Accountability News Update – 16 April 2010

A fortnightly round up of accountability news and views from around the world.

UK: Web-inventor calls for government data transparency
The inventor of the World Wide Web talks about the need for countries to open up and make public data accessible to all citizens.

Pakistan: Access to information now a fundamental right
The Right to Information is now a fundamental right in Pakistan following the insertion of Article 19A in the Constitution via the 18th Amendment Bill. Under article 19A, “Every citizen shall have the right to have access to information in all matters of public importance subject to regulation and reasonable restriction imposed by the law.”

US: Calls for ‘YouTube’ of Government data
US Technology Chief, Vivek Kundra has encouraged technology developers to create a ‘YouTube’ of government data in the US. The tool would enable people to “slice and dice” data to create mashups and web applications to reveal new patterns and carry out analysis.

UK: New Anti-bribery legislation comes into force
A new Bribery law in the UK heralds a clampdown on large UK businesses making payments to officials overseas to facilitate business, say experts. The new act has introduced an offence of corporate failure to prevent bribery. It is the first time such a law has existed in the UK. It also requires companies to have “adequate processes” in place to prevent such offences.

Canada: Delays leave access to information rights ‘totally obliterated’
A recent report on the performance of Canada’s Access to Information Act flags chronic delays as a serious impediment to citizens trying to access information. The report, entitled Out of Time, documents the extent of delays and identifies factors contributing to them, based on an assessment of how 24 federal institutions responded to access to information requests in 2008-2009. These institutions account for 88 percent of the requests Canadians submitted that year.

Brazil: Congress passes Right to Information Bill
The Lower House of the Brazilian Congress has approved a draft bill on the Right to Information. The RTI Bill now awaits approval by the Senate and if passed will give effect to the right to information enshrined in the Brazilian Constitution of 1988.

UPA First-Year Performance Review: Mixed Results, Promising Future?

As the UPA-II completes its first year, there have been a series of articles in the media assessing its performance on various  fronts. Livemint has published a review of the UPA’s reform agena, <a href=”http://epaper.livemint.com/ArticleImage.aspx?article=19_05_2010_008_001&amp;mode=1″ target=”_blank”>Good Moves, Bad Press</a>, and posted a <a href=”http://dl.dropbox.com/u/1738449/UPA%20POLICY.mp3″ target=”_blank”>podcast  discussion</a> with AI’s Yamini Aiyar on the UPA’s successes and failures. <a href=”http://dl.dropbox.com/u/1962232/slideshows/POLICYUPApublish_to_web/index.html” target=”_blank”>Click here</a> to see a slideshow summarizing the major UPA policies. The  economy appears to have rebounded well after the global financial meltdown, but <a href=”http://www.livemint.com/2010/05/17210711/Government-seems-stalled-it-i.html” target=”_blank”>according to Rajya Sabha member N.K. Singh</a>, the government is stalling on the economic front and needs fresh initiatives and resolve. <a href=”http://blip.tv/file/get/Livemintpodcasts-EconomicReviewOfTheUPAsFirstYearInPower471.mp3″ target=”_blank”>Listen</a> to chief statistician of India Pronab Sen speak on the present state of  the Indian economy under the UPA and what predictions can be drawn for the  future, and view a <a href=”http://www.livemint.com/94B8802B-E2E3-49C1-BF79-0FBF010AA855ArtVPF.gif” target=”_blank”>graphic summary</a> on the ups and downs of the economy over the year.<br /><br /> The UPA  intended to focus on infrastructure development as a core interest over the past  year, <a href=”http://www.livemint.com/2010/05/19222953/Infrastructure-the-good-the.html?h=B” target=”_blank”>however its achievements on various infrastructure fronts have been mixed</a>.  Gokul Chaudhry, a partner at BMR advisors, provides perspective on the UPA’s challenges and successes in developing infrastructure in this <a href=”http://blip.tv/file/get/Livemintpodcasts-ReportCardTheUPAOnInfrastrucure165.mp3″ target=”_blank”>audio discussion</a>.<br /><br />Finally, the Economic Times’ Debate Section includes a  series on the UPA’s performance with perspectives from the CPI, the UPA, and  the Opposition. <a href=”http://economictimes.indiatimes.com/ET-Debate/articleshow/5951050.cms” target=”_blank”>Brinda Karat</a> comments on how the diminished presence of the Left this year  has led to a more opportunistic government, less focused on policies for the  masses and more interested in its own agendas and the desires of powerful special  interest groups. <a href=”http://economictimes.indiatimes.com/Opinion/ET-Debate/How-has-UPA-II-fared-in-the-first-year/articleshow/5951050.cms?curpg=2″ target=”_blank”>Salman Khurshid</a> points toward the transformations in rural India, and the  reforms made in education, law, and in areas concerning equality and minority empowerment as powerful indicators of the UPA’s success, and  optimistically highlights the potential success of policies on the horizon. <a href=”http://economictimes.indiatimes.com/Opinion/ET-Debate/How-has-UPA-II-fared-in-the-first-year/articleshow/5951050.cms?curpg=3″ target=”_blank”>Arun Jaitley</a> however, highlights the PM’s lack of control and what he  views as a tendency of the government to favour the corrupt.

