PLANNING COMMISSION

Working Paper No. 1/2007-PC

PLANNING FOR RESULTS:

PUBLIC ACCOUNTABILITY INFORMATION SYSTEM (PAIS)

Arvind Virmani[*]

TABLE OF CONTENTS

Page

1INTRODUCTION

2Rationale for Government Expenditure

2.1Public Goods

2.1.1General

2.1.2Sector Specific

2.2Quasi-public goods & services

2.2.1Cross-Sectoral

2.2.2Rural

2.2.3Urban

2.3Merit (private) goods & services

2.4Producer programs / subsidies for employment

2.5Other non-merit transfers and subsidies

3PLANNING ELEMENTS

3.1Definition of Objectives

3.2Identification of Specific Goals

3.3Operational Plans

3.4Management Information System

3.5Monitoring And Evaluation.

3.6Public Access to Information

4PUBLIC ACCOUNTABILITY Information System

4.1Integrated Smart Card

4.2Classification of Beneficiaries

4.3Web Enabled Public Information System

5OPERATIONAL PLANNING

5.1Outcomes & Management

5.1.1Capital Expenditure

5.1.2Service Delivery: Subsidy Accounting

5.2Time Horizon & Management Transfer

5.2.1Maintenance of Assets

5.2.2Plan to Non-Plan

5.2.3Centre to State

5.2.4Incentive Compatibility

6CONCLUSION

7REFERENCES

TABLE

Table 1: Public and Quasi-Public Goods and Services

1

1INTRODUCTION

Over the last five years there has been increasing recognition that the traditional focus on financial allocations and expenditure may have weakened the incentive for outcomes that actually benefit the poor and less well off, who are the presumed beneficiaries of these expenditures. Since the 1980s concerned citizens and leaders have speculated about how much of program expenditure actually reaches the intended beneficiaries, with guesstimates ranging from 15% to 25%.[1] Whatever the precise number, there is a clear need to improve the quantity and quality of output produced by these expenditures and delivered to the intended beneficiaries. Planning Commission Working paper No. 1/2006 has presented suggestive calculations showing that in the year 1999-2000 the amount of money spent on a few major poverty alleviation programs would have been sufficient to eliminate poverty during that year. Improvement in the delivery mechanisms can therefore have a dramatic effect on the lives of the poor.

Central Schemes and Centrally sponsored schemes come directly under the purview of the Central government. As the Planning commission has the authority to allocate and approve funds for these schemes,[2] it also has the authority to require the setting up of systems of operational planning and management that generate information needed to monitor these programs. A substantial part of the Central assistance for State plans lies outside ‘Normal Central Assistance’ and is channelled into programs such as AIBP, ARDP, BRGF and JNURM, whose fund release is approved by the concerned central department and the Ministry of Finance. This note outlines some practical steps that can be taken to improve the output/impact/outcome of central government expenditure over the next five years.[3]

In the case of State Plans and the Normal Central assistance for State plans in which funds are allocated among States on the basis of the modified Gadgil formula, the Planning Commission and the central government does not have the constitutional authority to withhold funds from some States and transfer these to other States. Thus it has little authority to monitor any specific State government program. All it can do is to set up statistical systems that generate macro–economic information on the performance of the State governments over time and make this available to the public, non-government organisations and the media. The identification of appropriate outcomes for data collection and monitoring depend on construction of a hierarchy of goals (general/specific) that are critical to the overall objective of enhancing public welfare. The frequency with which the macro-aggregate information is generated will determine the periodicity with which the monitoring exercise can be carried out. Annual evaluation is impossible if the vital data (e.g. quinquinial NSS surveys) is generated every 4 years and is made available with a lag of 1 ½ to 2 ½ years. More frequently generated data such as State GDP (particularly agriculture)can be useful if and only if the link between State Plan expenditures on agriculture and the potential increase in GDP from agriculture is specified (through econometric estimates that account for rainfall variation).

