Business Line, July 15, 2009

As projected widely, Budget 2009-10 rewarded the aam admi, especially of the rural areas, as a gesture of gratitude for the mandate to the Congress party and its allies. Rightly so, the Budget has enhanced funds for development schemes to unprecedented levels. To pick a few, the nine flagship schemes and Bharat Nirman programme alone have a total outlay in excess of Rs 1,40,000 crore. To the discomfort of many observers, the Budget projects the fiscal de ficit to reach 6.8 per cent in 2009-10 primarily due to increased outlays on development schemes.

Implementation hassles

However appealing this thanksgiving may be, one is somewhat sceptical about whether it will really change the condition of India’s poor. This ominous thought emanates from the country’s mediocre record in the implementation of various development programmes at the ground level, where a concoction of inefficient government machinery, corruption, and asymmetric information problem has been rendering development programmes ineffective over the years.

The performance audits carried out by the Comptroller Auditor General of India (CAG) reveal major lacunae in the management of many of the development schemes and their abject failure to achieve goals. The aforesaid basic systemic problems remain deep-rooted for one to expect that the enhanced funding will attain different rate of success than in the past.

In this context, it will be worthwhile to ponder Mr Rahul Gandhi’s observation that while 10 paise of every rupee spent for the poor had reached its target during his father’s time, today the same amount reaches the intended beneficiary only when the government spends Rs 10. Therefore, the leakage is 99 per cent. If we go by his formula, a mere Rs 1, 400 crore, or one per cent of the total, will be the actual benefit accruing to the targeted population from flagship schemes and Bharat Nirman.

Even if we were to discount heavily for error in the thesis, the scale of leakage leaves one wondering if there is real benefit for the poor in the outcomes of such efforts.

Systemic deficiencies

Though incredible, this observation unfortunately may be an accurate representation of ground realities. A field study by CUTS International in 2008 found that in many rural areas the systemic deficiencies such as selective information flow and corruption often result in entire funds and deliveries under development schemes being siphoned off.

Even in the case of National Rural Employment Guarantee Scheme, the CAG audit report in 2008 has reported serious shortcomings and corruption in implementation.

Most of the squandering of funds occurs mainly because of the flawed methods of selection of beneficiaries, often using the Below Poverty Line (BPL) cards. Distribution of BPL cards itself has come to epitomise corruption as most well-to-do families in the rural areas possess BPL cards.

The failure to select the right beneficiaries, or an adverse selection in economic terms, is rampant at the panchayat level and leads to the exclusion of deserving beneficiaries from the purview of development schemes.

Moreover, the evolution of impregnable networks in rural areas comprising local elites, officials and elected representatives that manage information on different programmes creates a vicious circle to ensure that development schemes do not deliver to the targeted beneficiaries.

Leakages downstream

Therefore, continuing with the strategy of merely allocating more funds for development programmes at the national level without plugging the leakages downstream is erroneous or may even end up as eyewash as they leave very little or nothing for the intended beneficiaries.

The harsh reality is that India does not possess appropriate systems of governance or practices in public service delivery that could efficiently reach out to the poor and ensure distributive justice. It is startling to note that much of the money spent in the name of the poor may actually be reaching the well-to-do, or worse, is fuelling the black economy.

In hindsight, the Government should have ensured that effective monitoring and distribution mechanisms are in place before undertaking to increase developmental funding so that the thanksgiving exercise rises above the possibility of ending up as mere symbolism.

The near complete failure of development schemes in achieving targets is in fact a pointer to the level of alienation of the real stakeholders from governance and policy making in India, which inherently follows a top-down model.

Historically, policymaking has remained the exclusive domain of a few informed and powerful citizens. It is a matter of concern that policies and programmes, both at the Centre and States, are designed and implemented without adequate consultation with, or participation of, the real stakeholders from rural areas such as the poor, small farmers and women.

Even existing avenues like Gram Sabha, a platform where the villagers can raise their needs and the Governments can disseminate information on development schemes, are unutilised.

The inputs from Gram Sabha could have helped in making national policymaking better aligned to ground realities.

However, various studies have found that decision-makers hardly look into demands articulated at such platforms while designing government policies and programmes. This inevitably leads to policies and schemes becoming largely irrelevant and non-productive.

If the development schemes have to deliver for the poor in India, the Government has to tackle the systemic problems by introducing efficient participatory methods of designing and implementation of schemes and distribution of public funds.

Hence, it is imperative to democratise development programmes by ushering in higher levels of accountability. Currently, multiple agencies are responsible for the implementation of development schemes resulting in lack of coordination, heightening costs of implementation and, above all, low accountability. Though the CAG carries out thorough audits of the government schemes, they are selective and the findings come out bit too late, as the funds are already wasted.

The need is to put in place an exclusive mechanism to conduct concomitant review of the development schemes and programmes while they are being implemented. It could be called National Accountability Commission that functions as a well-networked, independent authority to detect and set right any anomaly immediately.

The objective should be to put in place a concrete mechanism to cleanse the system off its current deficiencies, emulating the work of the Election Commission of India in the past two decades. Unless something similar or better is in place, the poor of this country is going to realise repeatedly that the promised bounties are nothing but chimera.

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