Blog Archive - Page 63 of 130 - Accountability Initiative: Responsive Governance

Run-up to Budget 2017: Social Sector Allocations and the Complexity of Fund-flows

In the run-up to the Union Budget 2017, Accountability Initiative (AI) at CPR, which tracks government budgetary allocation and related expenditure for key social sector schemes annually, both through analysing government data and corroborating it with ground surveys run by their field staff, shares their latest findings.

In a series of articles below, Yamini Aiyar, Avani Kapur and Abhishri Aggarwal break down the bottlenecks in fund-flows, which negatively impact implementation on the ground despite monies having been allocated, as well as provide scheme-specific budgetary (allocation, expenditure, government reported outputs & outcomes) analysis over 2016-17.

Complexity of fund-flows

In Huffington Post, Yamini Aiyar explains why the money allocated by the union government fails to reach the ground, primarily due to the complex mechanism of fiscal transfer or fund-flow, which makes tracking and accountability very difficult.

The complexity of this mechanism of money-flow has been captured in the animated video (above).

In a follow-up and related article, Abhishri Aggarwal analyses the lack of effective implementation of the Integrated Child Development Services (ICDS) scheme, as well as the need for a transparent, well-maintained monitoring system.

Social sector allocations

In a second series of articles, in the Wire, Yamini Aiyar draws on AI’s budgetary analysis for 2016-17 to unpack and critique the government’s social policy approach. She explains how despite attempting to shift to an ‘empowerment’ approach in its welfare model, primarily through the mechanism of conditional cash transfers, health and education, in particular, ‘remain invisible in Modi’s social policy’.
Yamini Aiyar and Avani Kapur further provide a detailed sectoral analysis, inlcuding key challenges faced, in a series of articles in Livemint on maternal and child health; Swachh Bharat Mission; Sarva Shiksha Abhiyan; and health-care.

The full series of budget briefs (2016-17) developed by AI on seven social sector schemes can be accessed at their website here.

A Handbook for Passing on the Blame

The essence of what the government does boils down to two things, in a financial sense, it collects taxes and delivers a basket of services. In today’s day and age, these tasks are no longer usurped by despots, but are performed by elected representatives, hired bureaucrats or chosen regulators who are put in their positions and are entrusted with powers to do what people expect of them. Everything else – the actual design of a taxation system, or the positioning of an executive arm of the government to perform the day to day tasks of governance – are just the granules of detail that elaborate upon these two simple precepts.

The idea of accountability remains the same, whether in the public or private realms. A task is entrusted to individuals or teams and if that task is not performed according to pre-determined parameters, then some adverse consequences are to be faced as punishment for the failure. It is the fact that adverse consequences will be faced, that gives teeth to a system of accountability. In such circumstances, both governments and the private sector design elaborate mechanisms for both entrustment of tasks with precision, as also to hold those entrusted to account, for failures to reach the objectives fixed.

Yet, it is normal human nature to attempt to gain powers. These might be absolute or relative in nature; the power to order someone else around might come with the obligation to be subordinate to someone else. It is also normal human nature to attempt to avoid being accountable for failure to achieve entrusted objectives. Again, these tendencies remain the same, whether in the public or the private sector.

When it comes to the public sector, it is necessary for citizens to understand what the various ways are, by which the components of government attempt to avoid accountability for their failures. This is not to say that everybody in the government is attempting to avoid responsibility all the time, but to emphasise that in case they do, they need to be caught and punished appropriately. This is also not to say that everybody who fails in the government ought to be dragged to face a firing squad, but that there must be some form of graded system of punishments in place, ranging from censure to the ultimate punishment of removal from the assigned job, for accountability to have any meaning.

However, rarely do we see anybody in the government actually facing the consequences of their wrong actions. Much as we prefer to revile them, politicians are the ones who face the strongest accountability test in government. They have to go through the ordeal of standing for elections every five years. In the case of the bureaucracy in India, largely recruited for a permanent stay in the government till retirement and eligible for a pension afterward, accountability systems are weak.

