Budget blues: Shifting policy issues to line ministries?

The ‘2014/2016 Programme-Based Budget Circular (No. 12 0f 2013)’ harps on certain worn themes like efficiency in service delivery, restriction of recruitment in the Civil Service, addressing bottlenecks to growth/investment and job creation, etc. It emphasizes the narrowed fiscal space because of expenditure commitments linked to implementation of the PRB recommendations and lower revenue. Of course a budget circular will never mention some of the causes of the latter, such as the wastage of public funds, which is taxpayers’ money, incurred in government schemes such as free transport to educational institutions, the unacceptable recruitment of retirees on generous contracts and so on.

But these are genuine matters of concern among the population, and are deliberately sidelined by the authorities until they disappear from public scrutiny and the waste continues. As usual, it is the people who have to bear the brunt as line ministries are forced to cut down on expenditure for much-needed services and essential human resources.

So the Budget Circular does not does not break any new ground but once again tries to throw the onus on line ministries instead of assuming responsibility for decisions that ought to be the mandate of the Ministry of Finance and Economic Development – which it should not be in the first place: there has been extensive discussion in this paper about why Economic Development and Planning should be separated from Finance (vide the latest article on the topic, R. Chand’s ‘The Economic and Social Transformation Plan – a Non-Starter’ in this paper’s issue of 23-29 August 2013), and it has fallen on deaf ears. The hastily cobbled patchwork laughably called the ESTP, which superseded some carefully Sector Plans, is further reason why planning should be divorced from the financing/accounting exercise.

One of the consequences of the amalgamation of planning and budgeting functions is to shift the responsibility of some important policy decisions from the centre to the line ministries, which are instructed in the Budget Circular to ‘specifically explain how you plan to finance it (NB: referring to service, scheme or project) whether through taxes, user charges, funds reallocation, external grant, project loans, etc.’ Isn’t it the job of a Finance Ministry to seek funds, devise ways to raise revenue, negotiate loans for projects and grants for schemes? Is it for a line ministry to propose user charges, especially as regards services which are being provided free of user cost in our welfare state model? That model for the country was a political decision, isn’t it? So how can a line ministry propose something that goes against this central policy decision?

All ministries are so involved in operational aspects and constantly in crisis-management mode – ‘firefighting’ – that there is no time to reflect seriously on matters which can have an impact on long-term central government policy, and the user fee is a case in point. The central government ought to have a body whose sole concern would be to collect and examine the evidence about a number of key issues, culling from experience across the world – since there is nothing new under the sun – and then make recommendations.

In the absence of such a body – an Institute of Public Policy and Analysis, for example — it would be too easy for a Ministry of Finance or a Financial Secretary or equivalent to decline any responsibility for an unpopular measure, such as user fees, and lay the blame squarely on the officers of the line ministry who ever made such a suggestion. The latter have therefore to be doubly cautious about the instructions received in the Budget Circular and analyse carefully the implications of what they may propose, lest they are subsequently made to carry the can for policy decisions not of their making – as in the case of MedPoint.

* * *

President Obama: no to toppling Assad of Syria

In a carefully worded speech to the American nation on Tuesday night, President Obama said that he had asked Congress to put on hold its vote about allowing a military strike on Syria. He explained that he had had talks with Russian President Putin at the recent G20 summit in St Petersburg, and the latter had submitted for consideration a plan that aimed at making the Syrian government put its chemical weapons under international control.

He first explained why it was important to punish Syria for using chemical weapons and then why he was choosing the diplomatic path and calling for a pause, as after his meeting with Putin he was also in touch with the leaders of the two closest allies of the US, England and France, to work out an acceptable diplomatic solution. But the British Prime Minister David Cameron has warned about a possible ‘ruse’ by Russia to take attention away from a military intervention, while Russia has rejected France’s proposal for such action in case Assad refuses to comply to international control.

Mr Obama spelt out that the objective was not to topple Assad but to diminish his capacity as regards the use of chemical weapons. He referred to the adverse experience of the US in Iraq where after the fall of Saddam Hussein, it had not anticipated nor was prepared to handle the consequences that followed.

Some analysts are of the opinion that in going back on military action, which he had forcefully advocated but a few days earlier, Mr Obama was putting his credibility at stake. But he has made it clear that, should Syria not comply and should Congress vote against, then he would have recourse to the UN with the help of Russia, which is Syria’s strongest friend, China and his allies the UK and France. This is a departure from the intervention in Iraq for which the US did not seek UN approval.

Meanwhile, with over 100,000 of his people dead since the beginning of the ethnic conflict, a relaxed President Assad – given the postponement of an imminent attack – was happily celebrating his 48th birthday…

* Published in print edition on 14 September 2013