STRENGTHENING DECENTRALISED ACCOUNTABILITY

OF CENTRALLY SPONSORED SCHEMES

Centrally Sponsored Schemes

Financial outlays 11th. Plan: 2.35% of GDP Union Government provide finance Implementation by State Governments, District,

Blocks and Panchayats Essential to ensure that outcome of CSS reaches

intended beneficiary Need for decentralized accountability of grass-root

public authorities to the beneficiaries of the schemes

Administrative issues

Defective delivery system : serious problem and limitation.

Late Shri Rajiv Gandhi had stated that hardly 15 paisa of every rupee spent reaching the targeted beneficiary.

All expenditure incurred on social development schemes, does not serve the intended purpose.

Need for effective measures to avoid waste of public money and containing corruption.

Inadequacy of delivery system

Current monitoring and audit unable to prevent waste of public money.

Need for strengthening institutional mechanism for converting financial outlay into outcomes, by improving delivery system.

Decentralized democratic control by grass-root public authorities is essential for improving delivery system.

Factors contributing to failure

Poor planning: focus on inputs rather than outcomes; Unrealistic targets Top‐down process Planning with limited attention to varied local needs; Limited citizen participation Involvement of multiple levels of government with

overlapping roles and responsibilities and varied capacity in program implementation

Factors contributing to failure (continued)

Poor expenditure management leading to unpredictable fund flows,

Weak monitoring and oversight: limited information on implementation processes

Poor incentives within the system to track progress; Limited oversight by citizens. Solutions need to be identified within a framework

that enables accountability at multiple levels – Accountability of the state to citizens,– Accountability within the state apparatus

Major weaknesses in public expenditure management

Weak planning capacity, Irregular fund flow, Low absorptive capacity, Ineffective monitoring and feedback on poor delivery

system, Lack of mid-course corrections to rectify defects in

implementation process. Top‐down process not reflective of local needs, Lack of accountability to citizens.

Flagship programs

Consolidation of the existing flagship programmes for employment, education, health, rural infrastructure, urban renewal

Introduction of new flagship programmes for food security and skill development.

More than Rs.50,000 crores that were committed to these flagship programs in the previous government are lying unutilized.

Governance reform for strengthening transparency and accountability in public planning and expenditure processes are critical.

Transparency: disclosure and dissemination of information

Disclosure and dissemination of information section 4 of RTI Act by grass-root public authorities.

Beneficiaries should be enabled to perform social audit, by providing information and corrective administrative actions taken on the basis of feedback from beneficiaries of CSS.

Institutional mechanism to support and promote decentralized democratic control, for improving delivery system.

Innovative measures needed

Disclosure and dissemination of information to the beneficiary which enable them to monitor, audit and criticize for improving the delivery system.

Holding Government and its instrumentalities accountable to the governed.

Paramountcy of this democratic ideal is over-riding factor in Preamble of RTI Act

Accountability for Outcomes NREGASocial Audit in Andhra Pradesh

Management Information System (MIS) for NREGA for facilitating social audits.

Software to record all transactions in NREGA including work done and the wages paid, down to the household level. Proactive disclosure of information by I.T.

Data verified by systematic social audit in every village by educated trained persons.

Audit findings presented in Jan Sunvai at Block level and used by Government for corrective actions.

Social Audit

Governments have spent crores of rupees on poverty alleviation. Yet stark poverty and inequalities remain due to the fact that intended benefits of the programs do not reach the targeted clientele i.e. the poor.

There is dilution and deviation in the implementation of the programs. And more often than not the targeted poor are not aware of either the objectives or elements of the program.

While streamlining of service delivery systems and ensuring transparency and accountability are made an intrinsic part of governance are desirable, it is equally important that the poor for whom the programs are implemented are aware of their rights and entitlements and participate in the program design, decision making processes and monitoring and evaluation of the program.

Relevance and Criticality of Social Audit

Concept of Social Audit has become important, where in the community audits the program and its implementation.

Coupled with the Right to Information Act, Social Audits have tremendous potential in – Bringing out and ultimately reducing corruption,

malpractices and deviations – Cleaning up the implementation of the program – Improving delivery system

How is the Social Audits of NREGA conducted ?

