Rebooting India: Realizing a Billion Aspirations (20 page)

At a time when the government aims to make India a global manufacturing hub through its ‘Make in India’ programme, the combination of electronic taxation and toll systems can be a powerful launching pad for such initiatives. Whether it’s improving traffic in cities or creating an efficient road transport network across the country,
simply building more flyovers or more highways won’t solve the problem. Creating intelligent systems that use technology to flatten out the biggest bumps in road transport, and then applying these systems in innovative ways to solve other transport-related issues is the only way in which India’s investments in infrastructure development can bear fruit. We’ve already seen the positive economic impact of bringing villages into a national road network; imagine the possibilities of a system that could connect every corner of the country in one fell swoop.

Just as you cannot tell whether a fish swimming under water is drinking water or not, so also you cannot tell whether government servants employed in government work are taking money or not.

—
Kautilya
, Arthashastra

SOCIAL WELFARE RECIPIENTS make for unlikely owners of luxury cars. Yet, an investigation by the Brazilian government’s Public Spending Observatory initially indicated that many beneficiaries of the Bolsa Familia scheme were also listed as owners of high-end vehicles in the federal car registry. With a little bit of digging, this unusual statistic was found to be the result of a tax dodge; the real, and considerably wealthier, owners of these vehicles were registering them under the names of Bolsa Familia recipients to avoid paying taxes.
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We’ve already read about Sanjay Sahni, the Muzaffarpur electrician who uncovered instances of fraud in the government’s rural employment guarantee scheme. All he did was to find an official list of beneficiaries from his village on the internet; some of those on the list hadn’t worked for the scheme at all, and others had not received a full payment. Instead, the money was going to middlemen and village officials. Sahni was able to mount a successful campaign so that his fellow villagers could get their rightful dues.

Let’s say you are a taxpayer who happens to be curious about how your tax money is being spent. If you live in the United Kingdom, you can go online, enter your annual income and find out not only how much tax you pay yearly, but how that tax money is being used every day—whether it’s in running the government, funding medical research or in welfare programmes for the elderly and disabled.
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As the examples above illustrate, citizens have the right to know where their governments are spending their money, while governments themselves can use a better understanding of their finances to weed out fraud and get more bang for their buck. The idea of transparency in government expenditure is gaining traction around the world, and a coalition of nations has now come together under the umbrella of the Open Government Partnership (OGP), a global initiative launched in 2011.
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The OGP engages with governments to promote transparency and citizen empowerment while eliminating corruption, and advocates the use of technology to improve governance.

Many member nations have launched federal transparency portals to report on government finances and expenditure, in keeping with the principles of the OGP. Brazil’s transparency portal, for example, has provided private citizens with an unprecedented level of access to keep tabs on the flow of government money in a country as riven with corruption as our own. The Brazilian government itself routinely analyses data from the portal and other internal databases to monitor spending. Journalists use the portal to uncover individual instances of wrongdoing, as in the case of a minister who inappropriately made the government foot the bill for his personal expenses. In an example of how such open platforms can be further leveraged, Brazilian programmers have created a website that takes information from the portal and presents it in a simplified format, making it easy for users to understand the details of public spending in such areas as education and transportation. Other countries, such as the US and the UK, have also created large online repositories for the government’s financial data.

The value of a transparency portal in streamlining India’s government expenditure is unquestionable. As an illustration, consider the fact that well over a thousand social security schemes are operational in the country today, from the centre down to the state level. Yet there is no single, uniform and user-friendly system that provides a clear outline of exactly how much money was allocated to each scheme and on what it was spent. The information you can find tends to be heavily outlay-driven, giving only an overall picture of the monies allotted to a specific programme; there is no detailed breakdown of expenses, there is no link to a set of specific outcomes; it is quite likely that any available data is a few years out of date and, most crucially, no data is available below the district level, in effect cutting off the flow of information just as it reaches the individual citizen. Much of this material also tends to be scattered across multiple government reports, making it even harder to get an integrated picture of government spending across the country.