The next two sectionsattempt to address two historical weakness in our planning system. Section 2 deals with the disconnect between the original theoretical reasons for planning (market failure, gap between social and private returns)[4] and the way it has been implemented in practice (marginal changes in incremental allocation driven by political imperatives, starting of new programs by every new government without evaluating whether the old ones have worked).Section 3 tackles the gap between macro planning and detailed operational plans for actual ground level implementation. Section 4 outlines elements of a government management information system (PAIS) suitable for public accountability in a democratic country with a nascent civil society and budding media. Section 5 goes into a little more detail into the issue of monitoring outcome that are an essential part of planning for outcomes. Section 6 concludes the paper.

2Rationale for Government Expenditure

As the government’s intervention expanded into every area of the economy, society and culture, the capacity of the government to directly produce and supply services, to manage financial transfers and subsidies and to enforce laws has become increasingly inadequate. Over the years the capacity and the ability of the government (in terms of quality of personnel and organisational capability) to achieve positive results has deteriorated relative to its ability to cause harm (as this is not affected by professional or organisational capability). As public resources are, by definition scarce and costly (in terms of opportunity cost and distortions) it is essential to use the government’s financial and administrative resources where they can make the biggest difference to social welfare.

According to the original theory of planning the emphasis of government expenditure should be on areas where the gap between social and private returns are highest and where market externalities need to be corrected. Future programs, projects and other expenditures should be separated into economically meaningful categories and sub-categories that bear some relationship to these economically sound principles. Integrated programs can then be built under these thematic categories in sectors where they are applicable.

We have to distinguish between Public goods and services (G&S) and those which deal with private goods and services. Private goods and services are those that are provided to individuals or specific households (e.g. PDS food, toilets). Public goods & services are provided to groups (e.g. connecting and village/urban roads) and individual usage is difficult or costly to measure. Quasi-public goods fall in between in that part of the benefits can be tracked to individuals, but part is more diffuse and may even accrue to future generations or to a wholly different group in another form. The items and examples are illustrative (not comprehensive).[5]

2.1Public Goods

2.1.1General

(a)Knowledge generation and dissemination.

  • Diffusion of agriculture & allied technology: HYV seeds, re-planting, fish stock, crop varieties, cultivation protocols/practices, Handicrafts & handlooms.

(b)Regulatory Systems, Standards and Certification: Establishment, maintenance, enforcement.

  • Health and Safety Standards for products & services, Environmental standards for producers: Dissemination, diffusion and enforcement.
  • Development of Standards & Curricula, Testing & certification systems for education & skill development

(c)National statistical system: Macro data collection and statistics. Sector and industry specific data.

(d)Pollution & Environment(Negative externality/Public Bads): Water, Air pollution

2.1.2Sector Specific

  • National security: including Borders, NE, J&K
  • Law and order: Police, courts, judges
  • Roads: Highways, Inter-connecting roads(habitations), urban roads
  • Aquifer planning & management
  • Urban and Rural civic planning; Land use planning (agriculture, non-ag; residential, commercial, industrial).Supply of “urban land”;
  • Communicable, vector borne and epidemic diseases
  • Forests, green belts; wild life preservation, bio-diversity

2.2Quasi-public goods & services

2.2.1Cross-Sectoral

  • Education/Training of high quality educators/teachers/trainers and administrators/planners/managers.
  • Preventive health: Public health education and incentives
  • Drinking Water Supply system
  • Sewerage, Drainage, Sanitation and Waste disposal systems

2.2.2Rural

  • Dams and Canals, Drainage systems.
  • Rural electricity Distribution or decentralised production
  • Community watershed, water harvesting.
  • Marketing channel for agricultural & rural products e.g. B to B website.