NREGA wage payments through banks: Taking Stock

In May 2008, the Government declared that wage payments, under the National Rural Employment Guarantee Act, the world’s largest rural public works programme, would be made through banks. According to a recent announcement, under the new system of financial inclusion 8.60 NREGA workers accounts have been opened and about 82% of wages i.e. close to 17,000 crores have been disbursed through these accounts up to December 2009 – accounting for 70% of the expenditure under the programme. Although this new system has been hailed as a foolproof, cost-effective solution to reduce leakages and to promote greater transparency, the transition was rushed and several complications with the new system are now becoming apparent.

Delays in wage disbursement: The issue of delays in wage payments is one of the most serious problems with the system of bank payments. Reports from several states including Jharkhand, West Bengal, Chhattisgarh, Rajasthan, Madhya Pradesh, Uttar Pradesh and West Bengal indicate the problem of delayed payments and dwindling interest in employment under the NREGA is rampant across several states.

It is a well established argument that the coverage of banks and post offices in rural India is patchy and as a consequence workers especially in remote parts of the country find it difficult to travel long distances to collect their wages causing delays in payments. Interestingly though findings from a survey in UP and Jharkhand indicate that close to 90% of workers who lived more than 5 km from a bank/post office expressed a preference for bank payments over cash despite the distance, indicating the deeper problems lie elsewhere. An important cause of the severe delays in the disbursement of wages is the institutional incapacity of rural banks to handle the huge volume of accounts. The shortage of staff and technology is most acute in post offices where accounts are managed manually through log journals.

However, the cause of delayed payments is more complicated than this. There are several bottlenecks associated with the different steps in the wage payment process: Filling the muster roll, measuring work and matching with attendance, preparing payment orders, sanctioning of cheques by officials and finally crediting of wages in workers accounts by the bank. Centre-state financial norms are not always clear and often mired in politics causing significant delays in the flow of funds from the central to state governments. A detailed discussion on these delays at different levels can be found in a recently published article by Reetika Khera called ‘Wages of Delay’.

Although such delays legally entitle workers to unemployment benefit, compensation has rarely been paid which is a clear violation of the Act. The government has acknowledged this gap and has sought to rectify it by directing state governments to ensure that the ‘twin legal mandates’ of wage payment within 15 days and through institutional accounts are ‘scrupulously adhered to’. A host of directives follow such as holding of a monthly Gram Rozgar Diwas at the panchayat level in which issues of payment backlogs will be cleared, strict monitoring of timely payment of wages by the District Programme Coordinator etc.

The ‘Business Correspondent Model’ which is currently being rolled out by the government is an attempt to address this problem of delayed payments and ensure that the rural poor have timely access to financial services. How this works is that the business correspondent (BC) would, on behalf of the banks, for a commission, deliver financial services to ‘clients’ though appropriate technology like handheld computer devices. However, given that the problem of delays is more complex than a simple issue of institutional access, the solutions might lie beyond the scope of this administrative ‘innovation’.

Corruption: While the move of separating the implementation and payment agencies has countered the earlier forms of corruption such as siphoning of funds, some forms of embezzlement have persisted and some new forms have emerged. The first is through ‘deception’ where often the abhikarta (implementing agency) in collusion with the bank officials withdraws money from the accounts of workers without their knowledge. The second is through ‘exploitation’ where genuine workers withdraw their wages themselves but are forced to hand over part of their money to the contractor or sarpanch based on a pre-decided ‘deal’. The third method is where workers ‘collude’ with the implementing agency and fake names are entered in the muster roll on the basis of which wages are withdrawn.

While the first type of embezzlement can be effectively dealt with through strict enforcement of certain minimum safeguards such as ensuring money is only withdrawn by the account holder. The other two types of embezzlement are perhaps more difficult to counter because they are borne out of an essentially feudal, exploitative set up in which rural banks function.

