The annual budget is the foremost expression of government’s policy priorities. No matter what is said in the President’s address to Parliament or the speeches of other members of the cabinet, the promises may remain just that unless adequate financial resources are made available.
Can the budget be used as a tool to increase accountability in the system? There are at least three broad ways in which accountability can be enforced around the budget process. The first is funding of rights and entitlements. In a system where there are a number of rights and entitlements being created by the government, does the budgetary allocation adequately fund the full implementation of those rights? It is easily possible to look at the right to education created in 2009 by Parliament, and compare the expenditure envisaged at the time of passage of the Bill and the current allocation in the Union budget. Similarly, if a right to food is created, the question would be whether the government makes adequate allocations in the budget. This kind of accountability is an input based financial measure and focuses on what the government said it would need to spend, and what it is actually allocating.
The second kind of accountability is to examine the actual outputs. If the government indicated that it would set up universities, or construct certain length of roads, then it will be useful to check whether the government has actually delivered on the output it promised in the previous budget. This output based measure is useful but not adequate in ensuring accountability. The outcomes that are expected from a certain action such as lower infant mortality due to immunization programmes are even more important. Measuring outcomes can sometimes be tricky and complicated. But the world over, governments are building systems that can adequately demonstrate whether the outputs and outcomes are being achieved. Perhaps, the most difficult aspect to measure is the question of efficiency. Could the government have achieved the same levels of outputs and outcomes more efficiently? While this is a useful question to ask, the systems and processes required for measuring efficiency levels will take some serious effort to set up.
There have been some explicit attempts in recent years by our governments to increase accountability of the budget process. The performance budget was one such attempt. More recently, the outcome budget was another attempt to hold implementing ministries and departments to account for the commitments they have made. But these documents are largely efforts within the executive to hold itself accountable, although these documents are also tabled in Parliament.
The role of Parliament includes approval of the budget after due scrutiny, and oversight of the performance of each ministry based on the funds approved in the budget process. The ministry-wise demands for grants are discussed in detail in the standing committees. Given that we have a parliamentary system of government and the conventions that we have developed around the budget process, the committee’s recommendations do not have any impact on the actual allocations in that year. So the committees’ observations are a signalling device on questions and measures that need to be considered by the respective ministry. Some of these recommendations of the committees are taken up by the government for future changes or reform.
Most members of Parliament would agree that more needs to be done to make the budget scrutiny process more rigorous and effective. There is also a question being raised about which parts of the budget need to be confidential until the budget speech of the finance minister in Parliament. Could there be a mechanism set up where the expenditure proposals are laid out in draft form for wider debate before formalizing them in the budget document? The budget process we have followed might have served us well in the past but with changing aspirations and expectations from people, there is an opportunity to re-examine several aspects and bring them in line with the new era of information and transparency that this generation of India demands.
CV Madhukar, Founder, PRS Legislative Research