2.2.3Urban

  • Urban Transport planning and public transport systems

2.3Merit (private) goods & services

  • Subsidised food: PDS/MDM/nutrition (for BPL)
  • Primary education –universal (SSA) and literacy
  • National scholarship program and subsidy/support system for socially deprived and economically vulnerable.
  • Rural secondary education
  • Training/skill development in agriculture (e.g. soil quality) & allied (fish farming)
  • Basic health services (universal access) & rural health system
  • House sites & toilets (for all/BPL)

2.4Producer programs / subsidies for employment

(especially socially deprived/ handicapped, economically vulnerable)

  • Safety net: NREG (employment for BPL)
  • MSP, price risk insurance
  • Monsoon risk insurance (subsidy) for small & medium farmers
  • Fertiliser subsidy for small & medium farmers
  • Tube wells-GW, minor irrigation
  • Labour intensive small manufactures e.g. export oriented, handicrafts, handlooms

2.5Other non-merit transfers and subsidies

Many of these need to be eliminated. Contrary to the basic philosophy of Planning they have seldom (if ever) been subject to rigorous Social cost-benefit analysis and continue because of bureaucratic inertia. Each subject division should identify these with a view to elimination. If necessary an independent evaluation can be carried out or commissioned.

3PLANNINGELEMENTS

A perennial criticism of Indian Planning has been that Five Year Plans exist only on paper and bear little relation to what happens on the ground. Though this criticism is exaggerated and ignores the limits that the constitution places on various arms and levels of government, it has an element of truth in it. This is the failure to develop and approve detailed operational plans before the financial allocations are made/ released/spent. Such plans are also essential for ensuring proper monitoring of outputs/ impact/ outcomes and for ensuring public accountability. A re-examination of plan processes and procedures and a filling in of missing elements is required. Planning for government expenditures involves the following steps:

3.1Definition of Objectives

Expenditure planning requires that the objective be neither too broad nor to narrow. This is particularly true in a large, diverse country like India. To take an example from the health sector, health for all is too broad an objective to be meaningful for planning expenditures. At the other extreme, malaria control is too narrow an objective. One appropriate objective in this context may be the ‘Eradication of communicable diseases and the control/minimisation of epidemic diseases.’[6]

3.2Identification of Specific Goals

A menu of specific goals must be drawn up to achieve this objective. This menu will include for the objective illustrated above, sewerage and sanitation, clean drinking water, public health education as well as control of vectors, vaccination programs, and R&D.

3.3Operational Plans

Detailed operational plans must be drawn up to achieve these goals. This has been the most neglected and deficient area of our planning process. A plan is not just a fine document of intent but a series of steps to implement it in a co-ordinated and effective manner. As health and diseases vary across climatic regions and States each will require a sub-menu with a different emphasis. For instance malaria may be very important in one state while Dengue or Chikangunya is more important in another. Similarly sanitation may be critically deficient in one State and drinking water problems acute in another. These sub-menus (given the relative importance of different diseases) must be translated into detailed measures to be taken at the district/ block/ panchayat / village level as appropriate. For instance if the sanitation plan includes supply of toilets to BPL families, identification of such families must be part of the operational plan.

To take another example, if the objective is transport connectivity the State governments must build roads that connect villages to each other and to market centres, railway stations and neighbouring towns. These towns must in turn be connected to each other and to ports and airports. These road links must be identified (source & destination) and defined (quality of road surface, culverts/ bridges needed etc.).

3.4Management Information System

Effective governance requires a Government Management Information Systemsor Government E-management system (GEMs) that will generate information on execution of operational plans and the attainment of specific goals. It is an essential element of the overall Public Accountability Information System (PAIS).

Sustained monitoring of programme inputs or outputs is possible only if information on these is generated by the implementation system. Thus a well defined and designed GEMs is an essential part of any effective expenditure system. The GEMs must generate data on the specific goals that are to be achieved, so that they can be monitored. For instance it is not possible to monitor the achievement of connectivity unless the roads needed have been precisely identified and the GEMS generates information on which have been constructed. Though the monitoring and auditing of financial flows will always be needed,[7] the attainment of physical goals is vital to monitoring and evaluation of government expenditures, because of the wide and varying gaps between financial outlays and the achievement of specific goals.

