Monday, November 23, 2009

Kerala fails to deliver


For the third successive year, Kerala is falling behind in Plan spending and the state government is seeking to cover up its failure with specious arguments.

The state has had a poor record in financial discipline for a long time. Officials generally waste the early part of the financial year and go on a spending spree at the fag end to use up as much of the sanctioned money as possible.

After the state government devolved powers on local self-government institutions, the situation deteriorated. These institutions have to spend 40 per cent of the annual budget. They have not measured up to the task.

One reason for the hectic last-minute activity has been the panchayats' inability to begin work on schemes early in the year because of delay in obtaining governmental sanctions.

To overcome this problem, the government permitted spillover of a part of the sanctioned expenditure into the next financial year. This encouraged officials to remain lax.

Last year the finance minister decided to prevent bunching of Plan expenditure at the close of the year as it affected the quality of spending and created difficulties to the government by raising the demand for funds in the last months.

Accordingly the government directed all departments and local self-government institutions to spend at least 10 per cent of the Plan funds in the first quarter (April to June) and to raise the expenditure progressively to 30 per cent by the end of the second quarter (July-September) and 60 per cent by the end of the third quarter (October-December), leaving 40 per cent to be spent in the last quarter (January-March). .

The administrative departments and their heads were requested to prepare action plans sufficiently in advance, specifying various activities such as formulation of schemes, issue of sanctions and monitoring of output, so as to achieve these expenditure targets.

The strategy did not succeed. At the end of the year, only about half of the Plan allocation of Rs77 billion had been spent.

The government thought of salvaging the situation by resorting to the old practice of allowing carry-over of 40 per cent of the unspent money to the next financial year. Before it could pass the necessary orders, the Election Commission announced the schedule for the Lok Sabha poll. The model code of conduct came in the way of the contemplated action.

In June this year, the Finance Department reissued the circular, modifying the spending schedule slightly. While retaining the expenditure target of 10 per cent for the first quarter, it fixed a uniform target of 30 per cent for each of the remaining quarters.

Last week Chief Minister VS Achuthanandan revealed that Plan expenditure till the end of September this year was only a little over 20 per cent, as against the target of 40 per cent. He attributed the shortfall in expenditure to the restrictions on account of the three Assembly by-elections.

The argument that elections come in the way of Plan spending is disingenuous. It is being advanced to cover up the government's failure to prepare action plans in time.

The model code of conduct, which comes into force as soon as the Election Commission announces the poll schedule, only forbids start of work on a scheme. Work which has started can go on. The model code is in operation for only about two months. In the case of the Lok Sabha elections, it came into force only in the last month of the financial year. In the case of the Assembly by-elections, the restrictions were in force only for five weeks.

An efficient administration can easily make up the loss by speeding up work when the electoral process is over. No other state has pleaded inability to fulfil Plan targets because of elections.

Panchayat, Assembly and Lok Sabha elections in the state now fall in different years. If elections are a major hindrance it will be impossible to achieve the targets in three out of the five years of the Plan period.

For a state experiencing paucity of funds, Kerala's laxity in financial matters is appalling. According to media reports, the state has so far spent only about Rs7 billion out of Rs14.33 billion sanctioned by the Centre under the tsunami relief programme and about Rs3.7 billion out of Rs 7.7 billion granted to provide relief to farmers in distress. –Gulf Today, November 23, 2009.

No comments: