Budget Analysis and Advocacy towards Improved Public Provisioning

1. Budget Analysis and Advocacy towards Improved Public Provisioning SonaMitra Centre for Budget and Governance Accountability November 9, 2012

2. Outline of the Presentation • Adequacy of Budgetary Resources for Social Sectors and Quality of Utilization of Funds in the Social Sector Schemes • Responsiveness of Budgets to the Disadvantaged Sections of Population • Promoting Transparency and Accountability in Budgets: Some Efforts by CBGA

3. I. Adequacy of Budgetary Resources for Social Sectors and Quality of Utilization of Funds in the Social Sector Schemes

4. Functional Classification of the Expenditure Side of a Budget

6. Social Services or Social Sectors typically include those sectors in which government’s interventions have a direct impact on human development • Responsibility of the government in these sectors is crucial, given the poor levels of human development in India and the fact that disadvantaged sections are lagging behind • In India, public expenditure on Social Sectors(as compared to the size of India’s economy, i.e. as % of the GDP) has been very low • There is a lot of disparity in public expenditure on Social Sectors across different States

7. Trends in Social Sector Spending • Social Sector expenditure from the Union Budget has been stepped up since 2004-05 • Union Budget outlays have been stepped up on Plan schemes like SSA, NRHM, NRDWP, TSC, ICDS etc. (the ‘flagship’ schemes) • However, State Governments incur 75 % to 80 % of the total public expenditure on Social Sectors, which has witnessed stagnation • The priority for Social Sectors in the State Budgets declined during 2000-01 to 2004-05 (a period of acute fiscal stress); but has shown small improvements since 2005-06 • The small improvements in spending on Social Sectors (since 2005-06) has happened mostly in Plan Schemes, while Non-plan spending on these sectors has been checked by the States (primarily due to their reluctance to increase long term ‘liabilities’ relating to salaries of regular staff and sustenance of institutions)

8. Combined Expenditure of Centre and States on Social Sectors

9. Shares of Centre and States in Total Social Sector Expenditure

10. Constraints with Centrally Sponsored Schemes • ‘One-size fits all’ approach • Tied versus untied funds • Inflexible nature of schemes • Concerns related to flow of funds and monitoring arrangements • Problems of fund utilisation in the Plan Schemes due to limited capacity and fund absorption power of the (poorer) States in a tied framework • Skewed pattern of fund utilisation across diff. components in the Schemes • Tendencies of centralisation and encroachment upon State subjects

11. Resource Absorption Capacity of States: Fund Utilisation in Social Sector Schemes • Several States (typically, the poorer ones) have shown noticeable levels of under-utilization of budget outlays meant for Plan Expenditurein social sector, i.e. for exp. on the Plan schemes • In case of budget outlays meant for Non-Plan Expenditurein social sector, under-utilisation of funds is substantially lesser (perhaps because a large part of Non-plan spending is meant for salaries of regular staff and maintenance of the establishments)

12. Contd.. • A study by CBGA and UNICEF assessed fund utilisation in some of the flagship schemes in Social Sectors, focusing on two districts (Rajnandgaon in Chhattisgarh and Lalitpur in Uttar Pradesh) • Schemes selected: SSA, Mid Day Meal, NRHM, ICDS, Total Sanitation Campaign, and National Child Labour Project • The evidence gathered pertained to financial years 2007-08 and 2008-09, i.e. the first two years of 11th Plan • The study relied heavily on info. about fund flow and fund utilisation provided by the scheme implementing agencies and perceptions of govt. officials at various levels (including the front line staff)

13. Main Problems in Fund Utilisation • Under-utilisation (or under spending) of available funds in the schemes • Poor quality of utilisation / spending in whatever proportion of funds got utilised, as reflected in the following: • Spending in the schemes was skewed across the four quarters in a financial year (a large part of total spending incurred only in last two quarters) • Spending in the schemes was skewed across diff. components of the scheme (i.e. higher levels of utilisation in salaries, construction work etc. and lower levels of utilisation in training programmes, awareness programmes, monitoring and supervision etc.) • Spending was skewed across different regions covered by the scheme (i.e. across diff. districts within the State and across diff. blocks within the district)

