Poor public spending under ADP
Tuesday, 11 March 2008
THE rate of implementation of the Annual Development Programme (ADP) in the current fiscal year, so far, is, according to reports, very poor.
It was only 21 per cent in the first six months of current fiscal year against 31 per cent at this time of the previous fiscal year even under tumultuous political conditions under an elected government.
It needs to be recognised that overemphasis on ADP's spending targets should be avoided. ADP managers need to pay more attention to the quality factor. In a situation where implementation is measured by how quickly, instead of how efficiently money is spent, the spending rate is likely to go up without matching the outcome. In the past, many projects partially or fully completed, had problems inherent, right from the outset. Shoddy construction created the need for reconstruction which increased the cost.
A faster rate of spending funds may not be the only criterion for measuring success of the ADP. The quality of the projects and their utility to various economy-supportive measures, on completion, seem to be better measures to evaluate ADP implementation.
While overemphasis on financial targets are not desirable, underspending does also create problems. This is because underspending can increase development costs, reduce investment and growth rates and distort the planned pattern of investment. Underspending is usually linked to poor absorptive capacity or the inability of the plan implementors to guard against inadequate preparatory works on projects, lack of timely and proper engineering supervision, lack of discipline and administrative and procedural delays.
The reasons for inadequate spending in the current year's ADP needs a close scrutiny. It needs to be seen whether it stems from greater attention to ensure quality of the projects or whether negative factors delayed the execution of projects. Steps should be taken without wasting time if negative factors caused the slow implementation pace and loss of time. The capacities need to be strengthened to accelerate the rate of implementation of the ADP.
It was only 21 per cent in the first six months of current fiscal year against 31 per cent at this time of the previous fiscal year even under tumultuous political conditions under an elected government.
It needs to be recognised that overemphasis on ADP's spending targets should be avoided. ADP managers need to pay more attention to the quality factor. In a situation where implementation is measured by how quickly, instead of how efficiently money is spent, the spending rate is likely to go up without matching the outcome. In the past, many projects partially or fully completed, had problems inherent, right from the outset. Shoddy construction created the need for reconstruction which increased the cost.
A faster rate of spending funds may not be the only criterion for measuring success of the ADP. The quality of the projects and their utility to various economy-supportive measures, on completion, seem to be better measures to evaluate ADP implementation.
While overemphasis on financial targets are not desirable, underspending does also create problems. This is because underspending can increase development costs, reduce investment and growth rates and distort the planned pattern of investment. Underspending is usually linked to poor absorptive capacity or the inability of the plan implementors to guard against inadequate preparatory works on projects, lack of timely and proper engineering supervision, lack of discipline and administrative and procedural delays.
The reasons for inadequate spending in the current year's ADP needs a close scrutiny. It needs to be seen whether it stems from greater attention to ensure quality of the projects or whether negative factors delayed the execution of projects. Steps should be taken without wasting time if negative factors caused the slow implementation pace and loss of time. The capacities need to be strengthened to accelerate the rate of implementation of the ADP.