Budget Analysis: A Means Towards Transparent and Accountable Governance

February 7, 2014 | By | Add a Comment
John Samuel

Transparency and public accountability of governance are the hallmarks of a democratic polity. But that is precisely what is missing in our political system. In many of the countries, polity is undergoing unprecedented changes — negative ones, of course — and the so-called welfare state is gradually abdicating its social responsibility. The moral authority and social legitimacy of the political class have sunk so low that they are no longer capable of guarding the basic tenets and spirit of democracy. Increasingly, the presiding deities of institutionalised corruption are secure and comfortable in the corridors of political power and in the backyards of a subservient bureaucracy.

At a time when party politics has come to signify arenas of vested interest, personality conflict, an ethical vacuum and reactionary trends, non-party social action and political processes must assume the critical role of sustaining the meaning and vitality of the process of democratization. One of the most important roles of citizens and social action groups is to build up effective public arguments to advance transparent and accountable governance.

In the absence of a widespread pro-active social or political movement, public argument is the most effective means of involving citizens and democratic institutions in a more responsive and responsible government. Effective public argument is based on verifiable information, constitutional validity, a cohesive socio-political perspective and moral authority. But the first of those — information — is the key. To make public argument fruitful, one must go beyond the rhetoric of impressions and emotions. So the first step is to equip citizens groups and social action organisations with an adequate information base, an understanding of policy-making, of systems of implementation, and the impact of such systems at the grassroots level.

The best place to start is with the gathering of budgetary information. For the domain of governance is in many ways related to budgetary trends and priorities. Budgets reflect the policies and programmes of the government. So, for any realistic understanding of public policies one needs corresponding budgetary information. Policy arguments, substantiated with budgetary information, will be far more credible and effective. Budget analysis thus provides a critical value addition to public advocacy initiatives. It would enable citizens and social action groups to compel the government to be more alert to the needs and aspirations of the people in general and the deprived sections in particular. That is the first step towards an accountable and transparent system of governance.

Demystifying the Budget

Budgets are far removed from the people. In a country like India where almost 50 per cent of the people are illiterate and have never had occasion to see more than a couple of hundred rupees, the budget, and the millions of rupees shrouded under major or minor heads, make little sense. Even the middle class, which constitutes around 20 per cent of the population, understands the budget only through populist measures or budgetary gimmicks, flashed through the mass media. It is media images that often determine the public perception of the budget, not perceptive analysis and an understanding of the document. The demystification of the budget is therefore an important step towards the creation of a conducive environment for public advocacy.

The budget is prepared by specialists. Reading the budget requires a certain amount of expertise in finance and the ability to locate the figures corresponding to different expenditure. Because of this, one needs basic training in reading and understanding the budget. And helping the most deprived of people to read and understand it in such a way that it inspires them to question the manner in which they are governed.

The budget is an articulation of the existing power relations in society. While the mass media controlled by big business interests and the articulate urban upper-middle class may project a budget in the most positive light, the impact of such a budget on the lives of tribals, the unorganised, the rural poor and slumdwellers, is often ignored. Even when the budget’s impact on the poor is studied, it remains an academic exercise, scarcely ever reaching the common people. It’s no wonder then that the budget needs demystifying, so that ordinary people can participate in the process, questioning and changing the budget in favour of the most deprived.

The industrial and business class, of course, has a well-developed institutional mechanism to access budget data and even to influence the budget according to their vested interest, in ways that invariably make the rich richer and the poor poorer. Financial pundits, policy analysts and media commentators hired by FICCI or CII work earnestly to influence the budget as well as public perception of the budget, in accordance with the interests of the rich and powerful.

How do we counter such motivated interpretations of the budget by the elite? This is where the work of DISHA (Development Initiative for Social and Human Action), a social action group working in Gujarat, becomes relevant. The effort of DISHA to translate budgetary information in a way that makes sense to the most deprived sections has made a qualitative difference in their public advocacy for the rights of tribals and unorganised labourers. The significance of DISHA’s budget analysis exercise lies not in its academic validity or methodological sophistication, but in its attempt to understand the budget in the light of grassroots experience and ground realities. This is what makes their budget analysis more communicative to the common people. Their efforts to bring out budgetary information and analysis in the local language, published in the form of readable booklets, has helped people see the budget as part of the reality of their lives.