Taking strict action against such corruption, the government has restated that unfair practices in the system of wage payments will be punishable under section 25 of the Act. However the record for invoking this clause has been quite abysmal. While enforcing this penalty clause which allows for a fine up to 1000 will ensure accountability to some extent, there is a pressing need to restore transparency safeguards already built into the act. Public scrutiny of wages through reading out muster rolls and regular updating of job cards needs to be reinstated. This is a powerful practice because it enables workers to verify their attendance and monitor wage payments themselves, thereby curbing corruption.

The switch to bank payments has without a doubt provided substantial protection against embezzlement and is a critical step towards ensuring greater accountability in the disbursement of wages under the NREGA. However, the issue of delays in wage payment needs to be tackled swiftly by both streamlining processes and mechanisms under the system of bank payments as well as reinforcing traditional safeguards.

Anindita Adhikari is a Research Associate with the ASER Centre.

FAQs on NRHM Fund Flows

The National Rural Health Mission (NRHM) aims at strengthening the financial management structure and accounting systems so as to conform to best practices and meet accounting and auditing standards, at all levels. However, on several fronts, achievements have fallen short.

1. At what level can one identify the variations in reported figures?

Answer: The Comptroller and Auditor General (CAG) report observed that at times, variations were noticed between the funds releases by GOI and those received by State Health Society (SHS).
a) For FY 2007-08, the figures released to SHS, Andhra Pradesh (reported by GOI) was Rs. 597.83 crore. However the SHC reported to have received only Rs. 556.96 crore.
b) Even there is a gap between the funds released by SHS to District Health Society (DHC) and funds received by DHS. For FY 2008-09, Kurnool district in Andhra Pradesh had reportedly received only Rs. 951.75lakhs, however as per the SHC’s record, they have released Rs.1131.13 lakhs.

2. How regular is the fund flow from SHC to DHC?

Answer: Considerable fund remains with ICICI bank (banking partner in 13 states), both at State and District levels, till such time they were actually utilised. In Kerala, the monthly balance in the ICICI bank account of the SHS ranged between Rs. 17.52 crore to Rs. 86.12 crore during 2007-08. Average monthly balance worked out to Rs. 49.52 crore.

3. Does this unspent amount earn interest?

Answer: As per the NRHM framework, funds were to be kept in interest bearing bank accounts. However, in two States, unspent funds were not kept in interest bearing accounts.
a) In Assam, DHS Lakhimpur kept Rs.1.20 crore in current account
b) Similarly, in Bihar, SHS deposited Rs. 106.76 crore in March 2007 in non-interest bearing account
c) DHS, Bhojpur kept the NRHM funds in a current account and sustained an interest loss of Rs 37.42 lakh as of June 2008.

 

Cases of discrepancy between opening balance of SHSs and DHSs, difference between cash balance depicted in accounts and bank pass book, inconsistency between opening balance of the current year and closing balance of the previous year etc. were observed.

4. Has the money always get spent on prescribed line items?

Answer: As per rules, funds were required to be spent for the purpose for which they were intended. But that is not always the case.
For instance, for FY 2008-09, in Karnakta, Rs. 0.36 crores of NRHM fund was spent on purchase of
i) four wheelers under Kysanur Forest Disease Control Programme, ii) control of Handigodu disease, iii) and even on Mysore Dasara Exhibition.

5. What is the experience so far with the state wise audited reports?

Answer: Cases of discrepancy between opening balance of SHSs and DHSs, difference between cash balance depicted in accounts and bank pass book, inconsistency between opening balance of the current year and closing balance of the previous year etc. were observed.
In Bihar, four different opening balances as on 1 April 2005 were noticed in four different sets of documents of SHS detailed below:
Opening balance Amount (Rs. in crore) as on 01-04-2005
As per SOE——— ———————47.66
As per annual account of 2005-06 —-45.12
As per financial statement ————-52.67
As per Bank account ——————-43.78

6. So, after spending this huge sum of money every year, does all PHC/SC/CHS have atleast electricity facility?

Answer: No. For example, as per latest figures available, by the end of FY 2008-09,
A) In Bihar 72 SC and 30 PHC do not have electricity connection
B) In Arunachal Pradesh 37 SC and 5 PHC do not have electricity connection

7. Now that we know the problem, what is the solution?

Answer: There should be clear guideline for the nodal personnel to integrate data under various NRHM components at the DHC and SHS level.
a) Unique identification number for institutions (UIID), in line with UID, might make the fund flow tracking process easier to operate and monitor. It would provide the authorities a tool to make timely interventions.
b) We should also have a country wide unique accounting and reporting framework. The format should be user friendly and should not vary from state to state. As part of this new format the district level accountant should have the capability to consolidate realtime data presented in Rogi Kalyan Samiti’s (RSK) meetings.