Without up-to-date information on fund utilization and outcomes, it becomes difficult for the administration to evaluate the effectiveness of its public-spending programmes and to decide upon a future course of action. In the absence of such data analysis, we end up judging programmes on outlays rather than on outcomes. Lacking a mechanism to track the disbursement of funds to implementing agencies, we are left with no way of measuring their performance. Agencies themselves suffer when funds do not reach them in a timely fashion, either due to lack of information about when money enters the system or because of diversion. Funds also tend to float unused in the system, increasing inefficiency and waste. Since the flow of information is top-down, delays are inevitable, further muddying the waters. In the absence of a central system, agencies tend to implement their own mechanisms for handling fund fl ow and monitoring, resulting in a slew of individual systems that are incapable of talking to one another. As Yamini Aiyar and T.R. Raghunandan from the Accountability Initiative put it, ‘One of the necessary conditions
for ensuring outcomes against public spending is that expenditure be aligned with needs and priorities on the ground. But the late arrival of money coupled with the Indian bureaucracy’s passion for paperwork (in this instance, filling up utilization certificates), makes for a deadly cocktail of wasted expenditure.’
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In India, we already have several institutions working with publicly available data, performing research and compiling statistics in a user-friendly format for public consumption. These include the data-driven journalism portal IndiaSpend, private research initiatives like the Accountability Initiative and the Centre for the Monitoring of Indian Economy and the publicly funded National Institute of Public Finance and Policy. Much like the Brazilian model, the government should focus on releasing all its raw data related to expenditure, and journalists, researchers and public interest groups like the ones we list above can analyse this material to uncover relevant trends and provide public updates.

In 2011, the ministry of finance set up the Technology Advisory Group for Unique Projects (TAGUP) to study how technology could be incorporated in five large-scale financial sector projects.
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Given the urgent need for a streamlined expenditure management system in the country and the growing success that federal transparency portals—the US government’s data.gov initiative is a notable example—have enjoyed in other countries, one of the five projects was an Expenditure Information Network (EIN). Similar in spirit to a federal transparency portal, the EIN will allow a citizen to trace how their tax money is being spent from the centre all the way down to the local level. The Right to Information Act (2005) already mandates that every public authority must voluntarily digitize all appropriate records and enter them into a nationwide system for easy access; they must also voluntarily release certain specific types of information related to their structure, function and performance, making it freely available to citizens without the need for a formal request to be filed.
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The EIN
is therefore a concrete implementation of the spirit of information sharing espoused by the RTI Act.

The EIN has been envisioned as a single integrated network that will function as a transparent accounting and auditing system for government expenditure at all levels, from the centre to the district and beyond. The EIN will allow for the monitoring of various government schemes both in terms of funds utilized and outcomes generated, information that can also be used to evaluate the implementing agencies. The effectiveness or lack thereof of a particular scheme can then be used to drive informed policy decisions. Funds can be disbursed quickly and efficiently, and their usage can be tracked in near-real time and monitored till the last mile. This network also lends itself to the creation of a federal transparency portal which will empower public scrutiny of government spending.

Of particular note is that the EIN was also envisioned as a thin solution, a technology platform that brings together all stakeholders without disrupting existing systems and controls. Agencies will retain control over activities like approvals and sanctions, and will be granted the freedom to integrate the EIN platform into their existing programmes at their own pace. Those expected to become part of this network include administrative policymakers, government programme divisions within specific ministries, central monitoring agencies such as the Controller General of Accounts (CGA), state-, district- and village-level administrators, the agencies who actually implement various schemes on the ground, beneficiaries, experts, and of course, the general public.

Much like the set-up of the GSTN, the best organizational structure for implementing the EIN would also take the form of a National Information Utility (NIU). The NIU structure will also be better suited to partner with government bodies across various administrative levels. This is a critical requirement given that other expenditure monitoring agencies, such as the CGA, operate only at the central level. Since much of the expenditure happens at the grassroots where the writ of the CGA does not extend, an EIN must necessarily be housed in a neutral body which
can conduct business with central-, state-, district- and even village-level administrations.