Still, one might ask the question; who cares if accountability systems are weak? Considering that only 78 lakh people in the country pay direct taxes to the government, as reckoned by the Union Finance Minister in his budget speech, the angst of watching ones hard earned money being taken away by the government and misspent is restricted to a minuscule sliver of Indian citizenry. Yet, as our society is put under greater surveillance and technology enables more snooping into financial transactions, the tax base for direct taxes is likely to increase exponentially in the next few years. A lot more people will be paying direct taxes in future, and therefore, will need to be worried about how effectively the government is spending these accumulated funds.

We will need to know the actual ways and means by which government systems dilute their accountability to us. These methods will vary, depending upon which arm and category of government that we focus upon. The next few blogs will discuss case studies of how departments create smokescreens behind which they dilute, or wholly dismantle accountability measures that make them responsible to citizens.

The Public Housing Sector – A Case Study of Karnataka

Public Housing is a government service that garners a lot of attention, for several reasons. It is of course, an essential service and hugely important from the perspective of the poor. There are several such pro-poor services provided by the government, covering everything from health care to subsidised food, to crèches, schools and toilets. Housing stands apart from them, for two reasons.

First, Housing offers the largest per-capita subsidy offered to individuals or families as compared to other government programmes. There are other services such as guaranteed employment that might compete with housing in terms of the numbers of beneficiaries covered, but, due to the cap on the number of days of employment that are guaranteed under the present arrangements, the per capita subsidy levels are at best, about half the average subsidy delivered to each housing beneficiary. Other services, such as the provision of drip irrigation facilities, bore wells and farm mechanisation equipment to farmers may offer a larger per-beneficiary subsidy, but the might cover a few hundreds or thousands as compared to the provision of houses, where annual targets for an average State exceeds 2 lakh units.

Second, a house is a tangible, permanent asset. Construction can be visibly started on a particular day, and completion marked by a house warming ceremony. That provides much more opportunity to the person who claims ownership of the privilege for having ‘granted’ the house to the beneficiary, to bask in the gratefulness that the latter may shine on him. That link of the benefit to the large heartedness of the benefactor is not so tangible, say, in a programme for improving of educational outcomes.

For these two reasons, it is no surprise that politicians and officials compete with each other for assuming planning and execution responsibilities for delivering houses to beneficiaries. Whatever may be their actual role in the supply chain of providing houses, politicians and officials of all hues and levels like to be seen as the ones who swung the deal for beneficiaries; so they often fight amongst themselves for that privilege.

Then, there is the temptation of skimming off a good percentage from the expenditure incurred on housing. Since the subsidies on housing are high, most politicians and officials handling their allotment and construction reckon, quite correctly, that grateful beneficiaries will not be averse to generously parting with a share of the subsidy to them. Whilst cost estimates for constructing homes have to meet certain norms and standards, the actual material costs may greatly vary from official estimates, as recycling of old materials can reduce actual investments in housing. That adds to the cushion that might make beneficiaries more sanguine about parting with a share of the subsidies to the people who got them the house.

In short, the deal is simple; government officers and politicians who control the allocating and constructing of homes for people not only gain goodwill, but also stand to make a lot of money on the side.

Before one gets deeper into the dynamics of how subsidised housing is delivered, one must note that the systems and institutions in place for urban and rural housing respectively are different. We propose to focus on rural housing.

The process of delivering houses to the poor comprises essentially of two processes; namely, selection of beneficiaries and the actual construction of the homes. In my next blog, I will explore what are the accountability measures for the processes of selection of beneficiaries, and how they are diluted.

Money for nothing: lessons from PAISA studies

This is an article written in the ASER 2016 Report on the Annual Status on Education.

Back in 2012, Accountability Initiative researchers set out to understand the planning and budgeting process for elementary education. The focus of our analysis was the district education administration. Under the Sarva Shiksha Abhiyan (SSA, the Government of India’s flagship program for elementary education) all districts are required to prepare an annual work plan (building on school level plans made by school management committees). These are in turn consolidated into a state plan which is presented to the Ministry of Human Resource Development (MHRD). Several interviews and participant observations later we arrived at the following conclusion: there is no such thing as a district annual work plan! Sure these plans documents exist. But there is no real “planning” involved in preparing these documents. As one candid planner put it: “district work plans are made by photocopying old plans and updating costs. The process is taken so lightly that in one district the planners forgot to update the district names and year on the photocopied plan documents”.