Sruti Bandyopadhyay is a Research Associate with the Accountability Initiative

Health Care Spending Rising Faster Than Economic Growth In Industrialized Countries – OECD Health Data 2010

While India is still struggling to live up to the “Nine is Mine” dream (calling for 9% of GDP to be committed to health and education), according to OECD’s Health Data 2010, in leading industrialized countries, the health care spending is rising faster than economic growth. The study reports:

  • Average health spending in the 31 member OECD counties has increased from 7.8 percent of GDP in 2000 to 9.0 percent in 2008 –averaging around 8.4% of the GDP.
  • During the same period, health spending per person increased by 4.2% a year on average.
  • Governments of most OECD countries shoulder most of the burden of healthcare costs. Public expenditure has increased from an average of 12% of total government spending in 1990 to a record 16% in 2008.
  • United States tops the list, spending 7,538 dollars per person on health care in 2008, more than double the average 3,000 dollars for all OECD countries.

From Outlays to Outcomes- Getting Development from Development Expenditures

In August 2009, AI and the Centre for Development Finance, Institute for Financial Management and Research organised a conference entitled “From Outlays to Outcomes – Getting Development from Development Expenditures” in New Delhi. The papers presented at the conference have been featured in a special issue of India Review (Volume 9 Issue 2 2010). These include a section of guest editor papers, a number of papers discussing accountability in public expenditures in India, and a review essay on decentralization, institutions and accountability.

India and the Failed States Index: 12 Counts of Failure

Foreign Policy and the Fund for Peace have been publishing the Failed States Index since 2005. The 2010 Index uses 90,000 publicly available sources to assess 177 countries and rate them on 12 metrics of state decay—India ranked 87 and received a score of 77.8.

Higher scores on a metric indicate a greater degree of failure. The scores used are from the Fund for Peace publication as there appears to be some inconsistency in the Foreign Policy publication’s score.

No.

Metric

India’s score

1

Mounting demographic pressures

8.3

2

Massive movement of refugees or internally displaced persons, creating complex humanitarian emergencies

4.9

3

Legacy of vengeance-seeking group grievance or group paranoia

7.3

4

Chronic and sustained human flight

6.7

5

Uneven economic development across group lines

8.9

6

Sharp and/ or severe economic decline

5.0

7

Criminalization and/ or delegitimization of the State

5.5

8

Progressive deterioration of public services

7.0

9

Suspension or arbitrary application of the rule of law and widespread violation of human rights

6.0

10

Security apparatus operates as a “State within a State”

7.1

11

Rise of factionalized elites

6.0

12

Intervention of other states or external political actors

5.1

 

Total

77.8

While the most recent analysis of the scores is not yet available, past assessments by the organizations and recent news are useful in deciphering the factors that may have contributed to these scores.

1) The score on the demographic pressure metric is due to high population density relative to food supply and other essential resources in the country, and pressures from skewed population growth that have led to a “youth bulge”.

2) India does not have a major refugee or IDP problem but does have a manageable influx of refugees from Tibet, Afghanistan and Sri Lanka.

3) Group grievance scores are high primarily in Kashmir, as a result of the rise of militant groups, communal violence, and tensions between India and Pakistan. An increasingly violent Maoist insurgency and the rise of Naxalism have also exacerbated grievances.

4) Human flight indicators remain high for India as a significant percentage of the country’s educated population leave tostudy or find jobs elsewhere.

(5) and (6) The Indian economy has rapidly developed and established itself as the world’s second-fastest growing economy. India’s recently updated foreign direct investment policy (2005) has helped further open markets. And India’s significant economic growth (GDP increased by 6.8 % in 2009 despite a global recession) has been inequitable, as a large section of the population lives in poverty.

7) Politicians running campaigns and being elected to office while on trial for criminal charges have undermined state legitimacy. While Indian law prohibits convicted criminals from holding office, nothing prevents them from doing so until they have been convicted. Apart from the growth of crime syndicates linked to government officials, there is endemic corruption and widespread resistance to accountability and transparency—something the recently passed Right to Information Act may improve.

