Two GovTech fixes to ensure high-quality public services

Digital tools can automate the workflows thereby smoothening fund flow and reducing the discretion of officials. We discuss two GovTech solutions: Smart Payments (SP) and Just-in-Time Funding (JTF), which can solve the issue of unpaid dues and unspent balances.

In the last few years, GovTech (technology for rolling out State reforms) has improved service delivery, simplified tasks of officials and made them accountable, and ensured that politicians have better visibility of data on the reform programmes.

JTF and Smart Payment can ensure better traceability of funds, higher accountability, frictionless expenditure, and lesser administrative burden on officials and resolve the twin problems of unpaid dues and unspent balances.

One of the key examples of GovTech is Aadhaar, which has transformed the lives of all three stakeholders: Citizens, bureaucrats, and political leaders. For citizens, it provides a foundational identity to access banking, telecommunication and welfare schemes. Officials use Aadhaar for targeted delivery of public and welfare goods. For the political executive, Aadhaar gives them the confidence to roll out projects that reflect their development visions.

Government spending is critical for development. India’s architecture of public spending has two problems: Unspent balances and unpaid dues. The issue of unspent balances is borne out of inefficiencies in the processes associated with fund flows. On the other hand, unpaid dues are a default by the government on its payment commitments, which is mostly borne out of discretion that officials have on payment release (mostly non-value adding).

Digital tools can automate the workflows thereby smoothening fund flow and reducing the discretion of officials. We discuss two GovTech solutions: Smart Payments (SP) and Just-in-Time Funding (JTF), which can solve the issue of unpaid dues and unspent balances.

The payment cycle of any typical government scheme comprises compliance checks, entitlement calculations, and final payment approvals. These are manual interventions, hobbled by primitive MIS. Also, there is also an element of discretion in the decision-making process. As a result, there are delays in payments, opacity in the process, price escalations, and, finally, citizens get bad quality public goods.

A smart payment solution can mitigate or minimise many of these challenges. By reducing the need for manual interventions, such solutions can enhance the degree of observability in the system while ensuring rules-based payment processing to facilitate near autonomous or fully autonomous transactions.

This solution is being adopted by the National Rural Infrastructure Development Agency (under the ministry of rural development) for the Pradhan Mantri Gram Sadak Yojana and the Odisha housing and urban development department for the Mukhyamantri Karma Tatpara Abhiyan. As part of the solution, the progress of the work will be captured only once at the site (e-measurements), and the compliances and entitlements will be calculated by the system (smart payment engine), leading to the processing of payments as defined in the contract.

There is also a time lag between the fund’s transfer and its utilisation in the current system, leading to funds in bank accounts (of implementation agencies) sitting idle for long before they are spent. Moreover, the finance department and the respective line departments lack visibility of the funds parked outside the consolidated funds.

JTF can solve this issue by ensuring that funds are disbursed directly from the consolidated funds to the final beneficiary at the time of the actual expenditure. Also, instead of pushing funds to the implementation agency’s account, they will be pulled by the implementation agencies when they incur the expenses.

Odisha is piloting this solution for the grant-in-aid scheme for special schools. As part of the solution, instead of an upfront transfer of money to the non-governmental organisations managing the special schools, there will be approved spending limits. The expenditures will be processed autonomously, without any manual intervention, and money will be pulled directly from the consolidated funds of the state.

JTF and Smart Payment can ensure better traceability of funds, higher accountability, frictionless expenditure, and lesser administrative burden on officials and resolve the twin problems of unpaid dues and unspent balances.

Although there is a long road ahead, digital technologies are a potential ally in this journey of ensuring high quality public services to all citizens.

Anant Jayant Natu and Kunjbihari Daga are associate partners, MicroSave Consulting

The views expressed are personal