Big-Bang Budgets?

Posted by Shyam Ponappa at Mar 28, 2011 02:15 PM |
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Clarity of planning and conceptualisation needs to be the hallmark of policy planning for the Budget, says Shyam Ponappa in this article published in the Business Standard on March 3, 2011.

A good holding action in the face of turbulence is a real achievement. It’s a tremendous relief, with a positive spin. That’s what the finance minister seems to have given us with this year’s Budget. So, the glass could well turn out to be half-full, if heaven plays its part, and the demons — for example, rising oil prices because of turmoil in the Arab world — are in abeyance. For now, India’s spirits are up, and we have a shot at getting on with it. And if we don’t, heaven forefend, the government could resort to something as irresponsible as another spectrum auction (2.5 GHz for 4G/LTE) to pull itself out of the morass.

Given this reprieve, how best can we capitalise on it? Some of us have this notion that it is a tradition that major projects or schemes are announced at the time of the Budget. Is this a good way for the government to proceed? Are there better ways, and if so, what might they be? Also, after the Budget, several opinions reflected disappointment with the lack of big moves. What sort of actions would deserve the “Big Move” label?

Ignoring for the time being the FM’s statements about bills for banking, insurance and pension funds that could add up to a big bang, there was in fact a Big Move, with the ground prepared well beforehand, as it should be: the proposed cash transfer of Rs 37,000 crore allocated for kerosene, LPG and fertilisers to BPL users. This move to cash transfers will be a major change that should be for the better, despite apparent misgivings from the Left. In fact, its effect should be much more than an equivalent allocation in the previous system, with its infamous leakages. The logical extension of this process would be smart-card purchases of specified products with designated limits from any retailer, with direct rebates from the government in a single transaction. No forms, no fuss, thanks to the Unique Identification Number (UID). Next could be food subsidies of over Rs 74,000 crore through smart cards.

In this time of drift over several years, there has been an apparent lack of visible leadership until the appointment of a new telecom minister after the destabilisation of the past few months. This was followed by the prime minister’s assertive statements in both houses of Parliament. Similarly, the UID thrust and the first step with cash transfers show that the government can indeed take well planned initiatives. Here we have a set of steps taken with clear objectives (although somewhat muddled in the telling), with plans being developed and executed with what we hope will manifest as high quality, on time and within Budget. So it’s possible, although not our usual practice. If only we could get more of this assertive leadership to good ends.

Imagine if we brought the same clarity of objectives and conceptualisation to, say, addressing the supply of energy to end users. True, this is a very difficult area because of the multiple challenges across several ministries/agencies (fuel production and distribution, transportation, power generation, transmission, distribution, pricing, state electricity boards), and our habitual malpractices as users. The approach, however, would presumably be the same as for the UID. We would start with clear objectives that are coherent, ie, not disjointed or contradictory, and undertake a systematic, multidisciplinary effort — no ivory tower geniuses — to plan and execute through a process of sound project management to achieve the desired results. This would be an end-to-end effort that would have little to do with the budget except for the annual announcement of financial allocations, once the activities and resource requirements are specified. Its fundamental characteristic would be that it would have to be an integrated systems approach to get results.

Most important are well planned, convergent, goal-directed activities. Whether for food storage, anganwadis, power, roads, railways, integrated energy and transport programs, or communications and broadband, the process flow needs to be defined thoroughly, and every aspect specified for our environment in the implementation plan. This process would improve the odds of achieving the objectives. For instance, if cold stores are not meshed with production and markets, or transport linkages are deficient, chances are that they will fail.

The process could begin at any time of the year, and not necessarily announced at budget time in the annual cycle. Once the initial approach is conceptualised and the initiative launched, the programme plans would be scoped and spelt out, and the budget estimation completed. At budget time, as with the cash transfers linked to the UID, there would be an allocation of funds for the activities in the next 12-month phase.

Now to the Railway budget: the much touted Railways desperately need rehabilitation. In view of the significant multiplier effect that the Railways have on many other sectors, the government really must reassert its leadership in the next couple of months (after the West Bengal elections?), and reclaim this crucial area of transportation. The urgent need is to reverse the atrophy over recent years, as well as to begin to build for the future, as for instance China has done, with trains that take passengers over 1,000 km in three hours.*

Train bullet

To conclude, it is time the government took one infrastructure sector or programme at a time, including education/vocational education/continuing education, and developed clear, goal-driven plans to provide the framework for the next budget session.

* 'China Sees Growth Engine in a Web of Fast Trains', Keith Bradsher, New York Times, February 12, 2010:

Read the original article in the Business Standard here

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