India spells out its poverty reduction strategy in the Five Year Plans (FYPs), whereas Bangladesh, Nepal, Pakistan, and Sri Lanka have Poverty Reduction Strategy Papers (PRSPs) providing a focused view on the agenda towards poverty. However, the FYPs and PRSPs of all five governments, whatever may be the effort and sophistication invested in the exercise, essentially remain statements of intent, writes Rehman Sobhan in ‘Challenging the Injustice of Poverty: Agendas for inclusive development in South Asia’ ( >www.sagepublications.com ).
Since, at the end of the day, all these statements have to be operationalised through the annual budget which obligates public revenues for specific projects and programmes targeted to reduce poverty, the author begins by examining the budget-making process as a way to realistically assess the revealed intentions of incumbent governments towards poverty reduction.
Indicators of priorities
The budget establishes the expenditure priorities of the government, identifies the constituencies which will be targeted by these expenditures and the fiscal policy instruments which would be instrumental in enabling it to meet its expenditure and policy goals, reasons Sobhan.
He identifies three indicators of government’s priorities in budget-making, as follows: the constituencies consulted by the Finance Minister (FM) while preparing the budget; the actual transparency of the document in specifying the allocative preferences of the government; and the mechanisms of accountability which ensure fidelity to the priorities proclaimed in the budget.
What can be distressing to know from the book is that most FMs in South Asia tend to be narrow in their consultative process, far from transparent in the construction of the budget, and weakly accountable in the expenditure stages.
Consultative process
FMs of South Asia remain relatively unconstrained in preparing their annual budget beyond their own perception of a need to consult constituencies which they deem politically important, the author observes. “As a consequence, in most countries of the region, FMs tend to prioritise particular political constituencies such as regional governments, parliamentarians, key business constituencies, professional bodies and occasionally some civil society groups.”
In India, as in other South Asian countries, the voice of the private sector remains largely articulated by the upper ranks of the business community through the salience of industry bodies (such as CII and FICCI) in the consultation process, notes Sobhan. He concedes that this preference for giving heed to elite opinion in the design of policy has not precluded episodic exercises of consultations with the less privileged groups.
Civil societies
A noteworthy feature of India, according to the author, is ‘the voice and role of civil society in speaking directly for the excluded or in articulating their specific concerns to top policy makers.’ Civil society activism, exercised through the courts, has been occasionally reinforced with attempts by such groups or individuals within them to reach out to the political leadership and influence their thinking on policy issues, he informs.
An example cited in this context is about how Sonia Gandhi, ‘draws upon an advisory group which includes some very articulate voices from civil societies such as Aruna Roy and Jean Dreze, who have played an active role in the PIL (public interest litigation) which culminated in the legislation of the compulsory midday meal and employment guarantee schemes.’
Yet, all such interventions by civil societies in India remain ad hoc in nature, laments Sobhan. In his view, what remains surprising, in spite of six decades of parliamentary democracy, is the absence of any institutionalised mechanism to reach out to the excluded groups, to take account of their more endemic deprivations rather than to address specific crises which periodically escalate their struggle for survival into a national political problem.
Open Budget Index
It should be of interest to know from the book that the International Budget Partnership (IBP) has prepared the Open Budget Index (OBI), which awards score to governments around the world on the breadth of their consultation process and the depth of accountability to the citizens. India’s OBI score for 2008 was 60, behind Sri Lanka’s, at 64, though ahead of the scores of Nepal (43), Bangladesh (42), and Pakistan (38).
Countries with a score of 81-100 are those providing extensive information in their budget documents; a score of 61-80 indicates significant information, 41-60 means ‘some information,’ 21-40 stands for ‘minimal information,’ and at the bottom of the heap, zero to 20 indicates scant or no information.
While France, New Zealand, South Africa, the UK, and the US rank high in the score, Sri Lanka gets mentioned as the only country in the region where the government releases a pre-budget statement prior to the actual budget proposal.
Opacity of budgetary system
The author does not find it surprising that public expenditures on poverty alleviation are opaque in the region, given the weak transparency demonstrated in the budget-making process. “No government has designed a budget which categorically spells out, with complete transparency, the projects and resources which are specifically targeted to the poor. Nor does the budget set specific targets for poverty reduction or employment generation and relate these to specific projects, programmes or heads of expenditure.”
Rues Sobhan that the opacity of such a budgetary system makes it difficult, if not impossible, for any government to be held accountable for its record in poverty reduction or in meeting its proclaimed goals through specific public expenditures. Which explains, he says, the absence of any record of any debate in the state/provincial or national legislatures where parliamentarians have been able to use budget documents to take the FM to task on, say, the effectiveness of public expenditure in any fiscal year for actually reducing poverty in general or through a particular programme.
Broad brush expenditure heads
Expenditures on projects targeted for poverty reduction are usually allocated under broad spectrum budget heads such as the social sector or safety net or transfer payments, the author finds. He adds that all public expenditures under these budget heads are traditionally classified as being directed towards poverty alleviation. The grim truth, though, is that “targeting under these broad brush expenditure heads conceals the actual share of resources which would end up being of direct service to the excluded.”
Instructively, a World Bank study shows that only 34 per cent of the public expenditure on education had a directly beneficial impact on the excluded, in Bangladesh. “The poorest quintile of the population benefited from only 8 per cent while the richest 20 per cent benefited from 49 per cent of public expenditure subsidies on curative health care. In outpatient care, the poorest quintile received 11 per cent of the subsidies while the richest 20 per cent received 32 per cent (Narayan and Zaman 2009)…”
A book that makes a call for inclusive budgeting -- a call that is too fervent to ignore.