To the casual observer, comments like this are yet another illustration of the apathy and lethargy that India’s administration is infamous for. But our investigations into the planning and budgeting process for SSA and indeed for most other social programs, revealed a more complex story

To begin with, although districts are expected to make annual plans, the plans are made without any relevant financial information. Districts are not given any information on budget estimates, nor do they have the mechanisms to track real-time expenditure. Plans are thus made without any evaluation of spending capacity in the district and are no more than a wish-list. This is one reason why final plan approvals are significantly different to plans submitted. For instance, our analysis of district plans in 2012-13 revealed that a mere 59% of the budget proposed by Nalanda district, Bihar was finally approved. Similarly in 2011-12, only 79% of the budget proposed by Kangra district in Himachal Pradesh was approved.²

These gaps in planning are exacerbated by the centralized structure of the SSA. In this system, state and district governments are expected to align themselves to central government priorities. To illustrate, in one instance a state government needed money to restructure its teacher-training model. To access SSA money, it had to seek GoI approvals through the state SSA authorities. GoI, however, refused to provide money because the restructuring wasn’t aligned with the prescribed framework. Consequently, the final approved state budgets are often very different to what states ask for. In some years the gap between proposed and approved state budgets is as much as 50%. Moreover, state and therefore district priorities are often ignored in favor of pursuing norms and priorities set by the Government of India.³

Poor financial management makes matters worse. Our studies reveal that none of the districts analysed receive their entire approved budget in a financial year. And of the money that does reach, significant proportions arrive toward the second half of the financial year.

Faced with such constraints even the most well-intentioned district administrator will find it difficult to make a plan. And in such circumstances inaction and lack of planning may well be the rational thing to do. After all, why make a plan if you cannot finance it and why set goals and targets when you will be expected to respond to priorities set elsewhere!

In the words of one administrator: “Work plans function on the side. After that we receive orders which are very different from the plans noted in the AWP&B. Then we start fulfilling those.”

But perhaps the biggest gap in the planning and budgeting system, to the extent that plans are made at all, is that it is based entirely on inputs. Goals and targets are linked to data collected through DISE (District School Information System for Education) which does not have a single indicator on learning. Thus learning goals are never specified and as a result budgets for specific initiatives aimed at improving learning quality (budgeted under the line-items for innovation and learning enhancement programs) account for less than1% of the SSA budget. It is instructive that the government discussions around annual budgets, recorded in the PAB minutes, reflect no discussion on learning goals and state specific proposals on how to achieve these goals.

All this was set to change in 2015. The acceptance of the 14th Finance Commission report, the creation (and subsequent endorsement) of a sub-committee to review centrally sponsored schemes under the NITI Aayog, and the rhetoric of co-operative federalism adopted by the government together held the promise of a more flexible, outcome oriented financing system for the social sector. But for the moment this promise remains unfulfilled.

Rather than initiate a substantive debate on a new financial architecture, the emphasis has been limited to introducing a few minor tweaks. For instance, all central schemes, including SSA, are expected to free up 25% of their budgets for a “flexible” pool for states to spend in accordance with their needs (although our informal conversations with education administrators indicate than even this isn’t being implemented). At the same time, the promise of change brought with it much confusion on the ground and a significant slowdown in the movement of money. Accountability Initiative’s analysis of the 2015-16 SSA budget suggested that a mere 57% of funds had been released to states in September 2015. Expenditure was even slower. Just 23% of the approved plan had been spent by September.⁴

These delays had a direct impact on fund flows to schools. The 3 school grants tracked by the PAISA questions in the ASER survey reveal that the number of schools that reported receiving the school development grant dropped from 76.76% in 2010-11 to 67.92% in 2015-16. The timings of grant receipt has also been affected. The number of schools receiving the school grant by October-November at the time of the ASER survey (half way through the school year) has dropped from 50.86% in 2011 to 45.17% in 2016. Importantly, money available for specific initiatives under the innovation and learning enhancement programs budget line item took a hit. In 2015-16, a mere 25% of state proposals for quality related activities were approved by MHRD.⁵