The first step to building an EIN ecosystem is to register all players on a common platform. The details of every programme will be captured on this platform, starting with the programme definition. Fund allocations, fund flow and utilization will be tracked through the system, and feedback can be solicited as needed. From the point government money enters the system till the point it actually reaches the citizen on the ground, every step in the process is transparent and traceable.

In the existing set-up, information flows only one way through the system, from the time it enters at the top. The people on the ground have little to no way of providing feedback to the system, making real-time monitoring virtually impossible. We envision the EIN as an entity set up along the lines of a hub, with every participating entity being a spoke. Unlike a linear model, the hub-and-spoke system allows for the free flow of information among entities, whether it’s the central government or a gram panchayat. Delays and blocks can be flagged as soon as they arise; since every player in the system is aware of the problem, the impetus towards a speedy resolution is all the greater. The hub-and-spoke model also allows for asynchronous rollout, as we discussed in the case of Aadhaar, where different government bodies come on board at their own pace.

Let’s explore some of the problems with government expenditure by turning the spotlight on education. How does a government-run primary school in India spend its money? Which is a higher priority—buying chalk, repairing toilets and drinking water facilities for students, or whitewashing the school walls? The answers to these and other questions can be found in the 2012 Planning, Allocations and Expenditures, Institutions: Studies in Accountability (PAISA) report, ‘Do Schools Get Their Money?’, produced under the aegis of the Accountability Initiative, a research organization;
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the data from this
report, in our opinion, make a compelling argument for the role an EIN could play in ensuring that government spending actually meets its intended target. PAISA, which is India’s only citizen-led effort at the national level to track government spending on education, surveyed nearly 15,000 government-run elementary schools across the nation, and asked some simple questions, such as: ‘Do you get the money allocated to you from the government, and if you do, when and how much of it do you get?’

Government schools get money under the Sarva Shiksha Abhiyan (SSA), meant to promote universal elementary education, and this is further divided into subcategories for specific use—to maintain school infrastructure, for operational and administrative costs, and for obtaining instructional aids for the classroom. The survey found that of the three, the second category was the only one where every government school could be sure of receiving the allocated sum in its bank account—and that’s only 2 per cent of the total money the SSA scheme disburses. Schools had little control when it came to deciding how to spend their funds, since these decisions are controlled at the central level by the state government. So, as it happened in Himachal Pradesh in 2011, if the state government orders all the schools in one particular district to build boundary walls, they must comply, regardless of whether this is a fruitful use of their limited funds or not. Similarly, if the chief minister decides to pay a visit, schools are forced to whitewash their walls, or buy cupboards and other furniture that may not be their topmost priority.

Halfway through the financial year, the survey found that only about 50 per cent of schools had received their grant money; the official explanation for this delay included limited access to core banking facilities, banks not transferring funds on time, wrong bank account numbers, and confusion around the names of the grants. Here is an immediate problem that an EIN could fix. An electronic system for managing fund flows would ensure that all schools received their money on time.

Far more schools—67 per cent, to be exact—spent their money on whitewashing their walls rather than repairing toilets (36 per cent) or
on drinking water facilities (44 per cent). Does this mean that having pristine walls is more important to schools than providing usable toilets and clean water to their students? Not really; it’s just that a whitewashed wall is an easy, tangible outcome to point to when funds have to be spent quickly. What this also indicates is that expenditures are driven more by the diktats of the government and don’t always connect with the need on the ground. Here is another area where an EIN could bring in much-needed change. By simply being able to track in real time where schools are spending their money, the administration can immediately identify and hopefully eliminate mismatches like those above so that schools are given funds to address what they genuinely need. By bringing government, schools, banks and the public onto the same platform, an EIN can bring about a shift in the current mindset that prioritizes outlays over outcomes. As the report puts it, ‘Unless expenditures are targeted towards efforts at translating schooling into learning, the increasing public expenditure on elementary education will be wasted.’