The Indian government has released its Union budget plan for the FY 2019-2020. The country’s economy has been in doldrums since demonetization delivered a knockout punch to it in 2016. Back at the helm of governance for a second term after general elections, all eyes are on the BJP government to see if and how it is going to pull up its straps and get the economy back on track.
Before evaluating the budget, it is crucial to understand what the budget is. In the scope of work of the government that gets elected in democracies or what we call as governance, there is a slew of areas which need development and maintenance, such as agriculture, defence, infrastructure development, etc. This is the reason why governments are empowered to levy taxes, control prices and manage money. Budgets help to create wealth and to allocate it to different sectors from where development schemes deliver the benefits to the people. This is the ideal situation, but it is a utopian world for us.
A high-level perspective of the budget reveals something important. Majority of the scope of the budget is intended to generate more wealth for the government. More national highways mean more toll booths and consequently more toll charges. Increase in fuel prices means travel is going to get more expensive, not just for vehicle owners, but for people in general. So, the government is essentially acting like a financial institution which is lending out money intending to bring in more money. In such a case, it becomes imperative that governments adhere to certain best practises followed in the corporate world.
First one is the Balanced Scorecard, which looks at the four key aspects of financial performance, customer satisfaction, internal process and organizational growth. This can be easily translated into:
- How effectively the government is using the resources (wealth) at its disposal
- Satisfaction levels of people (who are the government’s customers)
- How the government’s internal process can be improved and,
- How the infrastructure and culture of government bodies can be improved.
There is a significant model used across industries to help deliver better results from projects, and it is known as the RACI (Responsible, Accountable, Consulted, Informed) model. In the corporate, business strategies when executed as projects are what creates wealth. In governance, budgets are the government’s business strategies, and when they are implemented through development schemes and taxes, they generate wealth for the government. Projects are executed using the SMART (Specific, Measurable, Achievable, Relevant, Time-bound) model and development schemes need to be executed using the same model.
But the most important of all is accountability. Where is the report card of last year’s budget with the details of the government’s performance in executing its development schemes and how much money was spent on them? How much money has been gained from taxes and other means? A high-level report does not suffice when the country has been segmented into states, cities, corporations, municipalities and panchayats. From the level of panchayats, report cards need to be generated to understand what development schemes were implemented, how much money was spent, and how successful are they.
Such report cards have to be generated for every aspect of governance. Corporate uses what is called as metrics to measure success using parameters for measurements known as CSFs (Critical Success Factors). Metrics, when measured for evaluating performance, are known as KPIs (Key Performance Indicators) and when measured for understanding risk are known as KRIs (Key Risk Indicators). Insights from data obtained by using these parameters for one FY should be used to create the next FY’s budget.
And what do we have in our country? This FY, there is a budgetary allocation of ₹65,837 crore and outlay for capital expenditure of ₹1.60 lakh crore for railways. Where exactly is all this money going to be used? The trains are still of the same old design, maintained just enough for them to run the intended distances, with poor and unhygienic food services (vessels get washed inside train toilets, which are themselves stinking dirty).
I have heard of several cases in states like U.P., M.P., Bihar etc., where people muscle their way into AC compartments, travel without tickets, and even ticket examiners (TTs) get thrown out of moving trains for trying to get such people out. During every year’s budget, a certain amount of money gets allocated to railways, and on the ground, almost everything remains the same—which means governments simply want to keep running the shows with zero interest in improvements.
Stable fuel prices is a critical parameter for stable prices of commodities and maintaining lower inflation levels. We have continuously fluctuating fuel prices, which is resulting in higher cost of commodities and higher inflation. ₹70,000 crore capital for PSU banks without a clear plan for recovering high-value corporate loans that have defaulted to NPAs (Non-Performing Accounts), and stopping black money from getting hoarded continuously out of the country is insensible. In education, there are no schemes to improve government schools across the country and make education equally accessible to all sections of society.
As we all know, equal education to all would be fatal to vote bank politics on which all political parties are thriving. What worries me is, there is not a word about nature conservation and sustainability—which in turn gives corporate a free reign to use and destroy natural resources at their whims and fancies. No mention of air pollution, water conservation (wanton destruction of drinking water resources) and improving quality of living conditions. What value does governance have if it does not help in improving people’s lives?
Budgets without accountability are the chief contributor to corruption in our country. Only 20% of the allotted money for development schemes create value for people, and the whopping 80% gets fed into the bureaucratic red tape to get the 20% work done. A one nation, one transport card has been proposed in the budget, but it remains to be seen how long it will take to see the light of the day, and we won’t even know how much money is going to be spent on it. We all know how the Aadhaar fiasco unravelled. Any tax breaks or incentives are only meant to coax people into putting more of their money into the market or borrow more money from the market, which in turn will create more wealth for the government.
With a burgeoning population, omnipresent corruption and very little of the resources getting used for development, it is no surprise that no one gets any benefits out of paying taxes and the entire country is in a perpetual struggle for sustenance. Unless the entire system of governance is overhauled, yearly budgets have little effect on people’s lives—except the ones who are licking their lips and waiting for their piece of the pie. What is growing is the demand for public sector jobs and a career in politics, and we all know why.