Mar 17, 2016

Decentralized budgeting- Need of the hour

Narasimhan Khadri
There was one particularly disturbing news in today's (17th march 2016) Prajavani titled "Jaarige baarada ghoshane" . It lists out many programmes and schemes that were announced in the last year's budget which has not been implemented even now. Also another worrisome statistics published In the same article is the fact that only 76 percent of the money that was cleared by the state legislature house has been utilized till February end. The rest 24 per cent money will have to used by march 31st else it will be expired. In a phenomenon disparagingly called by scholars as the 'March Rush' , money approved in the previous year's budget will be hurriedly spent only in the last month of the financial year. Does such hastiness result in any effective government expenditure? Does it yield positive result? All this is happening while the state is in one of its worst periods of drought and every penny spent by the government can have a positive cyclical impact on our people.

This can only be called as fiscal arrogance . These incidents are not unique to Karnataka government alone. This happens in almost all the states and even the central government cant be absolved of the guilt. Another important inference that can be drawn from this disturbing statistics is , it dispels the myth propagated by our pink newspapers that governments don't have 'enough' money. The fact is governments have a lot of money, the only thing lacking really is will to spend it in a right manner. This cannot be stressed enough.

The reasons for such 'fiscal arrogance' by governments are as follows .
a) Budget making is completely a centralized process.
b) Only a select group of ministers and bureaucrats are involved in the decision making as to what amount of money must be spent in which schemes. ZPs, TPs, and GPs are not even consulted- even if they are consulted in rare cases it is only done to fulfil statutory obligations.
c) Media creates a hoopla around these schemes only for a few days after the budget statement is made
d) Thereafter there is lack of sustained monitoring and accountability.
e) Budget making process is entirely focussed on grabbing headlines. It lacks clear long term vision.
f) Financial committees- which are watchdogs in legislatures and lok sabha- lack teeth to enforce fiscal discipline .

It is in this context that AAP government's very ingenious experiment of decentralized budgeting in Delhi must be studied and lauded. This involves delimitation of entire Delhi into Mohalla Sabhas and allocating a fixed sum to these 'sabhas'. How these money will be spent will be decided by the registered voters of the 'Sabha' wherein each voter will cast his/her vote. This process ensures that people take ownership of the money that has been approved. This increases confidence amongst the people , most importantly women get a significant voice since they get to vote on issues like sanitation, girl's health, security etc.

It is a constitutional obligation that even we demand such a decentralized budget making process from our state governments. For this to happen we have to advertise the advantages of such a process so that it becomes an election issue. We have to pinch our leaders who are blissfully asleep.


  1. Decentralized budget is really the need of the hour and rightly multiple news agencies and articles have published in past as well in this regard but it would be good to see suggestions on how it can be effectively implemented. Reason being even with decentralized budgeting system there is a fair chance that funds will be either misused or unused, the way it is currently happening with centralized schemes.

  2. The good thing about decentralization is that it is practical and practicable. It is a ready made solution for all the political problems. Of coarse not without some glitches. Like, it seems like murkier to let 100 people decide on something. In contrast to give a single person the entire control seems like a smooth ride. But here lies the catch. If at all those 100 people could be accommodated the whole implementation problem vanishes like a deer in front of a hungry tiger.