The end of the second quarter, 30 September, is just a few days away. It’s the three-monthly home stretch for companies as they race to meet quarterly targets of sales, profits, cost-controls and other performance targets. While this is true for all companies—big and small —there is additional pressure on publicly listed firms, as a plethora of stakeholders —shareholders, money managers, rating agencies, creditors, auditors, regulators, media—watch with hawk eyes the data that companies will release in the weeks to come. And, come December (and March and June), the whole cycle will repeat. It’s a relentless treadmill. As one CEO quipped, in a corporate take on the popular Hindi film Qayamat Se Qayamat Tak (which came to be known as QSQT), “We are living in a world of QSQT (Quarter Se Quarter Tak)”!
Cut to our government. Or more accurately, governments in plural, thousands of them: Union, state governments, at least 5,000 urban local governments, and 600,000 village governments. Collectively, these governments manage funds to the tune of over Rs20 trillion, in the current fiscal year, give or take a few thousand crores. The total banking deposit base in India was about Rs40 trillion (March), which means that our governments spend 50% of our national deposit base. Every year.
Each government raises resources and spends them on a variety of public obligations. Each has many stakeholders, the primary ones being the citizens. Each has a management of elected representatives and administrative professionals. Each makes promises of performance every year.
Unfortunately, because no standard performance yardsticks are applied, these promises are anecdotal, sporadic and never strung together into any coherent measurement framework, thereby making performance accountability weak and enforced only once every five years via the ballot box.
Some may argue that the budget and the Comptroller and Auditor General (CAG) reports are strong accountability instruments. True, but there is a difference between statutory accountability that is focused on probity and performance measurement. Also, the budget is essentially seen as an instrument of promise, rather than of performance —the parenthetical revised and final estimates are rarely discussed, given the overwhelming attention given to the promises. As to CAG reports, while the quality is outstanding, the periodicity and timing makes it less visible in the public eye—imagine if we got an audited statement of Infosys for the year ended March 2008 in June 2009. It’s like reading last year’s newspaper.
Many people talk of Right to Information (RTI) as an example of accountability in government. Unfortunately, while RTI was a historic victory, it is not a sufficient accountability tool. Imagine if a shareholder wanted to know how Reliance Industries was performing, and Mukesh Ambani asked him to file an RTI petition. What we need is suo motu disclosure, that is, disclosure as the “duty to publish” (DTP). DTP is the supplement of RTI (section 4 of RTI Act states this but has been overlooked).
Incidentally, the disclosure regime in the private sector has its origins in a shareholder-led RTI movement (for those interested to know more, I have prepared a short history of corporate disclosure, available at www.livemint.com/corporatedisclosure.htm).
Clearly, the metrics of such disclosure cannot be “revenue growth” or “margins” or “inventory turns”, given that government institutions are more complex than private enterprises. But this just means that the metrics need to be different, not that the principle need not be applied.
While this approach needs statutory support, let’s not wait for the legal framework to be established, else our grandchildren will be filing PILs demanding data. Between media, civil society and industry forums, we can demand disclosure (say, starting with our Union ministries), beginning with two simple parameters:
• Finances: How much did your ministry receive and spend during the period?
• Impact: What are the metrics you use to measure success, and how did you do on these metrics? These could be self-assessment metrics that each ministry defines for itself.
Over time, the data can be deepened, and extended to all governments. Imagine our newspapers and TV stations reporting on the quarterly performance of our governments—comparing the performance of the ministry of surface transport with that of power; or Maharashtra’s education department with Tamil Nadu’s; or the city of Hyderabad with Bangalore. Imagine if this were done with systematic, standardized, timely data. We would stop our current practice of using fuzzy, subjective “100/200-day” assessments that don’t put any pressure on our public officials.
It’s time to put our governments on a QSQT performance track, like our private sector companies. After all, we are all shareholders in government. And we can never sell our shares.
Ramesh Ramanathan is co-founder, Janaagraha. Mobius Strip, much like its mathematical origins, blurs boundaries. It is about the continuum between the state, market and our society. We welcome your comments at email@example.com