Interestingly, while ground level activity may have slowed down due to gaps in financing, the policy space has busied itself with expanding the range of tools available to measure learning in schools. These include the ongoing state level learning assessments, a census assessment being planned by the MHRD, and the NITI Aayog’s efforts to rank states. For the moment the objective and audience for these different assessments are unclear. However, if the government chooses to use these assessments imaginatively, there is room to significantly alter the institutional architecture for elementary education. Here is our proposal: replace the SSA financing model with a three-window financing model that incentivizes states to build long-term, learning focused plans on the one hand and rewards performance on the other.⁶

The first window would be an annual grant for states to meet their basic infrastructure needs. Much of this has been prescribed by the RTE and most states in the country are still struggling to meet these requirements. For the moment, financing for the RTE is based on annual plans made by state line departments and approved by MHRD. Rather than spending energy on the same exercise every year (the entire state education department spends at least 2-3 months a year making, at times photocopying, annual plans and budget estimates) state governments should come up with a three-year budget estimation which can be funded annually by the centre. This will introduce some level of predictability in the current planning system as states will have a ballpark amount of money that they can expect from the centre. Based on Accountability Initiative’s estimations of current expenditure, this window should account for no more than 50% of the current annual SSA budget. This funding window will address commonly expressed concerns of equity in financing among states and ensure that poorer states are compensated.

In keeping with the 14th Finance Commission’s principles of greater state flexibility over planning and budgeting, the second window should be an untied learning grant given to the states for a 3-5 year period, based on a long-term strategy linked to clearly defined learning targets. Since this is an untied grant, the Centre will no longer need to spend time playing headmaster determining line-item wise expenditure for state governments. Rather, it can focus on providing technical support and guidance to states by undertaking assessments and facilitating knowledge sharing across state governments.

Finally, the third window could link the different assessments with state plans and budgets by offering a performance-based financial reward to states against set targets. Not only will this give much needed teeth to the measurement process, it also has the potential of creating competition amongst states, and over time building greater transparency and public debate on learning levels in India’s schools.

Weeks after the launch of the 2016 ASER report the National Democratic Alliance will present its 3rd and penultimate budget to the nation. ASER 2016 is yet another reminder that even as governments change, very little changes for India’s school going children. The 2017-18 budget may be this government’s last chance to give India’s school going students hope for the future. This is the time for radical change.

1. The PAISA studies are a series of expenditure tracking studies undertaken by Accountability Initiative, Centre for Policy Research. One set of PAISA questions are asked during the school visit that is part of the ASER survey. These relate specifically to a set of annual grants that schools are expected to receive. For more details see www.accountabilityindia.in

2. For more details see: Aiyar et al (2015): “Rules Vs Responsiveness: Toward building an outcomes focused approach to governing India’s finances”. http://www.accountabilityindia.in/paisa/study/download/1268

3. ibid

4. For a detailed analysis of the 2015-16 SSA budget see: Kapur, A and Srinivas, V (2016): “Sarva Shiksha Abhiyan” Budget Briefs Volume 8, issue 1. http://www.accountabilityindia.in/budget/briefs/download/1263

5. ibid

6. For details see Aiyar et al (2015) Rules Vs Responsiveness. A version of this proposal on financing structures was published in Ideas for India in November 2015 and Livemint in February 2016

Beneficiary Selection for Housing Programmes

This is the second part of the Raghu Bytes series on ‘Avoiding Accountability’.

As related in last week’s blog, programmes for subsidised housing are politically important, because houses are tangible assets and the subsidies given for benefits at this scale, are the highest per-capita. Predictably, the competition to gain control over the process of beneficiary identification is high.

Years back, an energetic and diligent colleague of mine, then holding the charge of the Deputy Commissioner of a district, observed that he was being put under pressure to slow down the implementation of a government programme. Now, that’s unusual, I remarked. What happened? I asked. He related how he had gone into overdrive for the implementation of the housing programmes for the poor in his district. He linked up with the village level local governments and energised them to send him their lists of beneficiaries who were waitlisted. Then, he streamlined the construction methods, by galvanising the contractors who were supplying prefabricated materials, such as doors windows and toilet pans, to accelerate production. He ensured that beneficiaries – who were expected to construct the houses on their own – were not impeded due to financial bottlenecks. He even went to the extent of carrying the subsidy cheques personally and delivering them to beneficiaries, to spread the message amongst his staff that no delays would be tolerated.

