditure Management”

The Debate, which saw speakers such as Former Revenue Secretary N K Singh, Former Cabinet Minister Suresh Prabhu, CII Chairman Emeritus Tarun Das, Business Standard Chairman T N Ninan and Accountability Initiative Director Yamini Aiyar make presentations on the broader issue of accounting and expenditure of Government finances also stressed on far greater line-by-line analysis and discussion of Government expenditure, ideally driven from the very bottom.

"Even though there are 3 or 4 important flagships expenditure of the Government like the Mahatma Gandhi Employment Guarantee Scheme, like the Right to Education Bill, like the Bharat Nirman. But in addition to these flagship programmes, there are at least 120 centrally sponsored schemes which have been inherited by the Planning Commission historically and refuse to get faded out or merged," said Mr Singh, also former Expenditure Secretary to the Government of India.

"Every time you ask for a merger of one of these, a couple of ones get dropped and then very sooner or later, a couple of new ones come up," he added.

Govt Accounts Immune To Reforms

Mr Prabhu argued that government accounts were least affected by the reforms. "Though the entire country is obsessed with reforms, they talk about civil sector reforms; they talk about reforms in various industries and other parts. But government accounts itself has not even been touched by any process of reform."

According to Mr Singh, it was fair to say that part of the problem of macro-economic management was because expenditure does not lend itself any measure of serious scrutiny in terms of whether they find the expenditure necessary or the outlay which each year, they keep on adding because of inflation that which is necessary.

Moreover, he said, there were often cases where the classifications were wrong. "The Expenditure budget that you know is typically broken into two parts; there is a Plan Expenditure for which the Planning Commission allocates the expenditure in the budget and the Non-Plan Expenditure which ofcourse after classification which hopefully after the Rangarajan Report would see greater rationalisation. There are many items in Non Plan which are also expenditure for capital making." All this led to a situation where attempts at building outlay/outcome budgets were hopelessly inadequate, Mr Singh said.

Abstract Goals Being Planned

Mr Prabhu also gave the illustration of the Sarva Shiksha Abhiyan. "The goal is to create universal literacy; that’s an outcome, which is also very abstract. But what you really mean by that is there are so many steps that one has to take to reach that level. So to reach that outcome, we must have schools, you must have teachers, you must have students ofcourse and all that. But if you really want to have all that, then you must provide expenditure for that. So unless you actually now when you’re budgeting for it, you’re already have in mind what the outcome should come from that expenditure. That outcome budget will never be able to capture the real expenditure. So we must start with the process of budgeting."

Mr Prabhu also referred to instances where the Comptroller & Auditor General (CAG) over emphasized the fact that a certain ministry had failed because they did not spend (for example) Rs 70,000 crore of expenditure.

"So the ministry would have done a good job if they had spent Rs 70,000 crore, but they are not interested to know what the quality of the expenditure is. Where the money was spent, what the results of that expenditure were. So the entire obsession seems to be on spending and not necessarily getting what out of it," he said.

Mr Prabhu also made a point about treating exceptional income as regular income by the Government of India, stating that it should either be shown in a different fund, use it for debt redemption, or put it somewhere else, but you cannot put it as regular income. "So by showing that, if you’re going to say that I sold 2G Spectrum and therefore my regular deficit has come down, fiscal deficit has come down, it’s almost like saying, “I sold my house, therefore I have enough money for dinner.”

Lack Of Awareness At Grassroots

Dhanendra Kumar, former Chairperson of the Competition Commission of India made a case for demand-based governance and accountability. "There is very little awareness at the grass root level in the common man about the various schemes and programmes of the government. Certainly not about how much money is earmarked for them for that village or in the metrics which the Central Government’s various schemes and programmes and the state schemes and programmes many of them overlap also.

If there is a system by which I as a consumer sitting in a remote corner in Himachal Pradesh or Uttaranchal or Jammu & Kashmir, can know that for the Grameen Vikas Yojana or the Rural Development Programme or Sarva Shiksha or the Drinking Water that so much money is available for this block, then and for my village, then I can draw upon that. If there is a missing link from the main road to my village, I could put in a representation, who should I put in and how much can I get. I think in terms of the knowledge and awareness, there is very little which exists at the moment despite all that we have done."