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For the first time, the Union Government has accepted as a policy that development outlays should be measured by their outcomes through a proper mechanism. Also, the Prime Minister Dr Manmohan Singh has presented a "Report to the People", the first of its kind, on the United Progressive Alliance Government’s performance in its first ten months of office (May 2004 to February 2005), with its commitment to provide a "corruption-free, transparent and accountable" Government. More than half of promises made in the National Common Minimum Programme of UPA have already been fulfilled and many other commitments are in the process of being implemented, the Report claims.
Major programmes under implementation and with substantial progress in 2004-05 include a 30 per cent increase in agricultural credit and increase in public investment in agriculture and irrigation, the "Food for Work" programme in 150 selected districts launched in November 2004, which would form the basis of the National Rural Employment Guarantee for which legislation has been introduced in Parliament, and higher spending provisions on irrigation, education, rural health and infrastructure.
The thrust of policies is on achieving economic growth with distributive justice and creation of employment. The Report refers to a sense of optimism pervading the country with a year of improved economic performance (6.9 per cent growth), communal harmony and political stability. With major economic indicators looking up, Government expects another year of strong growth at not less than 7 per cent.
Measuring Outcomes
How much of Government outlays get translated into desired outcomes has been a matter of national concern. Over decades, periodic evaluations apart, there have been no sustained efforts to find out whether vast amounts allocated for schemes of development in various sectors of national life have been properly utilised and accounted for and whether the results had been commensurate with the resources spent. With outcomes far below expectations, there is no doubt that there must have been over long years considerable misuse and leakage of funds and inefficiency in execution.
Yet, every year, the budgets provide for incremental allocations under the five year plans on the assumption that they would achieve the physical targets or the development benefits in terms of new capacities, social development (like schools and health centres) and provision of basic amenities or services, especially in rural and semi-urban areas. While progress can be benchmarked for infrastructural projects, the entire spectrum of rural development where resources are thinly spread remains uncharted. Responsibility in this vital areas rests essentially with sub-national governments and authorities (States, local bodies and panchayats) which are the implementation agencies. But the Centre, which provides the bulk of resources for national development, has even a greater stake and must have, in concert with the sub-national governments and civil organisations, a dependable mechansim for reporting on the outcomes and pointing out the deficiencies so that the processes of development could become more effective and meaningful.
Improving Efficiency
It is in this context that the Twelfth Finance Commission (TFC), which went into the finances of Central and State Governments and suggested ways of restructuring them over the next five years (2005-10), in its report presented to Parliament recently, emphasized the importance of relating economic expenditure to outcomes "in terms of quality, reach and impact of government services".
Budgetary allocations under different heads do not take into account how those expenditures get translated into outputs and outcomes. TFC cited the opening of a new school or health centre as an output while reduction in the rate of illiteracy or improved health indicators would be the outcome. Such measuring would also help to secure efficiency gains so that one could know if the same outcome could be achieved at lower costs or if the same costs could produce better outcomes.
The Finance Minister Shri P Chidambaram, in his speech presenting the Union Budget for 2005-06, said desired outcomes could come only through improved quality of implementation and enhanced efficiency and accountability of the delivery mechanism. The Finance Ministry and the Planning Commission will be working out a mechanism to measure development outcomes for all major programmes as suggested by TFC. A revival of the practice of performance budgeting at both the Central and State levels would also be useful to make a better allocation of available resources on more productive schemes and purposes. In recent years, "action reports" on budget promises have been made but along with the 2005-06 Budget, the Finance Minister has elaborately listed the fulfillment of many of promises made in the 2004-05 budget he had presented in July 2004.
Mapping a New Course
The Prime Minister’s report and the Finance Minister’s speech provide an overview of series of actions taken over a wide front - macro-economic management, investment climate, industrial competitiveness, infrastructure, agriculture, food for work programme,, agricultural credit, rural development, irrigation, water-bodies, micro-enterprises, education, health, backward regions, schemes for scheduled castes and tribes, and gender justice. Hopefully, the subsequent reports would relate the outcomes in completed projects and schemes.
The budgets of 2004-05 and 2005-06 have adhered to the social and economic priorities of the NCMP - growth with social equity - and allocated resources for most of the key programmes which will have an impact on the lives of the relatively poorer and depressed sections of society and are in conformity with Government’s objective of giving a "New Deal for Rural India".
Fulfilling Promises
In agriculture, the first announcement on UPA Government taking over in May to increase agricultural credit by 30 per cent every year has been implemented during 2004-05 with Rs.108,500 crore of credit in the first ten months against the target of Rs.105.000 crore and an addition of over 5.8 million new farmer accounts in the portfolios of commercial banks. Some 37 irrigation projects were taken up for completion during 2004-05 under the Accelerated Irrigation Benefit Programme and a pilot scheme on restoration of water bodies directly linked to agriculture was approved and funding is being provided for projects in 16 districts in nine states. A task force has been created to look into problems of recurring floods, especially in Assam and neighbouring states and devise flood control measures.
The National Rural Employment Guarantee Bill will provide the legal basis for guarantee of employment for at least 100 days a year to at least one person in every poor household in not less than 150 backward districts. It will be gradually extended to cover the entire country. Meanwhile, besides the Food for Work programme, the Antyodaya Anna Yojana has been extended to cover another 50 lakh families as social security for the most distressed families. The Report says that a National Rural Health Mission will be launched soon to provide primary health care. Primary and Secondary Education will now be financed on a larger scale with the education cess on all Central taxes, direct and indirect, introduced in July 2004, which would yield over Rs 6000 crore per annum. Loans for education and self-help groups to start micro-enterprises have been stepped up during the year.
Government moved to contain inflation which was mainly fuelled by the steep rise in international oil prices and lower it from over 8 per cent to 5 per cent. In the broader economic context, Commissions have been set up to attract private, domestic and foreign, investment, strengthen global competitiveness of Indian manufacturing, and uplift the unorganised sector which contributes significantly to output and employment. Government also set up a Board for Reconstruction of Public enterprises while a Group of Ministers is engaged in a dialogue with industry to evolve mechanisms for increasing employment opportunities for persons belonging to Scheduled Castes and Tribes in private sector. Government has also set up a Backward States Grant Fund with a provision of Rs.5000 crore for financing social and physical infrastructure programmes in the most backward districts in the country within a given time-frame.
*Freelance Writer
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