As housing construction speeded up and the district quotas for subsidies exhausted, he persuaded the State Secretary for Housing to reallocate subsidies from other districts where the programme was languishing, to his district. The number of houses built swelled to 2400 plus, which was unprecedented in that district.

One would have imagined that politicians in the area would have been happy with the progress.

Wrong.

My colleague was summoned by the local MLA. She asked him why he had put house construction on the fast track. Did he have any ulterior motive? She asked, a euphemism for alleging that he might be on the take. He explained that his idea was to saturate the demand. Slow down, she told him. If you build houses for everyone so quickly, why would people come to me? Clearly, saturation of the demand did not meet her immediate political priorities. Predictably, she lost the next election.

Selection of beneficiaries for programmes, particularly of housing, is typically to be done by the Gram Sabha, which refers to the General Assembly of all voters residing in the village in question. However, the law in Karnataka has evolved over time, clarifying the powers of the Gram Sabha in this regard. The Karnataka PRI Act of 1993 assigned to the Gram Sabha the function of identification of all beneficiaries for the implementation of developmental schemes pertaining to the village. It also empowered the Gram Sabha to make recommendations and suggestions to the Grama Panchayat on development programmes proposed to be undertaken by the latter. A judicial interpretation of the ambit of these provisions of law confined these powers within a narrow range. The High Court of Karnataka drew a distinction between ‘identification’ of a beneficiary and the ‘selection’ of one, holding that the former responsibility did not include the latter. Given that the Gram Sabha only had recommendatory powers at that point in time, it was amply clear that selection of beneficiaries (from amongst those identified by the Gram Sabha), could be legally done at higher levels of government.

The Gram Sabha was transformed from a recommendatory body to a more powerful decision making authority through amendments to the law undertaken in 2003. In order to remove all doubts, the Gram Sabha was explicitly empowered to identify select and arrange in order of priority, the lists of beneficiaries. In order to make the position crystal clear, the law also declared that once lists of such identified, selected and prioritised beneficiaries were published by the Gram Sabha, no authority above, such as the State Government, could modify these lists.

The stage was set for an epic battle between the local and the State governments over the rights to select beneficiaries.

Challenges in the implementation of School Management Committees: A case study

The School Management Committee (SMC), is a legal provision^[1] for a partnership between community and school. The point is to implement a shared vision for a ‘good education’ for the neighbourhood’s children. It is based on the belief that even people with little personal experience of schooling, have a vision for their children’s futures and can make considered decisions about their educational goals. It follows that they can therefore also contribute to the plans of the local school to implement these goals in the school years. Given this, it requires both parties to collaborate in a participatory partnership to see this process through from start to finish.

In fact a community’s preparation to participate is as complex a journey, as is building the will and competencies of the bureaucracy to allow for it. While an idealistic policy and equally hopeful law is in place, they are not buttressed with institutional capacity to build the required skills, leave alone attitudes to render effective implementation. Even knowledge, the relatively uncomplicated component of competency, is not communicated in full. Over the years, Accountability Initiative’s (AI) contributions have aimed at easing access to the latter. Good minds are at work across the nation, assisting solutions to the challenges cited above. Everyone agrees that reform is a slow undertaking. What is not slow however, is the retort which has become a refrain, that the real and hidden cause of sluggish progress is a lack of personal integrity amongst stakeholders. AI has been building an argument against this contention in its work understanding governance. Considering this, our focus has been on frontline bureaucracy.

AIs team documents and analyses the everyday professional realities of the experiences of this layer, and analyses the complexities of the variables involved so as to provide implementing agencies (both government and non-government) with a clear and substantiated canvas on which to draw strategy for reform.

But, reality can be confusing. But, reality can be confusing. Truth is a point of view. As decisive and compelling as AI would like its advice to be, the truth is a tangled web and therefore solutions are seldom quick-fixes.

The Motiala (name changed) government Primary School is a case study, where all the stakeholders involved, can tick off the checkboxes on all the compliances on all manner of monitoring formats, but even then, the intent of the policy remains unserved. The school in Motiala is one of six that AI has been working with in Rajasthan for over a year^[2].

