Jaitley needs to link expenditures to results
In the coming budget, finance minister Arun Jaitley would do well to link expenditure under various heads to their outcomes—not the kind of pro forma outcome budget that gets made in the government, but a realistic one. So, as the Shanta Kumar committee has just argued, the FCI-centred system which will spend R1.15 lakh crore in FY15 needs to be seriously overhauled since it has neither delivered cheap grain to households nor higher returns to more than a small proportion of farmers. Similarly, is it worth the government spending upwards of R50,000 crore on school education if, as the ASER studies show, only a fourth of all children in Class 3 can read a Class 2 text fluently, and the situation is much worse when it comes to maths?
In the past, when such questions have been raised, the standard response has been that the government cannot afford to wait to spend money until things are fixed—even if the pipe through which water is flowing is leaking, the argument went, at least some water reaches the end of the pipe. Flawed as that argument was, considering the holes in the pipe have only got bigger, the optics couldn’t be faulted—stopping public spending on education for the poor, for instance, is bound to raise hackles. Fortunately, we now have a solution which Aadhaar provides. If the government-run school system is not delivering, the same money can be transferred via coupons that enable parents to transfer their children to private schools that deliver better; or link the pay of public teachers to certain independently-tested outcomes. If the budget is going to continue to tinker at the margins—10 schemes like MGNREGS and SSA take up 90% of the R2 lakh crore spent on 100 national schemes each year—it will have no impact. It is time to make decisive moves away from the past, and thanks to Aadhaar, the government has never had a better shot at working on fresh alternatives.