Budget, of the government, by the government, for the government

If public spending in India is to improve, the burden lies on us to remind ourselves of the 'people’s reality' every budget season

January is a busy month in the life of the policy wonk. As mandarins in the Ministry of Finance huddle into lockdown to put the final touches on the Union budget, presented in parliament on February 1, the policy commentariat comes into high demand -- the media, the seminar circuit are all abuzz with discussions on “what to expect”, and minutes after the budget is presented, policy wonks are called upon to offer “expert” insight on it.

At one level, this is an exercise in absurdity. There is almost no time to scrutinise the budget numbers on budget day -- these are placed online only after the Finance Minister finishes her speech. Moreover, changes in GST rates and state budgets (which account for 60 per cent of public spending) matter more to the average Indian than the Union budget. But what makes this annual ritual worthy is that the budget speech is the only public statement that offers insight into the government’s perspective on the state of the economy and health of public finances. The public scrutiny that follows ensures a modicum of transparency and accountability in public finance management. Remember, public scrutiny contributed to the government making its off-budget borrowing transparent.

However, every year, as I roll up my sleeves to prepare for “budget season”, I am reminded that scrutiny remains the privilege of the elite, policy wonk. The average citizen, whose everyday life depends on public expenditure, is consciously marginalised. In fact, it was my experience with planning and budgeting at the grassroots that nudged me to dive into the complicated (enough to turn your hair grey overnight) world of the Union budget. Indulge me, dear reader, as I share my story, for it reveals the harsh reality of budget-making -- centralisation, opacity and a decision-making hierarchy designed to ignore grassroots reality – that our national debates must be alive to.

Circa 2009, this was the moment in International Development practice phrases like “participatory budgeting”, “social accountability”, “co-governance” achieved global recognition. The idea is simple -- bringing government closer to people by inviting participation in core government functions – planning, budgeting, and auditing – ensures expenditures align with needs and priorities and strengthens accountability. Social movements in India were at the forefront of shaping this participatory revolution. And by the late 2000s, nearly every development scheme, designed in faraway New Delhi, was busy inviting the aam aadmi, on paper, at any rate, to participate in planning, budgeting and auditing schemes at the grassroots.

It was one such invitation that took me to rural Madhya Pradesh. In 2009, a group of young researchers and I were tasked to work with parent-teacher associations (PTA) in government primary schools to prepare school development plans ahead of the budget. By Delhi’s mandate, these would be aggregated at the district level into an annual work plan, which would serve as the basis of budget negotiations between states and the GoI. Technically, therefore, every rupee budgeted for education that policy wonks would debate after the Union budget presentation had a foundation in citizen-determined priority. Sounds fantastic. Well, turned out it was!

The PTA members had important (frankly, common sense) questions: How much money do we control? When will it reach the school account? Turns out this was not easy even for the “expert” to answer. It took serious detective work, pouring over scheme budgets and excel sheets to peel the budget onion, only to discover that schools have no real decision-making power over their budgets!

In 2009, just about 1 per cent of the elementary education budget (this increased to 3 per cent in 2020) was allocated for school development plans. Even this had specified spending instructions, so if a PTA wants to plan for hiring a new teacher, rather than purchasing chalkboards, it simply can’t!

A few years later, nudged by the MP experience, we began documenting the consequences of centralised financing. In Bihar, we found a school awaiting money for its building, forced to buy fire extinguishers, even as classes were being conducted under a tree! What better illustration of wasted public expenditure than this! Districts (and states), too, suffer a similar fate. Not only do they have no clear information on funds available, rigid spending norms mean they have no real capacity to budget.

Tardy implementation adds to the problem. Unpredictable and delayed funding is the norm, and money often trickles in toward the end of the financial year. Why bother planning then, if you don’t know when money will reach you? One PTA wanted to fix a leaky roof with their funds before the monsoon, but the funds never arrived. The monsoon came, the roof leaked, and the parents gave up. Faced with basic dysfunction, the government’s invitations proved meaningless. And even districts barely bother with the farce of planning. After all, it seems Delhi knows better!

This isn’t just the fate of PTAs. The Indian State is just too centralised and much too far away from the average citizen to be responsive or accountable. Consider this. Local governments in India are responsible for a mere 5.6 per cent of public spending. Compare this with China and the United States, where local governments account for 51 per cent and 27 per cent of public spending. In scheme after scheme designed by Delhi, centralised funding makes a mockery of invitations to participatory governance.

Underlying this low spending is a bureaucratic and political culture that seeks to conflate accounting for accountability. Discretion is curbed, the argument goes, because without careful tracking, the “local” cannot be accountable for public spending, giving rise to a public culture that gives inordinate space to scrutinise the Union budget but never really asks why the Union should decide how the PTA should spend its money.

Our debates on welfare today have moved to technology and the wonders of DBT. But no amount of technology can resolve the fundamental governance challenge India faces – what level of government should perform what level of function? In fact, it risks exacerbating it. If public spending in India is to improve, the burden lies on us who enable national debates to remind ourselves of the “people’s reality” every budget season! Here is my budget wish -- more accountability, less accounting!