The current Principal of the government Primary school in Motiala was appointed to her post in 2014, after serving approximately 17 years in the school^[3]. Suitable to her station as a young lady from a respectable family, she occupied herself with continuing her education after school. Quite pointlessly, (and alarmingly) she completed a Bachelor’s in Education and a Master’s Degree in the same year (1992), then proceeded to complete yet another Master’s Degree three years later (1995). She then promptly applied for a PhD, which has remained unfinished as she busied herself applying for a government teacher’s job the year after (1996). She was selected to join a school in a Block of District Jaipur.

Whatever wisdom supported the formulae that the Rajasthan government used to deliberate this posting, the need or demand for service notwithstanding, the distance of the school from their home not being kosher; the appointment and hence the job was not approved by her family.

The process was repeated again in 1997, and once again she was selected for duty in the very needy Block. The difference was that the posting was in a village where her uncle was the Sarpanch. As requested by her family, the Sarpanch ‘approached’ the Block Education Officer (BEO) to facilitate a transfer.

The BEO of the block she was posted in earlier spoke to BEO of the block in which she wanted the posting; who, further pressured by her significantly established businessman brother, handed-over the decision of where she would be posted entirely to the family. She reports with pride that her father, mother and brother proceeded to tour the schools with available vacancies until they selected Motiala as it was at a convenient distance from their home and later, her marital home. The village has been her home away from home. She will tell you with pride that the villagers consider her a ‘gav ki beti’ (a daughter of the village). They keep a familiar watch over her that she finds comforting. The interactions are in terms of making them making sure she gets to and from school safely; and attends all social occasions celebrated by the significant families in the village. There has never been an SMC meeting in this school, save for one held on AI’s insistence^[4]. The ‘beti’ being a regular visitor in homes of the most influential villagers, the Principal can’t imagine why there may be a need to hold a meeting. That the school may be excluding members of the community fails to occur to her.

There were a 110 children in the 2-room school when she joined as one of two teachers, the other being the acting Head Master. By 2009, when he was promoted, he taught her how to maintain all manner of administrative documentation, as the single pre-requisite to her becoming a Principal. This and the just-in-time problem-solving support she receives from the Nodal Officer is the only hand-holding that she has received to help her take on leadership of the school. She holds her lineage responsible for her losses too, as she blames being in the ‘General’ category to be the reason she has not been promoted yet. Her aspiration is to become a Second-Grade teacher, which will qualify her to teach classes 6-12 in a higher secondary school. In keeping with her lukewarm ambitions for her career and insignificant commitment to the mission of her job, she had plans to retire if the process of promotion takes too long or if the ensuing posting is inconvenient. After all her husband has a secure job in a leading public sector organisation and comfortable enough somehow to retire whenever he is ‘in the mood’. The recent demonetisation has required her to be ever so slightly concerned about holding a job, as it has hit her maternal home’s businesses in hundreds of lakhs; to the extent of making her father unwell.

The Motiala school has 30 children (21 girls and 9 boys)^[5]. It is RTE compliant in terms of infrastructure and staff. DISE data lists 7 other government schools in an area spanning a 2.5 square kilometers. The closest is 500 meters away from this one, with 22 enrolments, and 2 teachers, was opened because of an initiative taken by a resident, then an officer in the education department. Because it was located in its own habitation^[6] (‘dhaani’), and not the centre of the village and thereby not as accessible to all habitations, the villagers protested and asked for this school to be opened. The fact that there were also 10 private schools in the same Gram Panchayat, is some form of commentary on the quality provided by the government school. The fact that there is hardly any teaching at either school, with all children bundled into one classroom with a single teacher, concerns no one.

Conversations at the State about Motiala inspire no interest. For the scale at which the government operates, the financing of 7 schools with enrolments of 20-100 each, is an insignificant loss, despite DISE 2015-16 reports 33,298 Primary and 20,820 Upper Primary Single-Teacher Schools; which may have very similar stories. They are forgotten as no one can find any technical fault with the existing arrangement. Those who can, refuse to prioritise children’s learning over political or personal advantage.

[1] Clause 21 of the Right to Education Act (2009), which specifies that all schools (except unaided schools or those that do not receive any grants from Government or local authority to meet expenses)

[2] Accountability Initiative has been working in the Bassi block in Rajasthan, to ascertain the challenges to the education management as it takes on the task of running effective SMCs. Of the many levels of education bureaucracy we work with, there are 6 principals of schools who are provided inputs on coaching SMCs on fiscal literacy.

