Budget as an instrument of delivery
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Budget as an instrument of delivery

India’s annual budgeting exercise has moved towards the right direction over the last several years as they have become an instrument for delivery

Post by KARAN BHASIN on Thursday, January 5, 2023

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A quintessential feature of Indian politics has been promises – some of them have been kept while many remain unfulfilled. Manifestos, government programs and even budget exercises have been a victim of the electoral politics – or coalition compulsions – that require promises that are meant to be broken.

 

In late 2018, there were several exercises that were undertaken to review the promises made by India’s Prime Minister – Narendra Modi in his 2014 manifesto. He had performed rather well in terms of delivery of the promises – both in absolute and in relative terms. Post 2019, there has been a pandemic which has caused major disruption across economic activity and government finances. It is therefore time to take a closer look at budget announcements and see if such promises have been met – or if they remain unfulfilled much like previous budget announcements – more so, relating to railway budgets.

 

We looked at 34 major announcements made in the budget 2022-23 closely and tracked their implementation. Several of these announcements involve different ministries and state governments which makes it difficult to execute them in a time bound manner. Therefore, improved performance on execution of these announcements could be indicative of improved administrative efficiency of the Indian state.

 

To our surprise, a lot of progress has been made on each of these major announcements reflecting two things. First pertains to a conscious effort at restoring the credibility of the annual budget by announcing what can be delivered – and second pertains to a focused effort at effective delivery of what has already been announced. This comes with the backdrop of a clean up of the fiscal numbers during the pandemic – a clean up which was overdue since before 2014 as successive ministers tried to understate the true deficit through off balance sheet borrowings. It is therefore evident that the end objective is to restore the seriousness of the budget exercise and make a departure from the past experience of unfulfilled promises.

 

Let us begin with the PM Gati Shakti announcement from the previous budget. The objective was to build a platform that will help accelerate infrastructure development and alleviate delays due to different ministries responsible for managing various aspects of infrastructure development. The platform brings together 16 ministries and allows for integrated planning and coordinated implementation of infrastructure projects paving way for rapid development of multi-modal connectivity across the country. The platform has been operational for some time and 766 out of 4827 projects given in PM Gati Shakti National Infrastructure Pipeline have been mapped on the National Master Plan platform.

 

 

Further, the finance minister had announced a decision to expand the National Highways by 25,000KMs. The ministry has already initiated the formulation of revised guidelines for declaring state roads as National Highways and intends to notify new national highways once the policy has been finalized. It plans to raise Rs 20,000 crores through monetization of existing assets in the present financial year to support the augmentation of the existing national highways.

 

Another important announcement pertained to the Unified Logistics Interface Platform (ULIP) which was announced with the objective of efficient movement of goods through different modes, reducing logistics cost and time, assisting just-in-time inventory management, and in eliminating tedious documentation. The platform was to provide real time information to all stakeholders. The platform has subsequently been developed and it has integrated 29 digital systems of different ministries and agencies in an effort to give a fresh boost to India’s logistics sector.

 

On Kisan Drones for use in agricultural sector, the Finance Ministry has been releasing the funds to state governments and concerned organizations for purchasing the same. Similarly, the ECLGS enhancement was approved by the cabinet on 17th August 2022.

 

A major announcement was on housing for all under the PM Awas Yojana. The finance ministry set a target of construction of 80 lakh houses under the program in the current financial year. Out of a total of 120.38 lakh sanctioned houses, construction has started in 104.12 lakh houses while 63.27 lakh houses were delivered or completed as on 30th of September.

 

These are just some of the examples of the key announcements that were made as a part of the budget along with some details regarding the status of their implementation. A thorough analysis of all of the 34 major announcements reveal considerable progress on each one of those announcements indicating an improved efficiency and commitment towards fulfilling what has been promised.

 

Private sector employees are aware of the important of defining targets and tracking progress towards those targets over the course of the financial year. The analysis of the budget announcements made last year indicate that a similar approach has been adopted by the Finance Ministry. This is a welcome change from the past – more so when populist feel good announcements were made without much of follow-up leading to bitter disappointments such as during the farm loan waivers of 2008.

 

Prudent policies combined with an intent on execution are important to maintain the sanctity of the treasury and the trust between the government and the citizens. Therefore, this exercise leads one to conclude that India’s annual budgeting exercise has moved towards the right direction over the last several years as they have become an instrument for delivery. The budget 2022-23 broke the previous record of execution of budget announcements. It would be interesting to see if the government can break its own record over the coming years.

 

(The Author is Economist and Policy-researcher based in New York)

 

 

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