It might help the disgruntled middle-class Indian, who has recently discovered his remarkable aversion for corruption, to learn of a covert form of corruption: doing nothing. The money earmarked for health, education and other essential services — ‘plan funds’ — is not fully spent for a given year even in the face of India’s abysmal record on human development indicators.
To begin with, instead of recounting the legion of political and bureaucratic failures, let’s locate how it may be possible to effectively spend the plan funds that concern key developmental goals.
If funds and functions are devolved to the local level, better outcomes are possible. We do have a Panchayati Raj Act that stipulates 29 key functions, funds and functionaries to directly accrue to the panchayats. But that is a paper tiger at best.
Decentralisation has been little more than a placebo, especially if one considers the parallel narrative of deepening centralisation since the Act came into force in 1993. Therein lies the problem. And it’s all about power.
The plan funds, which cover basic social services, have been increasingly concentrated in what is called CSS (centrally-sponsored schemes), whose authority lies with central ministries. It is from the CSS that money is channelled to state departments and bodies that lie above the state, thereby bypassing states as well as panchayats.
The CSS has come to constitute two-thirds of the central financial assistance from about one-third 20 years ago. In 2009-10, states received more than R1 lakh crore for CSS, mostly for subjects like heath and education, which fall under the state list.
Politically, the CSS are a vote cow. The ruling party in the state is often indifferent and, in cases, hostile to the schemes’ success. It sees such schemes providing populist mileage for the Centre, in many cases representing the competing party in the state.
The Centre also stands culpable of controlling these for electoral dividends — more so with the significant emergence of regional parties in recent years.
Numbering between 250 and 300, the CSS are unnecessary as well as unmanageable — given that 80% of funds are concentrated in only ten schemes with the National Rural Employment Guarantee Scheme (NREGS), the National Rural Health Mission (NRHM), the Sarva Shiksha Abhiyan (SSA) and the Pradhan Mantri Gram Sadak Yojana (PMGSY) being the key ones.
For a given scheme, the states are expected to contribute with a matching (usually 25%) share. Often, states not releasing their share on time is cited as the reason for non-execution of plans. Almost as a rule, optimal utilisation occurs in the last quarter of the year — with obverse failures.
The bureaucracy controls the execution and the budget with eventual line control by the Centre. Centralisation and bureaucratisation, then, are the key culprits behind unspent funds.
But the CSS are here to stay. The best way forward for effective expenditures is by making local bodies the spending authority. The CSS should be cut down on numbers and converge with local plans with money reaching directly to panchayats, bypassing the bureaucracy, which has the key operational control and is likely to condemn the proposal.
Communities are not homogenous. Sharp divisions of caste, class and gender exist. Yet, devolution is a better choice. Even ‘devolution of corruption’ is a better option.
Being closer to people, conflicts will pave the way for capabilities faster than any notion of external, top-down ‘governed’ assistance. Even for the privileged classes, it is far easier to hold a ward councillor accountable than a cabinet minister.
Having said that, such a policy shift will require political will.