3.5Monitoring And Evaluation.

The final stage of the system is the assessment of impact and outcomes. A standard / normal GEMs may not generate sufficient information on the quality of output and the achievement of broader goals and objectives. Independent evaluation systems are therefore needed for this purpose. Often there are multiple programs designed to achieve similar or overlapping objective. Similarly the attainment of a specific objective may depend on many different factors including exogenous factors and different programs. A research program may be needed to sort out the various factors and impacts. A well designed evaluation can produce primary data that is useful for carrying out this research.

The frequency of monitoring is dependent on the frequency with which information is generated by the GEMs (annual, quarterly, monthly). In the presence of a GEMs, periodic independent evaluation can act as a cross-check on the accuracy of the GEMs (for instance through the use of satellite maps to determine road and canal completion)as well as provide a picture of the quality of output (e.g. direct sample check of road quality). Further a special evaluation is also useful to determine to what extent the broader objective is being fulfilled (prevalence of communicable diseases). This can help in reformulating specific goals, operational plans and implementation modalities.

3.6Public Access to Information

The details generated by the GEMs must be put in the public domain in accordance with the Right to Information Act, so as to achieve the objectives of the PAIS system (next section). The objective must be real time supply of information on the internet, starting from the list prepared at the start of the program/project through intermediate monitoring to completion. Any evaluation report regarding the quality of implementation must also be put on the internet. Till such time as the general public has access to the internet at the Panchayat level, local level information may also have to be provided in locally accessible forms such as notice boards and through local radio & print media.

4PUBLIC ACCOUNTABILITY Information System

The right to Information Act is a vital first step toward improvement of public accountability.[8] The next step must be the generation and publicising of information on all programs / projects carried out in the name of the poor and other citizens. Every program / sub-sector should have an internet accessible Public Accountability Information System (PAIS). Such a system would have two objectives.

(a)To provide information to the targeted population about,

(i)the expenditure allocated and spent, and the receivers of the expenditure,

(ii)The major program inputs purchased (sources, amounts) the people hired and their actual attendance record (e.g. teachers),

(iii)The output of the program (e.g. no of patients treated, children who attended school) and when available its quality.

These would be put on the website accessible through the internet.

(b)To empower the target beneficiaries (users) to put up their own evaluation of the program alongside the government provided data & information.

Thus for instance in the case of primary education, parents of enrolled children should be able to post their comments on the attendance record of their primary school teacher, the number of children graduated and the quality of the education provided. They could also agree/disagree with the govt. posted data (as per (a) above). This would be a review system patterned on existing systems like Amazon Books in which readers can post book reviews.

A PAIS system must have at its core a financial control and output/ achievement monitoring and evaluation system for each program.

The PAIS system would be a geographically multilevel, multi-layered system in which higher levels would present data after aggregation/integration from lower levels/layers (panchayat, block, district, State).

Most citizens, particularly the poor, for whom many of the projects/programs are intended do not have easy access to the internet. It is therefore essential that the Central and State e-governance projects be fully aware of and facilitate access to this information. For instance,many State governments are installing internet kiosks in Panchayat Ghars and these should allow free access to the PAIS system by local residents, non-profit organisations and local community radio stations.

Community radio can also play an important role in monitoring and increased accountability of local level functionaries (political and administrative). In 2005-6, TRAI had recommended a liberal policy on community radio stations so as to make it relatively easy and inexpensive for non-profit organisations to set up such local radio stations. Unfortunately, the policy did not make allowance for a small group of village youth/women etc to set up a low cost local station without forming/registering a society. This needs another look, particularly in villages/ panchayats where no society exists or has come forward to set up such a station. The very strict policy relating to news radio also needs re-examination. The community radio policy and rules should explicitly mention that such radio stations have a right to disseminate any and all news (information) relating to execution of government projects and programs in the block/district. This is necessary to ensure that the general estrictions on dissemination of news by private radio and TV stations is not used to stifle the dissemination of such information by community radio stations.[9]