[3] Joined mid-year 1997. Appointed Principal end of year 2014

[4] Please watch a video of AI Paisa Associate Tajuddin Khan report on the successful SMC meeting

[5] Class 1: 4 girls and 4 boys, Class 2: 3 boys and 2 girls, Class 3: 1 boy and 5 girls, Class 4: 0 boys and 6 girls, and Class 5: 1 boy and 4 girls.

[6] A habitation has only 5-10 households

Why is Accountability so Important in India? Watch this video to learn more.

Tucked away in the far corners of Purnea in eastern Bihar, Accountability Initiative researchers encountered a school that had recently received government money to purchase fire extinguishers. This money had been provided with instructions from the State government to ensure that all schools were adequately equipped to deal with emergencies. Who could object to that? Except this school was still awaiting money needed to start construction on its school building!

The “building-less” school (as defined in government records) in Purnea is not alone. Over the years, we have come across scores of instances where government funds reach last mile facilities (schools, clinic, Anganwadi centres), Panchayats and municipalities with instructions for expenditure that have little connection to ground realities.

Why does this happen? Why does development expenditure in India often have such little relevance to the everyday realities on the ground?

One important reason for this is that public money travels from the Union government to the ground through a fragmented, circuitous maze. This maze is opaque and difficult to track thus causing delays, inefficiencies and misuse. The result is an expenditure management system that encourages distortions.

Watch our video to learn more about the complicated world of development finances and how Accountability Initiative research aims to untangle some parts of the public finance web.

[Hindi] Why is Accountability so Important in India? Watch this video to learn more.

पूर्वी बिहार के पूर्णिया के दूर कोनों में बसे हुए एक स्कूल को सरकार से आग बुझाने के यंत्र की खरीददारी के लिए धन प्राप्त हुआ । यह धन इस निर्देश के साथ प्राप्त हुआ की सभी स्कूल पर्याप्त रूप से आपातकालीन स्थिति से निपटने के लिए तैयार हों। इस बात से किसे आपत्ति हो सकती थी ?

सिवाय ऊपर लिखे गये पूर्णिया के इस स्कूल को, जिसको अपने भवन निर्माण के लिए पैसा ही नहीं मिला था!

“भवन रहित” विद्यालय (जैसा की सरकार के अभिलेखों में परिभाषित है) में पूर्णिया अकेला नहीं है!

गत वर्षों में हम ऐसे बहुत से उदाहरणों से रूबरू हुए हैं जहाँ मूलभूत सुविधायें (स्कूल, क्लिनिक, आंगनवाड़ी केन्द्रों), पंचायतों एवं नगरपालिकाओं पर सरकारी धन व्यय करने के निर्देश जमीनी हकीकत से कोसों दूर होते हैं!

सरकार स्कूल, क्लिनिक, आंगनवाड़ी केन्द्रों, पंचायतों एवं नगरपालिकाओं जैसी संस्थाओं के माध्यम से नागरिकों को मूलभूत सुविधाऍं प्रदान करती है। पिछले कुछ सालों में एकाउंटेबिलिटी इनिशिएटिव को ऐसे कई उदाहरण मिले जहाँ यह देखा गया है कि मूलभूत सुविधाऍं प्रदान करने वाली संस्थाओं को सरकार द्वारा दिया गया व्यय करने का निर्देश वास्तविक ज़रूरतों से कोसों दूर है।

ऐसा क्यों होता है? क्यों भारत के विकास के लिए सरकार की तरफ से किये गये खर्च का ज़मीनी हक़ीक़तों से कम सम्बन्ध है?

इसका एक महत्वपूर्ण कारण यह है की जनता का पैसा केंद्र सरकार से जमीनी स्तर तक टुकड़ों में, घुमावदार भूलभुलैया के माध्यम से प्रवाहित होता है। यह भूलभुलैया अस्पष्ट है और इसको ट्रैक करना बहुत मुश्किल है जो फिर विलम्ब, अकुशलता और दुरुपयोग का कारण बनती है ! परिणामतः ये व्यय प्रबंधन प्रणाली के विकृति को प्रोत्साहित करती हैं।

Collective Responsibility – or Dilution of Accountability?