Filing of Applications under the RTI Identification and training the Village Social Auditors Door to door verification of the muster roll Awareness building of the rights and entitlements of the wage

seekers Public meeting at the mandal level where social audit reports

are read out in the presence of the public, people’s representatives, the concerned EGS functionaries and senior officers of the Government.

Corrective action is taken in the Social Audit meeting itself by the Project Director and the senior officials present

Highlights of the Social Audit process

Recoveries from the people who have misappropriated money in the EGS through the Social Audit process.

Termination of EGS functionaries who have been found to have indulged in misappropriation and embezzlement of money from the EGS.

Training of MPDO’s in the Social Audit process, where they have been part of the SA teams and actually participated in the entire process of verification and then read out their reports in the Public Meeting.

Training of Sarpanches in the Social Audit process, so that they understand the modalities and awareness is created among them regarding the EGS.

NON-GOVERNMENT INITIATIVES

Several dynamic non-government initiatives have emerged over the years, which highlight the need for effective accountability at the grass-root level.

Social Audit conducted by MKSS Social audit of NREGA in Andhra Pradesh Success stories need to be replicated, through out

India. Community involvement to tackle enormous waste of public money and rampant corruption in social development schemes

Over 3.34 million NGOs.

How can citizens help?

Right To Information Act 2005 has empowered each one of us to make effective contribution as a Citizen. We can promote Government "of the people, for the people, by the people" by more active interest in public issues.

Citizens participation is essential for sustained reforms and RTI Act 2005 enables our effective involvement in demanding improvements.

Citizen's struggle for promoting transparency and accountability in Governance is a matter of continuous sustained effort.

Structural deficiencies of CSS

There is strong case for scrapping CSS, but there is trend of continuous increase and further increase is likely.

Centrally sponsored schemes have emerged from ability of Central Government to raise financial resources to fund them, including excessive deficit financing and borrowing.

Schemes initiated by Central Ministries cannot be satisfactorily monitored by them, as the implementation process is highly decentralized.

Central Government and State Government seem to be more interested in centralized controls instead of effective decentralization to self-governing local bodies.

Cnanges needed in CSS

– Transparency– Participation– Consultation and Consent – Accountability– Redressal

Resistance to disclosure and dissemination of information

Resistance to effective accountability by public authorities, at all levels.

Section 4 of RTI Act has not been implemented in letter and spirit.

Authorities prefer to avoid disclosure of their administrative failures.

Institutionalized corruption can not survive in transparent environment.

Need for changes

Critical financial and operational information should be disseminated to the beneficiaries, who are in the best position to assess whether schemes serve intended purpose.

Information disseminated under Section 4 of RTI Act should enable the beneficiaries to effectively monitor.

Social audit by beneficiaries can supplement administrative monitoring and controls,

Centralized monitoring focus on compilation of statistics to show progress and performance

Audit comments

CSS faces sharp criticism by C&AG. There is no evaluation of delivery. Physical and financial performance is routinely over-

stated. There are no accountability provisions that can

result in independent verification of figures quoted by the Government.

Efficacy is judged by expenditure, usually bunched around the end of the financial year. It is obvious that this money does not reach target beneficiaries. Where is it going?

Improvements needed in CSS

Planning Commission seems to think reduction in multiplicity will solve the problem.

Limitations of budgetary and accounting systems. States would prefer untied grants, which would be

spent on salary, wages and pensions Untied grants at the village level are more

desirable, for meeting local requirement of socio-economic development.

Democratic decentralisation

Article 243G /243G of the Constitution of India on "powers authority and responsibilities" of Panchayats and Municipalities, by devolution of power by State Governments.

The local bodies are expected to function as "institutions of self-government."

Local bodies are dependant of grants from Central and State Governments, instead of functioning as a financially viable self-governing bodies

Outcome Budget

Finance Minister while presenting the Outcome Budget of 2005-06 announced that: “I must caution that outlays do not necessarily mean outcomes. The Prime Minister has repeatedly emphasized the quality of implementation and enhances the efficiency and accountability of delivery mechanism. During the course of the year, together with the Planning Commission, we will put in place a mechanism   to measure the development outcome of all major programs."

