?It is not the policies that are failing so much as the machinery for implementing them.? ? The Economist
This was the recent assessment of the reasons for India?s persistent failure to provide quality infrastructure and social services made by The Economist. It is easy to support this assessment with outcome statistics, summaries of slippage from promises and targets or cost overruns, and even public opinion polls. It is harder to see how to reverse this ?failure of the machinery?.
?Seeing? is the challenge. We all know the generic ailments of the public sector, but not what goes wrong in this particular public sector. We have anecdotes, but these are only snapshots of particular (perhaps unique) circumstances. We have statistics, more now than ever, but administrative ministries? reporting is incomplete and key pieces of information are often buried in mountains of less relevant figures. There are several challenges for seeing. First, asking the questions that help distinguish between appropriate responses. Second, prioritising the search for answers to minimize costs. Finally, detailed information on performance has to be widely available and accessibly summarised to maintain the incentives to acknowledge and address the failure.
Take, for example, the long-standing failure to spend allocated funds. Every year, the media pillories the Central and state governments for not spending their allocations for rural roads, electrification and so on. The finance ministry and planning commission spar about whether the ?surrenders? should lead to reduced allocations next year. And then comes the next round of allocations. Generic solutions have been unsuccessful. ?Performance management? can mean many things. Zero-based budgeting that reduces budgets proportionally to the surrenders could only encourage departments to get better at wasting funds, unless the monitoring of impact and project quality improves. Cutting programmes that have surrendered funds runs the risk of punishing people for their state?s failures.
Asking a few questions to determine where the machinery is breaking down, though, would inform a more specific solution. This is simple; we are not questioning the allocation of funds, or trying to evaluate the impact of the program, but just identifying weak links in the disbursement process.
First, does the machinery fail at the project proposal level? Are there no projects in the pipeline, either approved or pending approval? Is there a high rejection rate for projects being evaluated for funding? It is entirely plausible that there are not enough quality projects. The state cadres are understaffed, and positions for engineers, surveyors, and other skilled employees tend to have a higher vacancy rate. If so, then one solution would be to open the proposal process to allow the social sector to prepare project proposals, along the lines of the demand-driven social investment funds used around the world. This effectively shifts ome of the burden of project preparation to NGOs and citizens, and also provides them a way to articulate preferences. Another solution would be to depute trained personnel from the central government to aid with project preparation.
We?re not questioning the allocation of funds or evaluating schemes, but looking for weak links in the disbursement process |
If there are quality projects in the pipeline, however, this approach would be a waste. The next question would be whether project approvals are the problem. Is there a backlog of proposals? Is it a failure at the government project evaluation level? This, again, is entirely plausible, but suggests a different solution. Resources would have to be directed at training evaluators and streamlining the evaluation process instead of encouraging more projects. Standardising proposals would speed up evaluation, but the expense would be less justifiable if the main constraint on spending were in fact a lack of proposals.
It is also possible that allocated funds are not spent because the states do not provide adequate counterpart funds. The absence of these funds, in and of itself, is not terribly informative?all it means is that the state government?s costs of obtaining the funds (in terms of bureaucratic hurdles or loss of program control) are greater than the benefits of having the additional resources. Is this because the costs are ?too high?? What are the most costly hurdles? Or is it because the benefits are ?too low?? And if the benefits are too low, would the people rather spend the funds on something else?or is the state government not accountable to its citizens? One option is to subject the ?benefits?side of it to public scrutiny. Support accountability by publicising the list of all relevant projects for which money was allocated but not disbursed because the state failed to provide counterpart funding. If states are still not providing the funds after several years even under such scrutiny, then it would be safer to assume that the state population has other preferences on how to use the funds.
The cost side could be sorted out with a survey of users (state governments) designed to identify the most common complaints. Business and research organisations carry out surveys asking firms to identify constraints. Why not have a public sector analogue asking state officials to identify constraints? This would be an essential step towards making the general recommendation to ?streamline processes? more specifically focused on high-return adjustments. But the costs of preparing this survey might not be the highest priority for funding if the surrenders were due to lack of project proposals or bottlenecks in evaluation.
Answers to these questions may be available, and could help finalising budget expenditures. We need vision to repair the implementation machinery.
?Regular columnist NK Singh and Professor Jessica Wallack of the University of California, San Diego, are collaborating on a book on infrastructure reform on India. Essays based on their research will appear on this page
