Where has all the money gone?Building a framework for accountability in public

expenditures

Yamini Aiyar and Avani Kapur

Accountability Initiative

2nd June 2009, CCS

Outline

Why budgets matter to us?

What we should know about budgets?

What we know about Budgets?

The Right to Information Act: An opportunity?

What we can do?

Why budgets matter?

India a ‘miracle economy’: high GDP growth over the last few years

Large increases in social sector spending (health, education) up to 6.27% of GDP (Rs. 294,412 crore)

BUT despite all this spending, the results are dismal

Why budgets matter?

“About 27m Indians will be born this year. Unless things improve, almost 2m of them will die before the next general election. Of the children who survive, more than 40% will be physically stunted by malnutrition. Most will enroll in a school, but they cannot count on their teachers showing up. After five years of classes, less than 60% will be able to read a short story and more than 60% will still be stumped by simple arithmetic.”

(Economist, May 23rd 2009)

“of every one rupee spent on development only 15 paise reach the poor” (Rajiv Gandhi)

Clearly, there is something very wrong with the way money is being spent…………. Inefficiency? Corruption? Where has all the money gone?

Why budgets matter?

And this is your money – even when you don’t pay income tax!

Go back to the basics: What should we know about the budget?

Availability: How much money do I have? And what for?

Sources: Where is this money coming from? Timing: When did the money arrive? And how

much arrived? Expenditure: How much is being spent and at

what periodicity (monthly, quarterly)? When is the money spent and on what?

Trends: Has the availability risen or fallen? Have expenditures changed? How much gets left over?

Why do you need budget information? Helps you plan better (That’s why you ask how

much you’ll get paid every month in a job interview!)

Ensures transparency: Helps you catch mistakes or inefficiencies (under

spending, over spending) Ensures that you know when money comes and

goes Identifies leakages – helps you catch the thief

So, What do we know about budgets?

Finding information on the Government’s budget requires Sherlock Holmes’ detective skills

Many places to look but each tells the story a different way….Overall budget Reserve Bank of India: Big picture BUT no information

on how money is spent

Budget (indiabudget.nic.in) and state finance departments: Who gets what (department/ ministry-wise) and how it gets spent BUT only after two years (expenditure data not always available)

Finance Accounts: Who gets what across departments (economic classification) and how it gets spent BUT only after two years

Many places to look but each tells the story a different way….

Many places to look but each tells the story a different way….

Many places to look but each tells the story a different way….

Budget details: Department websites: Report on specific

activities. This is the place to come to if you want details (how much was sent out, when, how much got spent in real time)

BUT You have to be a genius to find the budget on

the website (eg. MHRD dept of higher education)

But most of all its impossible to understand……unless you’re a whiz kid or a nerd!

Lets look at a sample website…..

Even if you do figure it out, data often doesn’t match!

MORD annual reports planned allocations not match with india budget!!!!!

And it doesn’t tell you enough - little information on how much money reaches the final destination and when it gets spent

No reporting on trends

Year MoRD (Annual Reports)

India Budget (calculations)

2002-03 2500 2230

2003-04 2325 2090

2004-05 2468 2219

2005-06 4220 3835.55

2006-07 5225.62 5103.06

Information is neither regular nor reliable

Mistakes in data uploaded

Information is neither regular nor reliable

Not updated regularly

No system – adhoc – beg of month/ quarter….

Source: Department of School Education and Literacy , MHRD

The Right to Information Act: An opportunity?

Proactive Disclosure RTI mandates the proactive disclosure of

information by Public Authorities

It shall be the constant endeavor of every public authority to provide as much information suo moto to the public at regular intervals through various means of communication including the internet, so that the public have minimum resort to the use of this Act to obtain information. (section 4 (2))

Right to Information Act: An opportunity?

Reporting on the following parameters: About organization Subsidy programs Directory of employees Decision making PIO information Powers and duties Electronic information Concessions and permits Rules and regulations Norms Domains in archives BUDGETS SALARIES Public consultation etc

But…as you have seen, the government is not very good about reporting

Electronic audit of 91 Departments across the country

0 10 20 30 40 50 60 70

Information facilities

Advisory bodies

Public consultation

Budgets

Salaries

Documents in archives

Norms

Rules & regulations

Concessions and permits

Electronic information

Powers and duties

PIO information

Decision-making

Directory of employees

Subsidy programmes

About organisation

Poor Reporting……

Incomplete reporting: 10-30% of requirement especially for budgets

Undated or outdated information : Data 2-3 years old; budget, expenditure, and program project data is not even dated

So what can we do? There is a law, a powerful law that

government is mandated to follow

There is some reporting BUT bad reporting

There is some reporting BUT no one understands it

Can we help them report better?

Go back to the basics: What should we know about the budget?

Availability: How much money do I have? And what for?

Sources: Where is this money coming from? Timing: When did the money arrive? And how

much arrived? Expenditure: How much is being spent and at

what periodicity (monthly, quarterly)? When is the money spent and on what?

Trends: Has the availability risen or fallen? Have expenditures changed? How much gets left over?

There are lessons that can be learnt

India: APREGS/ JNNURM

Brazil: Transparency Portal

Some things to consider

No ‘one size fits all’ Identify the key activities in a sector –

reporting should be along key activities Trends are always more interesting than

bare facts. But what trends should we care about?

How to ensure accuracy? Updation? Regular flows of information?

One example: Education

STEP 1: Identify key activities Planning (setting standards/ Curriculum) Operations (Teachers)

Wages Training Materials

Operations (non-teacher) Infrastructure and mainantance Text books Subsidy’s MDM Wages (non teaching staff)

Monitoring and Evaluation

Step 2: Identify process of receiving funds

School

Infrastructure Teachers School Maintenance

Classrooms:

Rs 2,54,000 per additional classroom in UP and UPS both

Repair:

Rs 75,000 for major repair in both PS and UPS

TLM: Rs 500 per teacher per annum in UP and UPS both

School Development Grant: Rs 5,000 per year per PS and

Rs 7,000 per year per UPS

School Maintenance Grant: Rs 5,000 per year upto 3 classrooms; maximum of Rs 10,000 for more than 3 classrooms

Furniture:

Rs 500 per child as a one time grant only for UPS which started before 2001

Step 3: Identify Reporting levels

Department – District – Local body (Municipality) – final destination

Activities for reporting at each level

Step 4: Identify Parameters for reporting trends

Amount allocated Vs amount received (over time- how many years?)

Date when money should have arrived Vs when it does arrive at final destination

When was it spent? On what?

What will this tell you…..

Grant Characteristics

0

10

20

30

40

50

60

70

80

90

100

SDG SMG TLM

perc

enta

ge Receiving

Spending

Insuff icient

Oct Nov Dec Jan Feb Mar

Rece

ived Spen

t

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

50.0

School Development Grant - Receipt and Expenditure

AND NOW OVER TO YOU……..