CUTS Centre for Consumer Action Research and Training (CART)

YEAR 2004-05 YEAR 2002-03 YEAR 2001-02 YEAR 2000-01

CART>Milestones>National Level>Representation of Consumer's Interests>Memorandum to The Union Finance Minister>In the Context of the Union Budget 2002-2003

CURB WASTAGE TO CONTRIBUTE 8.9% TO NATIONAL INCOME
(Memorandum to the Hon’ble Finance Minister for Budget 2004-05)

Key Issues

 

CURB WASTAGE TO CONTRIBUTE 8.9% TO NATIONAL INCOME

The new government has spoken about achieving 7-8% growth over the next few years and reforms with a human face. However, no one seems to be talking about how national income can be increased and accelerated by efficiency, conservation and savings. If the government adopts a policy of ‘conservation and productivity for growth’ and takes measures to curb wastage in the economy, about Rs.200,000 crores can be saved by the economy contributing to a rise in national income by 8.9%. A few issues are flagged below:

Key Issues

Impact on Economy

Mention in Budget Speech

Budget 2004-05 Provision

Regulatory Reforms

Competition & Other Regulatory Laws

Effective implementation of competition measures including competition & regulatory rules will raise GDP substantially

  • The UPA government believes that privatisation should increase competition, not decrease it. No public sector unit will be privatised if it leads to the emergence of a monopoly or restricts competition.
  • Competition, both domestic and external, will be deepened across industry to promote economic growth.
  • I am pleased to announce an increase in the budget of our competition authority which would be escalated in future. This will enable it to perform its functions effectively.
  • Professionally run regulatory institutions will be established and strengthened to ensure that competition is free and fair.
 

Infrastructure

Road Infrastructure

  • Economic cost in developing countries from road traffic crashes is estimated at as high as about 2 to 3% of GDP. In low and middle-income countries the cost is estimated at Rs.300,000 crore ($65bn). (World Health Organisation 2004)
  • Moreover, the Rakesh Mohan Committee on Infrastructure estimated that economic cost of bad roads in India ranges from Rs.20,000 to Rs.30,000 crore (1 to 1.5% of GDP) annually.
  • The government will prepare a national road safety strategy and plan of action.
  • Increased attention will be paid to improving road design and visibility of road signs, and strictly enforcing laws on drunken driving. A separate provision will be made in the budget for this.
  • Road safety is a shared responsibility. NGOs and people from different disciplines such as road engineers, motor vehicle engineers, law enforcement officers, and health professionals will be involved to create awareness.
  • The government will coordinate with state governments to strengthen and modernise various laws to improve safety on the roads.
  • Rs.500 crore for improving road design, etc.
  • Rs.100 crore fund for awareness campaigns.

 

Key Issues

Impact on Economy

Mention in Budget Speech

Budgetary Provision#

Infrastructure

Capacity Building of Stakeholders

  • At present, there is no programme / facility for building the capacity of policy makers (peoples’ representatives) at national and sub-national levels. In a country where half the population is illiterate, it is imperative to build the capacity of our policy makers and other stakeholders such as agency personnel, civil society organisations and media so that they can participate effectively in the decision making process.
  • This vacuum is quite evident from the nature of debate we often see during parliamentary sessions. One can imagine the plight of decision making process at sub-national levels.
  • The government is committed to improve governance at all levels including at the level of policy makers.
  • Research and training agencies will be asked to develop special capacity building programmes for our policy makers at national and sub-national levels.
  • A fund will be created for capacity building of policy makers and other stakeholders such as agency personnel, civil society organisations and media.
  • Rs.500 crore Capacity Building Fund for all stakeholders

 

Key Issues

Impact on Economy

Mention in Budget Speech

Budgetary Provision#

Enhancing Investments

Foreign Investment Promotion

  • Actual foreign investment in India is only about 50% of FDI approvals.
  • Government has set a target of $10bn. But this figure is difficult to achieve, given the procedural bottlenecks at the local level
  • Foreign Direct Investment will continue to be encouraged.
  • My government will enact an omnibus Foreign Investment Promotion Act, which will set benchmarks for all government agencies, at the central, state and local levels to reduce the hurdles for foreign and domestic investors.
  • The Act will promote a “Single Face of the Government”