14. Major Factors that Caused these Problems in Fund Utilisation 1. Systemic weaknesses in the govt. apparatus in social sectors • Shortage of staff for programme management, finance and accounts work, and front line service provision (a result of the freeze in recruitment of regular cadre staff in these sectors since 2000-2001) • Weak infrastructural facilities • Uncertain and short tenure of govt. officials in key positions 2. Bottlenecks in budgetary processes • Delay in flow of funds at various levels • Limited delegation of financial powers within the govt. set up • Delay in sending sanction orders for actual spending 3. Deficiencies in the need assessment / planning in the schemes at the district level

15. Non-Plan Spending in Social Sectors • In sectors like Education and Health, Non-plan exp. accounts for almost two-third of total exp. • Non-plan exp. on these sectors is borne almost entirely from the State Budgets • Non-plan spending being checked by States in the era of ‘fiscal consolidation’ (i.e. expenditure compression) • This compression of Non-plan spending more acute in Social Sectors (as these are still a soft target) • Finance Commission transfers to States have not increased at the same pace as increase in total exp. by States • Even within Finance Commission transfers to States, the proportion of truly untied transfers has declined

16. II. Responsiveness of Budgets to the Disadvantaged Sections of Population

17. Responsiveness to the Disadvantaged Sections • Government of India has recognized the need for making a distinction between ‘incidental’ benefits for a certain disadvantaged group and ‘direct’ policy-driven benefits for the group from public expenditure, since 1970s • This recognition has led to the adoption of Plan strategies like, the Special Component Plan for Scheduled Castes (SCP for SCs), the Tribal Sub-Plan for Scheduled Tribes (TSP) and Women’s Component Plan (WCP) • TSP and SCP for SCs (renamed recently as SCSP) were introduced in 1970s, and WCP was introduced in 1997 but it has now been replaced with Gender Responsive Budgeting • The key concern is whether the various schemes under the different Ministries/Depts. of the Union / State Govt. are designed in such a way that they can address the causal factors of challenges / disadvantages confronting Dalits, Adivasis or women

18. Why do we need proper designing and implementation of SCSP and TSP? • Scheduled Castes and Scheduled Tribes constitute almost one fourth of the total population (2011) • Two of the most disadvantaged sections of the population, facing socio-economic exploitation and isolation historically. • Some of the pertinent causes for the continued exclusion of SCs and STs have been: • Inadequate policy priority for SCs and STs – reflected in Plan allocations by Union Mins. and State Govts. not being in proportion to the population of SCs and STs • Gaps in budget allocations for SCs and STs – often manifested in diversion of funds meant for SCSP and TSP into other purposes • Gaps in implementation of existing development schemes resulting in low utilisation of funds for the development of SCs and STs

19. What is the need for Gender Responsive Budgeting? • Women historically face discrimination owing to existing patriarchal and social norms • Gender-neutral budget implies gender-blind budgets • Unless special provisions are made / special mechanisms are designed in budgets, women may not receive the intended benefits • Gaps in sex-disaggregated data and other important information has led to a lack of capacity in formulating women-specific programmes • GRB in India is carried out mainly with Gender Budgeting Statements, an instrument for ex-post analysis • Need to incorporate GRB in the budget making process itself and design schemes that are gender responsive

20. III. Promoting Transparency and Accountability in Budgets: Some Efforts by CBGA

21. Promoting Transparency and Accountability in Budgets: Role of Civil Society Budget Groups • Strengthening the system of accountability of the government towards elected people's representatives as well as making governments accountable to people • Building a pro-poor perspective in the policies shaping up government budgets • Focusing on priorities underlying budgets— • Quality of government interventions in the social sector • Responsiveness of budgets to disadvantaged sections of population • Structural issues in India's fiscal federalism • Engaging at various levels of training and capacity building on budgets and policy advocacy with important stakeholders

22. Some of the Efforts by CBGA • People’s Budget Initiative (PBI) • A coalition that promotes participation of NGOs from across the country in the budget process of the Union Govt. (CBGA serves as the Secretariat of PBI) • Also, a platform for collective efforts by many of the civil society budget groups in the country • Open Budget Survey and Study on Transparency in State Budgets in India • Research studies on the openness of the Union Budget and State Budgets in India, preparing the ground for advocacy • Response to Union Budget • CBGA’s detailed analysis of the Union Budget within 24 hours of its presentation in Parliament

23. Thank You www.cbgaindia.org sona@cbgaindia.org