Outcome Budget is the latest innovation in financial administration;

Performance Budget and Zero Based Budget were earlier similar initiatives.

Outcome Budget as a performance measurement tool

Better service delivery and decision-making; Evaluating programmed performance and results; Communicating programme goals; Improving programme effectiveness. Measures the development outcomes of all

government programmes. Outcome Budget is also aimed at changing the

outlook of the government officials.

Outcome Budget as a performance measurement tool (Continued)

Indicate physical dimensions of the financial budget of a Ministry, indicating actual physical performance in the preceding year, performance in the first nine months up to December of the current year and the targeted performance of the ensuing year.

Brief introductory note on the organization and function of the Ministry, list of major programmes/ schemes implemented  by the ministry, its mandate goal and policy framework, budget estimates, scheme-wise analysis of physical performance and linkage between financial outlays and outcome

It has a review containing overall trends in expenditure vis-à-vis budget estimates in recent years. 

Outcome Budget is presented to Parliament.

Outcome Budget as a performance measurement tool (Continued)

The purpose of Outcome Budget is to make government more result-oriented

It is the basis for monitoring and evaluation.  Has Outcome Budget resulted in desired outcome? Is it only an instrument of administrative control

over subordinate offices? Does it enhance public accountability of all

echelons of administrative hierarchy?

Critique of budget reforms

Outcome Budget was launched as administrative measures to improve the outcome from public expenditure.

Annual Financial Statements envisaged in Articles 112 and 202 of the Constitution of India, has been gradually improved.

Budgetary reforms have also been adopted by State Government and are the basis of monitoring and evaluation of development schemes.

Further refinement is needed if Outcome Budget is to be an effective instrument of public accountability. Disclosure and dissemination of financial and operational data to the citizens is envisaged in Section 4 of the RTI Act.

Such information flow can result in direct accountability of grass root public authority to the beneficiaries.

Limitation of Outcome Budget

It has emerged as an instrument of centralized administrative control.

Each ministry/ department is concerned with fulfillment of targets set in the Outcome Budget. There is no independent mechanism to verify whether the goals and targets set by each ministry / department have been fulfilled.

The information flow on expenditure and outcomes from villages, through Blocks / District / States enables the Ministry to report on achievement of budget targets.

“Outcome Budget” as an instrument of public accountability

Information flow from subordinate offices to higher administrative echelon does not result in public accountability.

Budget process should leads to public accountability of grass root authorities.

Section 4(xi) of RTI Act requires publication of “the budget allocated to each agency, indicating particulars of all plans, proposed expenditure and reports on disbursements made.”

This provision is not implemented by all grass-root public authorities. Basic changes are needed in improving quality of disclosure and dissemination of “Outcome Budget” of grass-root public authorities.

Why Outcome Budget does not result in improved outcomes?

– System of annual budgeting leading to lapse of money at the end of fiscal year, results in rush of expenditure in the month of March and consequential waste of public money.

– Centralized control of the Finance Ministry and lack of flexibility to grass-root public authorities to make optimum utilization of money by using their best judgment.

– Line item budgeting, which implies that expenditure limits for every item is fixed. This gives no flexibility to a particular department or field outfit to spend money as per their priority.

– Administrative ministries have been given very limited powers to re-appropriate funds from one head to another.

SOCIAL AUDIT OF NREGA: (REPLICABLE EXAMPLE)

National Rural Employment Guarantee Act 2005 gives central role to social audit as a means of continuous public vigilance.

Social audit is envisaged as a continuous process of public vigilance and verification.

NREGA has identified "Vulnerabilities" for each stage and suggested possible steps to prevent them.

Social Audit Forum has been structured and there is mandatory review of findings.

It envisages public accountability of grass-root public authorities

Social Audit for overcoming prevailing deficiencies in implementing CSS

Audit, evaluation and monitoring of CSS should aim at strengthening the social audit by beneficiaries. In this context, several unresolved issues should be addressed:

a. What should be the roles and responsibilities of each of the `local authorities' in respect of planning, implementation and evaluation of each component of CSS?

b. What kind of accountability and supervisory mechanisms are to be ensured to make sure that concerned departments at each level are made accountable to the democratic local authorities?