In my last blog of 2016, I had asked the question whether there could be a middle path between the imperative of maintaining absolute confidentiality and collective decision making. I had used the current hot-potato of demonetisation as the case study for the purpose. As matters have progressed, clearly, it is seen that apart from a closed inner political circle – not everybody in the Union government cabinet seems to have been taken into confidence – participation in the decision making process has been confined to the Secretaries of the Finance Ministry and the Governor of the Reserve Bank.

Considering the sensitivity of the decision to declare currency notes of the total value of 86 per cent of the cash in circulation as invalid, there can be no questioning of the need to confine participation in policy making to a select few. However, it is when things go wrong – and indeed they have gone seriously wrong – that the need to fix accountability emerges.

Whilst in theory it is easy to say that accountability for miscalculations of the enormity of the problem and the mismanagement of downstream actions ought to be fixed on those concerned, in reality, as events show, this is nearly impossible to be done.

In the eye of the storm is the Reserve Bank of India (RBI), an independent, autonomous institution with strong statutory regulatory powers. If there is any one institution that has had its credibility seriously eroded due to the demonetisation exercise, it is the RBI. Both on giving the nod for the demonetisation exercise as also in managing the downstream exercise of remonetisation, the RBI seems to have committed serious errors of judgment and decision making.

On the merits of the demonetisation exercise per se, given that one of the main original objectives was to catch those stashing away black money unawares, the RBI seems to have ignored its own estimation of the size of the black money economy in the country. Given that nearly all the demonetised bank notes have been deposited back in the banks during the grace period provided, it seems that the objective of rendering valueless stashes of black money, has not been fulfilled. Then comes the later idea of promoting a cashless economy. It is not known whether the RBI endorsed this idea in the first place, or is now compelled to defend it because of the failure of the first objective.

On the management of the remonetisation exercise, the blame cannot be shared – the RBI has to take nearly all of it. Yet, in defence of the RBI, it would not have been possible for it to beef up its note manufacturing capability in advance of the demonetisation exercise. If it had taken advance action for printing new notes, the secret of demonetisation would have been inevitably leaked; and that would have been another kind of disaster. Having said that, subsequent delays in printing and distribution of new notes and glitches with ATM machines, led to the RBI taking decisions on a daily basis on the amounts of money that could be withdrawn, or deposited. The panicky reaction of the RBI did nothing to enhance its reputation.

What has driven the final nail in the coffin of the RBI’s credibility has been its obdurate silence. It might have hoped that the silence would be interpreted as that which a higher authority has the latitude to maintain, but on the other hand, that has only further lowered the perception of the RBI in the eyes of citizens.

Yet, the question is, can the RBI be nailed for this?

From what one can see, the answer is a bland ‘no’.

Let us consider the exchanges between honourable members of the Parliamentary Committee set up to seek information on the demonetisation exercise and the RBI a few days back and you will see what I mean.

In came our honourable MPs, bowling with guile and venom. Does the RBI know how much value of old notes have been deposited in the banks? They asked.

No, said the Governor of the RBI. The notes are still being counted. In other words, he ducked under the bouncer.

Wait a minute.

As far as I know, nearly every bank branch in India is computerised. Besides, even if they are not, every bank branch has to close its accounts every day. The deposits, cash balances, bank entries in the day book and the accounts registers, have to be tallied and noted. No teller or cash disbursing or cash receiving official can go home on any day, without actually counting the day’s receipts and withdrawals. That has been the way banks have been run for decades.

Considering the levels of computerisation and networking in banks, it would be the height of incompetence if banks were not able to mention to the last detail on a daily basis, the amounts of money that have been deposited in the form of old notes. Clearly, the RBI governor should have these details on his fingertips? Surely, he should be able to give a figure correct as to the previous evening – or even if some latitude is to be given – a few evenings before the appearance before the Honourable Committee?

Yet, when more probing questions were asked, a member of the Parliamentary Committee, no less than a former Prime Minister, rose to the defence of the RBI governor, informing him that it was not necessary that he responds. Answering these questions asked would undermine the image of the RBI, he said.

I would have imagined exactly the opposite.

Clearly, fixing accountability for the bad management of demonetisation is going to be a slippery thing.