Que. The public expenditure management is a challenge to the Government of India in the context of budget making during the post-liberalization period. Clarify it.
उत्तर-उदारीकरण अवधि के दौरान, बजट निर्माण के संदर्भ में, लोक व्यय प्रबंधन भारत सरकार के समक्ष एक चुनौती है। इसको स्पष्ट कीजिए।
Structure of the Answer
(i) Introduction: Briefly outline the evolving challenges in “public expenditure management” in India’s budget-making process post-liberalization.
(ii) Main Body: Examine major challenges in “public expenditure management” due to evolving fiscal priorities, socio-economic pressures, and institutional limitations.
(iii) Conclusion: Emphasize the role of reformed “expenditure management” in achieving sustainable growth, equity, and economic resilience in India’s liberalized economy.
Introduction
The “public expenditure management” challenges post-liberalization in India stem from balancing economic growth and fiscal discipline with rising demands for welfare, infrastructure, and regulatory adaptability, impacting budget formulation and economic stability.
Fiscal Pressures and Deficit Management
(i) Growing Infrastructure Needs: Massive post-liberalization infrastructure needs demand “high public investment,” raising pressure on limited fiscal resources and impacting budget allocations.
(ii) Revenue Shortfalls: Reduction in tariffs and subsidies post-liberalization limits government revenue, intensifying the “fiscal deficit” and reliance on external and internal borrowings.
(iii) Debt Servicing Constraints: Rising debt servicing costs limit funds for development, affecting “economic sustainability” and India’s future investment potential.
(iv) Persistent Subsidy Burden: Agricultural and energy sector subsidies remain high, posing challenges to efficient fund allocation and impacting “long-term fiscal health.”
(v) Inflation Control Pressures: High public spending can spur inflation, affecting “macroeconomic stability” and limiting the effectiveness of monetary policies.
Institutional Challenges and Efficiency Gaps
(i) Leakages in Welfare Schemes: Welfare programs experience significant leakages, diverting funds from “intended beneficiaries” and impacting the cost-efficiency of public spending.
(ii) Rigid Budgeting Processes: Bureaucratic processes limit adaptability, affecting “public expenditure management” when socio-economic conditions evolve rapidly.
(iii) Accountability and Transparency Issues: Lack of robust monitoring reduces accountability, leading to “inefficiencies” and low returns on public investments.
(iv) Complex Budgetary Processes: Complicated budgeting frameworks reduce transparency, affecting “public trust” and limiting stakeholder engagement in fiscal planning.
(v) Delayed Project Execution: Administrative and regulatory bottlenecks lead to project delays, resulting in cost overruns that strain public finances and reduce “budget effectiveness.”
Socio-economic Demands and Budget Constraints
(i) Rising Social Sector Needs: Post-liberalization, the need for spending on “healthcare, education, and social welfare” has increased, adding pressure on the public purse.
(ii) Population Growth: India’s growing population necessitates increasing funds for “basic amenities,” straining budget allocations and impacting equity in resource distribution.
(iii) Addressing Regional Imbalances: Economic disparity across states requires “targeted budget allocations” for balanced growth, challenging equitable fund distribution.
(iv) Global Competitiveness Requirements: Liberalization has exposed India to global standards, necessitating increased “investment in education, skills, and R&D” for economic resilience.
(v) Environmental Conservation Needs: Rising environmental concerns require additional budget allocation for “sustainable development,” impacting conventional expenditure patterns.
Necessary Reforms for Improved Public Financial Management
(i) Outcome-based Budgeting: Moving to “performance-linked budgeting” aligns expenditure with measurable outcomes, enhancing accountability and resource utilization.
(ii) Public-Private Partnerships (PPPs): Leveraging PPPs in infrastructure projects helps spread fiscal burdens and increases “efficiency” through private-sector engagement.
(iii) Digital Transformation: Implementing digital tools can improve transparency, reduce leakages, and allow “real-time monitoring” of public expenditure for efficiency.
(iv) Decentralized Budgeting: Fiscal decentralization allows states more freedom in “resource allocation,” aligning spending with regional priorities for greater impact.
(v) Strengthened Monitoring and Auditing: Enhanced tracking systems and periodic audits foster “accountability,” ensuring funds are effectively used for public benefits.
Conclusion
Efficient “public expenditure management” is essential for India’s post-liberalization fiscal health, balancing growth with equity. Effective reforms and robust accountability mechanisms can strengthen India’s fiscal sustainability and foster resilient economic development.