-continued-

c. What kind of preparation, capacity enhancement and framework will be needed for local authorities to play effective role?

d. What kind of reports should be disclosed and disseminated by authorities to citizens under section 4 of RTI Act, to enable effective accountability?

e. What should be the process and mechanism for centre and subsequently states to formulate the guidelines and rules for ensuring accountability of grass root authorities to the beneficiaries, in respect of outcome of CSS.

Action on comments made by Auditors

Action on audit findings on CCS is diffused amongst various agencies.

Audit can lead to effective public accountability by disclosure and dissemination of issues noticed during audit and administrative inactions to rectify the mistakes.

Current institutional arrangement may generally lead to inaction on audit findings by the executive.

There is need for thorough review of audit findings regarding CCS by various audit agencies, to evolve holistic recommendations regarding effective audit of CCS. 

Agencies involved in audit of CSS

1. Indian Audit and Accounts Department under the Comptroller and Auditor General of India conducts audit of Drawing and Disbursing Officers (DDOs) implementing various centrally sponsored schemes. On selective basis, some of the schemes are reviewed and Review Report in incorporated in the Audit Reports of Union and State Governments. These reports become public documents, after being placed before Parliament and State Legislature. Issues raised in Audit Reports present macro-level issues, which are considered by Central / State Public Accounts Committees. RTI Act empowers any citizen to get copy of related files

Agencies involved in audit of CSS (continued)

2. Each Ministry and respective Department under State Government has Internal Audit. Reporting process is confined to each Ministry / Department. Finding of internal audit is not generally known to public. RTI Act empowers any citizen to get copy of related files.

3. Provision of Social Audit is incorporated in some of the CSS. There is an elaborate Chapter on Social Audit in NREGA, which can be a role-model for other CSS. However, concept of Social Audit is at a nascent stage and there are recorded cases of reluctance of grass-root government authorities to allow implementation. Social Audit of NREGA in Andhra Pradesh is a shining example of efficacy of social audit for eradicating corrupt practices.

Agencies involved in audit of CSS (continued)

4. Right To Information Act is theoretically a very powerful law that should lead to accountability of authorities implementing CCS to the public. However, implementation by public authorities at village level is at very nascent stages, largely driven by initiatives by NGOs.  Central and State Government have not regarded implementation of section 4 and 26 of RTI Act as a pre-requisite for good governance. RTI Act enables the beneficiaries of CCS to demand accountability from grass-root public authorities; implementation in letter and spirit would lead to better outcome from financial outlays.

Need for convergence in Audit

There is need for convergence amongst aforesaid audit mechanism, to enable CCS to deliver intended outcome.

Currently, there is no effort towards consolidated audit approach that meets the requirement of effective public accountability.

Neglect and inaction on audit findings. There is need for ensuring action to rectify defects

pointed out by audit

SUMMING UP

There are basic systemic problems leading to (i) Lack of transparency in implementation of CSS, leading to corruption and waste of public money, (ii) Inadequate participation of citizens in formulation and implementation of CSS, although these are formulated for their benefit and (iii) Ineffective monitoring and audit, as these do not result in mid course corrections to rectify the defects.

There is need for extensive public debate on systemic issues, to find workable and practical solutions.

SUMMING UP (continued)

CSS should have requisite flexibility to enable changes based on local requirements.

Administrative measures should be evolved for promoting direct accountability of authorities executing CSS to the beneficiaries.

Mandatory guidelines for each CSS for disclosure and dissemination of information by grass-root authorities should be prepared.

Government should issue administrative instructions and Social Audit guideline for every CSS and development scheme.

SUMMING UP (continued)

Implementation of RTI Act 2005 by public authorities concerned with CSS should be improved.

Education programs for citizens under section 26 of RTI Act should include training inputs about development schemes initiated by Central and State Governments, to enable effective citizen’s participation.

Educational institutions should be involved in implementing such educational programs.

SUMMING UP (continued)

There is need for convergence between – Audit by C&AG, – Internal Audit by Ministries and State Government Departments, – Social Audit, and – Audit by citizens access to public records under RTI Act. 

Monitoring of different CSS should be converged and reflect the perspective onf “AAM AADMI.”

Audit and monitoring should result in mid-course corrections, for improving the delivery system.