Administrative Reforms

Performance-based System

Productivity level in government departments is quite low courtesy Article 311, which provides job security to government servants

  • The government will introduce a performance-based management system for all its functionaries and departments to make them more performance-oriented and accountable.
  • Incentives will be given to good performers
  • The government will strive to become a SMART Government (Simple, Moral, Accountable, Responsive & Transparent)
  • Set up a fund of Rs.100 crores for rewarding good performers

Administrative Reforms

Accountability

  • The government loses Rs.41,000 crores due to delays in more than 300 projects, which are all above Rs 20 crore each. Imagine the total cost of delays if all central and state government projects are examined
  • For instance, the Ganga Action Plan was started in February 1985 and scheduled to be completed by March 1990. Later, it was declared that the work would be completed by 2001. However, it has now been further extended to December 2008. This clearly indicates the extremely slow pace of development work being done for the past 18 years.
  • The government is committed to complete all existing irrigation projects within three-four years.
  • The Central and State governments must ensure transparency in implementation of projects.
  • Proper Project Management System will be put in place to ensure timely implementation of projects.
  • Rewards will be given to staff and contractors for completing work on time. Delay in completing projects will attract penalties. These provisions will be put in the contract document itself.

Administrative Reforms

Corruption

  • As per estimates of Transparency International (India), Rs 26,728 crores is wasted every year due to corruption, and it is the poor who suffer the most.
  • My government is determined to rid the country or at least reduce the scourge of corruption. For this purpose, procedures will be streamlined and systems automated as far as possible to eliminate any discretionary power.
  • Outsourcing of several government functions will be considered.
  • Incentives will be given to the states’ anti-corruption squad.
  • A budget of Rs.500 crores for CVC and for giving incentives to states’ anti-corruption measures

Leakages

Non-merit Subsidies

  • Subsidies on non-merit goods and services amounted to Rs 20,600 crores (2001-02)
  • Poor delivery with the undeserving getting a share
  • The richest 20 percent capture about 31 percent of subsidies meant for the poor, while 20 percent of the poorest use only 10 percent of the services (Source: World Bank Report)
  • I am committed to eliminate revenue deficit of the central government by 2009 to release more resources for investment in social and physical infrastructure.
  • All subsidies will be targeted at the poor and the truly needy.
  • My government will empower Civil Society Organisations (CSOs) to act as watchdogs. CSOs play a crucial role in promoting participatory approaches at the grassroot level by involving people in the decision making process.
  • Rs.500 crores fund for empowering CSOs

Leakages

Transmission & Distribution Losses

  • T&D losses in power sector estimated at 1.5% of GDP
  • Incentives will be given to state electricity companies/boards for reducing T&D losses.
  • Professional management will be put in place and full managerial and commercial autonomy will be given to power distribution companies.
  • The government will forge strong partnership with consumer organisations to check T&D losses in power sector. Measures will be taken to empower these organisations to make their participation effective.
  • Rs.1000 crores as incentives for state electricity companies/boards
  • Rs.100 crores for empowering consumer organisations

Unsafe Food

Adulteration

  • Rs.4000 crore loss to industry and Rs.2000 crore loss to the exchequer annually
  • Loss to consumer far exceeds the sum total
  • The PF Act empowers consumer organisations to prosecute offenders but lack of resources and skills prevent effective implementation of this power.
  • The government will empower state and local governments and establish a fund to enable them to check the menace of adulteration.
  • Consumer organisations will be resourced to act as good watchdogs.
  • Rs.2000 crore to establish a Food Safety Fund

Pradeep S Mehta,
Secretary General,
CUTS International, Jaipur.
Email: sg-cuts@cuts.org

YEAR 2004-05 YEAR 2002-03 YEAR 2001-02 YEAR 2000-01
 
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