The FfP’s most recent assessment of India’s core state institutions:

8) The quality of public services is severely lacking, especially in rural areas. Nonetheless, government efforts to improve health and education services (such as through the NRHM) have contributed to an improving score on this metric. Significant efforts this year—the Right to Food Act and the Right to Education—may further help.

9) India has a decent human rights record, having recently made concrete steps toward expanding the rights of womenand LGBT populations. However, the state is sometimes accused of preventing human rights organizations from entering Kashmir.

10) The rise of militant groups as well as the power wielded by Kangaroo courts and unofficial governing bodies in rural areas impact performance on this metric. Populations often turn to these bodies to address their grievances due to social custom or a lack of confidence in elected officials.

11) Communal, caste and regional tensions are sometimes reflected in government which has led to the factionalization of elites, but this is often mitigated by India’s functioning democracy.

The quality of public services is a metric that India consistently performs poorly on. Whereas demographic pressures fluctuate with factors like natural disasters that lead to a massive loss of life, the progressive deterioration of public services can perhaps more effectively be tackled through systemic reforms and improved accountability. It’s important to note that India’s score of 7.0 on this metric puts it behind countries like Ghana, Kazakhstan, Namibia that it is more developed than in other categories.

The writer is an intern at the Accountability Initiative.

If Only Khoslaji Had the RTI………..

One of the most difficult things to get in Delhi is land for your house. Even more difficult is figuring out whether the land is legal or illegal, whether the land deal is genuine or if someone is trying to trick you and make you a victim of a land fraud scam. Considering all the hassles, you might just choose to buy a flat, more so a flat which is built and allocated through the government, only to find out that there is no water in the taps, an electric current is running freely all over the place and the whole area just across the street is some kind of a hub for household industries and it just wont let you sleep. Even worse is that you open a shop on what you consider perfectly legal land only to discover after a few years that a huge crane is standing in front of your house, ready to tear apart the shop on the ‘now encroached’ land. For all of this and more, there is now a one pill cure for all the ailments in the form of the Right to Information Act.

A closer look at the RTI applications submitted to the Delhi Development Authority (DDA) reflects the power of information to bring about a more transparent and accountable system of governance. The RTI also helps citizens to overcome bureaucratic hurdles and the associated corruption which have harassed the ‘common man’ for ages. Many of these applications are inquiries about a piece of land and its use, or a flat which a person is either currently using or plans to acquire in the future. There are some which are concerned with general queries about the maintenance of colonies, parks and the associated area in a particular locality. While these cater to the interests of an individual or a group of citizens, there are others which are relevant to the general public as a whole and question the DDA on planning, implementation and malfunctioning of public works. Besides this, there are also questions on corporate houses, various government departments who seek to benefit from the information gained about any kind of prevailing contract, prospective work or just a suspected case of corruption which negatively affects their interests.

The most surprising thing about applications to the DDA is that its pretty evident that a lot of DDA officials are using the RTI to settle intra/inter-departmental issues and raising questions about the general functioning of the DDA. These musings within the DDA often take the shape of settling personal vendettas using RTI. But these cases are an exception, rather than the norm.

The role of RTI in raising awareness and generating public opinion can’t be denied. From the welfare of the poor and the homeless to the banning of sale of narcotic substance, citizens have tried to question the government on many important issues. They have tried to direct government’s attention towards forgotten matters and bring out the flaws in our system of governance. The most important flaws, which courtesy RTI, are out in the public is the tremendous gap between existing policies and their implementation. By focusing on it citizens have certainly helped in improving their lives, the lives of the people around them and most importantly the state of governance. With the increasing awareness amongst citizens about the the value of RTI as a tool, one can picture a more accountable, transparent government in the future.

Alas, only if the fictitious Khoslas of “Khosla Ka Ghosla” fame had been able to use the RTI, they would not have fallen victim to a land extortion racket.

Abhishek is an intern with the Accountability Initiative. He is a graduate from the Tata Institute of Social Sciences, Mumbai.

After the Tsunami: Malaysia’s Transformed Political Landscape in 2004 Continues to Test its Democracy

The documentary Selapas Tsunami (After the Tsunami), assesses the sweeping political changes brought about by the results of the 12th General Election in Malaysia, and discusses the ramifications these changes have had on government accountability and the building of an inclusive democracy. The film raises powerful arguments for decentralization—the benefits of greater regulation at the local level, the friction between federal power and local control–and highlights the inevitable backlash from an old guard that is uncomfortable with the transparent new model of democracy.