Why it's time to scrutinise the state government budgets

Towards the last week of February every year, media reports carry much hype about the Union Budget and speculations about its content. The Finance Minister is expected to deliver the ‘magic wand’.

For a full week after the Finance Minister's budget speech in the parliament, all kinds of meetings, media commentary and debates focus on what the Union Budget implies for the people of this country. Standard comments comprise of phrases like “pro-poor budget”, “anti-poor budget”, “pro-business budget”, “no relief to middle class”, “nothing for SC & ST in the budget”, “disappointed with lack of long-term perspective”, “nothing for this state or that region”, “budget aimed at coming elections” etc.

This year was no exception. After the hype a week before and after the presentation of the Union Budget, there is no further debate on issues that matter to people of the country.

In this cacophony, several crucial aspects have been generally ignored.

First, recommendations of the Fourteenth Finance Commission have significantly shifted the focus of budgetary exercise to state governments. Many national development schemes and programmes have been taken off the Central government’s list, and handed over to states. With the closure of the Planning Commission, it is expected that the planning function would now devolve to the states. However, the State Planning Boards in most states have remained a paper institution. Planning capacity in many states is generally weak. With additional resources at their command (and more flowing from coal block auctions to some states), there is an urgent need to strengthen this planning capacity. Therefore, focus of attention should be to analyse budgets of state governments.

However, such scrutiny of budgets of state governments by academia, media and civil society is few and far between.

Second, the Fourteenth Finance Commission has devolved nearly Rs 2.87 lakh crores (about $ 50 billion) to panchayats and municipalities. This amount is nearly three times of what the 13th Finance Commission had recommended. These funds are in addition to funds devolved by state governments. Do Zila Parishads, Panchayat Samitis and Gram Panchayats have the capacity to plan and utilise these funds adequately? Do municipalities have the competence to plan and implement basic services for all their citizens?

Why is there no scrutiny of local government budgets by the media, civil society and economists?

Third, the Constitution of India provides for District Planning Committees (DPCs) mandated to develop plans for ‘economic development and social justice’ in the district. These bodies have not even been properly constituted, let alone functioning effectively. With greater devolution of development funds with local governments, DPCs should be enabled and empowered to play a stronger role in ensuring planned utilisations of resources.

In the lives of most citizens, local governments in rural and urban areas are the first point of encounter in accessing basic socio-economic services and programmes. Should their budgets and plans not be the focus of most serious and timely scrutiny? Should the ‘finance ministers’ of local governments not be interviewed by various media about their budgets and plans?

As the challenge of implementation on the ground continues, the Union Budget and the associated debates around it, will have relevance only when budgets and plans of local and state governments are simultaneously scrutinised by citizens and experts.

The author is an IIT-IIM alumnus, and gave up a career in the corporate world, choosing to become a social innovator instead. He founded PRIA, a professional development organization that promotes participatory democracy, in 1982 and has since been its Founder-President. He has recently co-authored Global Governance, Civil Society and Participatory Democracy: A View from Below (2014).