In my previous column, I talked about how Budget 2010 represents an opportunity to raise money for social welfare through creative means such as targeted disinvestment, establishment of special economic zones, enterprise investment schemes and increased tax collections through tightening of loopholes.
However, history has shown us that efficiently deploying these additional resources to their intended purpose is as, if not more, important than raising them in the first place. Thus, the government must also use Budget 2010 to establish a framework for public governance that assures effective outcomes against intended plans.
By replicating mechanisms adopted by corporations, the government too can ensure that there is no discrepancy between intent and action, and promises are lived up to. Some of the proven measures they could include in Budget 2009-10 are:
1. Creating a common accounting platform for value management: Accelerate the move to switch government accounting norms over from the current cash-basis single entry accounting system to an accrual-basis double entry system of accounting with clear recording of debits and credits to three months. This will enable the creation of a framework of multiple ‘corporate-type’ entities with individual assets, liabilities and surpluses and allow for clear measurement of the value that each of these entities create for their stakeholders.
2. Establishing outcome-focused targets with clear timelines: Link all expenditures allocations to tangible and measurable outcomes and establish clear timelines for the achievement of these outcomes. Doing so will ensure that they are measuring value creation, as opposed to resource allocation, and will establish clear timeframes in which to generate results.
3. Requiring detailed action plans: Charge every ministry with devising granular, step-by-step action plans to meet their outcome-based targets. Creating these plans and cascading them down will not only clarify individual roles and responsibilities, but allow them to foresee potential risks and institute mitigation measures.
4. Setting up regular variance reviews and correction plans: Require monthly monitoring of progress against these action plans and a review of deviations from expected results. This would allow for early identification of variances and, more importantly, allow for timely corrective action.
5. Creating a Prime Minister’s dashboard: Create a Prime Ministerial dashboard that includes individual value-creation targets for each ministry as well progress against targets. This can be populated monthly with data sourced through the above described process after being reviewed by the Cabinet.
Incorporating these measures into Budget 2010 will ensure that the government not only puts into place measures for achievement of current targets, but also lays the foundation for an established framework for value creation.
Prime Minister Manmohan Singh’s government has already taken steps to strengthen governance policies. Its continued focus on this area was evidenced by the concrete measures the government proposes to initiate in this area across the next 100 days.
Several proposed measures focus on increasing transparency and accountability. Some of these measures include committing to publish annual reports on key areas such as employment and infrastructure, requiring ministers to publicly detail progress on major initiatives through the media on a quarterly basis, and a public data policy to disclose all information covering non-strategic areas.
These steps will ensure that there is a clear and transparent flow of information from the people executing on initiatives to their supervisors and stakeholders.
Other newly proposed measures focus on the principle of independent oversight and external monitoring and control mechanisms. These include the creation of an independent evaluation office as well as a delivery monitoring unit at the PMO.
These groups will ensure that key projects are closely tracked at every level and that there is public accountability for their execution. The next goal should be to establishing similar oversight and monitoring systems across all levels of government down to the gram panchayat that include all stakeholders into the evaluation process and encourage principle-based regulation and self governance.
Budget 2009-10 is an opportunity to think about and introduce systems that ensure the vision of the government gets translated into reality and economic governance becomes transparent and accountable.