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Swelling revenue expenditures & people\\\'s well-being

Thursday, 19 June 2014


The continuous surge in non-development revenue expenditure of the government has been an unsavoury outcome of budgetary management. This is more so because the government is forced to downsize its original development budget at the end of a fiscal year to accommodate the swelling revenue expenditure. There are various categories of non-development expenditures. These include pay of officers and establishment, allowances, supplies and services, repairs, maintenance and rehabilitation, interest payments on term loans, floating loans, national savings certificates, provident fund, postal life insurance, foreign debt and others, subsidies and incentives, grants in aid, contributions to international organisations, written-off loans and advances, pensions and gratuities, state trading, block allocations etc.
There is no denying that some incremental growth of the aggregate non-development revenue expenditure is unavoidable. But the moot point for consideration here is whether the growth of such expenditures -- the expenditures that are meant for the normal upkeep or maintenance of any government -- is contributing to achieving some desired outcomes, particularly in terms of improved delivery of public services that the government provides, efficiency and effectiveness of its (government's) operations and performance in all relevant areas and strengthening of institutions for good governance. Value-for-money is certainly a matter of import.
In this context, the scorecard of the government needs to be assessed, evaluated and analysed fairy and objectively, in the light of a set of measurable or quantifiable indicators in relation to a performance-related matrix. Unfortunately, there has so far been no worthwhile effort to do such tasks. That is precisely the reason why the people's disenhancement with various public service-providing agencies or bodies in areas of health, education, law and order and many more, continues to persist, notwithstanding the fact that allocations of funds for all such areas, out of the revenue budget, have been rising, in absolute terms, over the years. Under no economic rationale, the costs on account of government's services or operations should run afoul of the benefits that the people do reasonably expect to get out of related expenditures.
The government needs to address its budgetary management issues more dispassionability. If it continues to borrow beyond its affordability, it will have to make still higher amounts of spending on account of interest payments, particularly on its growing levels of domestic debt. Such interest payments are made out of the revenue budget. Furthermore, the subsidy bill, pay and allowances for its officers and establishment, pensions and gratuities bill have been increasing over the years and will continue to do so under the revenue budget in coming years. The government has also to devise a funding mechanism for pensions and gratuities that now remain otherwise unfunded.
Meanwhile, a substantial amount of revenue expenditures are now in the nature of charged ones that are not subject to any voting in parliament. There will be no way to contain their growth, if the government does not exercise its 'wisdom' while shouldering onto itself the burden of such expenditures. That is precisely the reason why the budgetary management should be subject to a set of objective criteria that are sine qua non for enforcing discipline in the overall fiscal operations of the government.