In his Budget speech on Friday, the finance minister repeatedly expressed anxiety and a trace of helplessness about the implementation of various projects and schemes. The proposals included the setting up of a national monitoring agency to oversee implementation and additional funding worth Rs10,000 crore as incentive for states that complete projects. The Prime Minister, in a television interview after the Budget, said the Centre could allocate funds, but the onus of implementation was often on states and “one had to work with different state governments of differing capabilities” to make this happen.
Such an approach offers no clue about how implementation is to improve. The Centre can’t take recourse to the Bhagavad Gita and say it is only responsible for action by providing funds, and not for the results thereof. Further, this is a good way to hide the poor performance in infrastructure—the National Highway Development Programme is four years behind schedule, the 11th Plan targets for power generation are already slipping, and there’s little progress in various Centrally funded projects. In contrast, the airport at Beijing, the biggest and the most modern in the world today, was completed in four years.
It is by now clear to all that poor governance delivery will lead inexorably to slowing of the economy and to increase the gaps between the haves and have-nots. In the next few columns, I’d like to focus on how things can perhaps be got done.
I need to assume certain givens. First, at the highest levels in the Union and state governments, there is realization that performance is as important for electoral success as are regional and other political considerations. Second, administrative machin- eries have become complex, slow, and unwilling to move and act—and corruption is growing. Finally, little can be done in the short term to change the mechanisms of delivery, for there is none that can take on the structure.
The most important deliverables are those that affect the poor. They expect two kinds of services. In the rural areas, it is access to fertilizer and seeds and, perhaps, kerosene. (Now there is also employment guarantee, that’s the National Rural Employment Guarantee Programme). In the urban areas, it is foodgrain from the public distribution system (PDS) and fuel—kerosene. The problems are of two types—covering all those eligible, and making the products available. The Budget initiative of using smart cards is a step in the right direction—especially for the urban poor. These would be entitlement cards for specific PDS services. The rent-seeking and corruption arise not from denying those eligible, but in the creation of a number of “bogus” cards, the entitlements for which are sold in the open market. As long as those eligible get the benefits, we should, in the near term, live with these corruption costs, else the system won’t work. The finesse in administration lies in how low one can get these “overheads” without bringing the system to halt—too tight, and it gets strangled; too loose, and there is leakage everywhere.
Having got the cards, the poor need the goods. One system that’s worked very well in this country is milk delivery. When “token”-based milk kiosks were first set up, there were some complaints about adulteration and quantity, but community pressure soon put an end to that. Kerosene can be delivered through similar kiosks, if set up in every petrol retail outlet, or even as a stand-alone in busy residential areas. These could be run by the public sector oil marketing companies. Swipe your card, and get your entitlement. Note that we’re still in urban areas. The other important expectation is foodgrain. In several states, there is subsidized delivery of rice, wheat, sometimes pulses and oil as well. The PDS system is notoriously inefficient. Again, in urban areas, it is possible to use our software skills to ensure delivery. Some costs may be incurred in packaging—this could be outsourced to the private sector, or better still, to women self-help groups. Package with a bar code that the retailer can swipe against the smart card, and hey presto, you have a verifiable system of quantity?delivered?against each card,?total off-take and a host of other data in your server. The costs of setting up the system are well worth it, considering the continuous leakages over the years.
An important point is that these cards don’t need to be anything other than for the specific purpose for now: not citizenship, voter or any other cards. And they would get issued after the current processes of verification are complete.
Handling delivery in rural areas is a bit more complex, as one must factor in the problems of infrastructure logistics, and the lower awareness and literacy levels. There are also more services apart from PDS, there are inputs for agriculture and, finally, credit. In the next column, I would like to deal with these.
(S. Narayan is a former finance secretary and economic adviser to the prime minister. We welcome your comments at email@example.com)