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Monday, February 18, 2002

A budget is not merely about numbers, receipts and expenditure.  It is about what is to be done with our money, what policies and services are preferred, how resources are spent, and getting good value for our money.

AP  draft   budget for 2002-03  conceals  as  much   as   it   reveals.  An expenditure of Rs. 32,981 crores is proposed for the year.  Of this, wages and pensions of employees account for Rs. 11,090 crores, or 82.7% of the Rs 13,408 crores tax revenues!  This is quite alarming.

A high wage bill is not a bad thing if employees provide public goods and services.  But what the budget does not reveal is that out of the 9 lakh employees directly under the state government, about 4.5 lakh (or 50%) are clerks, attenders and drivers! So half the state employees exist only to serve their bosses, but not to provide us services. Besides there is dearth of teachers, health workers, policemen and judges.  More than 35,000 primary schools have only two teachers.  We surely have a misplaced sense of priorities!

There is not only wrong deployment of employees, but where employees do exist, they rarely serve us.  The plight of schools and primary health centers strikingly shows us that we are not getting good value for our money. We need massive restructuring of government – complete redrawing of priorities.  The richest OECD countries spend 25% of GDP on education, health and welfare, whereas our public expenditure on all three sectors does not exceed 5% of GDP!

We have to build institutional mechanisms for accountability to make sure that services are actually delivered. For this, decentralization is the key.  Without the budget being allocated district-wise, and sector-wise, and without district governments having the authority to reappropriate within the overall allocation, all budget-making becomes a mechanical exercise.  In centralized budgeting and administration there are inevitably high transaction costs, leakages and corruption.  Despite all the talk of local governments, our budgets are still highly centralized.  In addition, we need to evolve standards of performance for every service, and give legal entitlements to citizens to ensure best value for money spent.  Citizen's charters are a potent weapon to make the budgetary intent a reality.

There are several low cost solutions to our governance problems, if only we learn to reprioritize. For instance, providing accessible and speedy justice through increasing the number of courts and creating gram nyayalayas in AP will cost only Rs 100 crores per year, a pittance in a Rs 33,000 crore budget!  The returns far outweigh the expense. And yet people are forced to go to the neighborhood goonda or mafioso to seek rough and ready justice!  Many poor and middle class citizens are compelled to remain mute spectators when their rights are trampled upon with impunity.

Finally, quarterly appraisal of performance with reference to budgetary allocations and expected   outcomes    will  make  budget  exercises  productive.  Transparency,  firm anti-corruption measures and specific institutional steps to prevent leakage will make budget an instrument of accountability instead of a routine and soulless display of numbers.  AP government made a good beginning in throwing open the budgeting exercise to the public.  But this is only the necessary first step in ensuring good value for every rupee spent on our behalf.