A demystification of the budget involves translating the technical financial information it contains in a way that can be communicated to the people, helping them relate such information to their everyday lives. While demystification and budget analysis provide a critical value addition to the public argument, the budget exercise by itself may not help bring about an effective public argument. DISHA, for instance, was able to effectively integrate their budget exercise with their advocacy work, based on grassroots mobilisation and effective networking.

In the context of advocacy, budget analysis can serve three major functions. Namely:

(a) The creation of public argument for policy change
(b) Pre-budget lobbying to ensure a more equitable distribution of resources and
(c) An increase in the bargaining power of social action groups

While the first two functions require distinct modes of analysis and a strategic use of information, the third function is more a by-product of the effective use of the other functions.

Public Argument

Public argument takes place in the arena of politics, and in terms of real or perceived power relations. Each policy takes shape and operates in a particular political environment. An effective public argument would go beyond a particular policy and would impact the entire ecology of that policy. Such a public argument derives its strength and vitality from the power of information and the power of people or of public opinion. Strategic use of budgetary information can be made to influence public perception and opinion. The success of a public argument should not be seen merely in terms of targeted policy change, but also in terms of attitudinal change among the people. This was very evident in the strategies used by CII (Confederation of Indian Industries) to create a favourable public environment for the ‘Chidambaram Budget’ of 1997.

It’s not as if public policies don’t find any financial expression in budget documents. They do. But in recent years, there is a widening gap between the policy rhetoric of the government and the budget outlays for programmes that actually come under such policies. This gap is most pronounced in the context of Structural Adjustment and the New Economic Policy. The repeated rhetoric of ‘Growth with Social Justice’ just doesn_t translate into budgetary outlays. Therefore, an understanding of budgetary information from the point of view of the most marginalised is essential to expose the doublespeak of the government and the political class.

Many other budget analysis initiatives were not as successful as DISHA’s precisely because they were not translated into public argument. DISHA has acquired institutional credibility and legitimacy for creating public argument. They were able to do this because they had a tangible mass base of tribals, a leadership with political experience and understanding, networks with social action groups, the bureaucracy and media, and a stable relationship with major politicians and policy-makers. In other words, DISHA was adept at making effective use of people’s power. What it achieved through budget analysis was an integration of the power of information with people’s power. Thus, budget analysis was a critical value addition to its earlier work. Organisations which did not have prior institutional experience or legitimacy could not make use of budget analysis because of the absence of the other factors required for public argument. If one undertakes budget analysis as the flavour of the month, it may not necessarily lead to effective public argument.

There is, however, a distinction between the budget as data, the budget as information and the budget as knowledge. Budgetary data — largely figures — does not by itself communicate much more than a vague impression about its quantitative aspects. An accountant may be more concerned about this aspect of the data. But when social action groups locate such data in the context of a particular policy or programme, it acquires the dimension of information. In other words, it is only when we contextualise the raw data within a comparative or chronological framework and in the light of a particular policy or programme, that we turn the aggregates of such data into meaningful information. A piece of budgetary information, for instance, will help us understand budgetary figures for health, in comparison to defence or education.

When we perceive such budgetary information in a socio-political or ideological perspective, it becomes a source of budgetary knowledge. And knowledge is power. To go beyond data and information and transform it to knowledge, one requires a socio-political perspective. This is another major difference between academic institutions and grassroots advocacy organisations. While academic institutions have the sophisticated analytical tools to transform data into accessible information packages, they often lack the socio-political perspective to transform such information into knowledge. A knowledge base is what gives momentum to a public argument.
Also important is the need to understand the budget not only in terms of the pattern of allocation, but also in terms of the pattern of expenditure and its impact on micro-level reality. If you have information about the performance budget, the planning process and the real impact, you would have a holistic picture of the implications of the budget. The data analysis of the budget should ideally be complemented by empirical research or grassroots case studies that would substantiate our knowledge about the budget. This would also make public argument sustainable and effective.

Pre-Budget Lobbying

At present, pre-budget lobbying remains the privilege of the few rich and powerful. With the help of a strong information base, professional expertise, powerful media strategies and powerful allies within the government, industrial houses and lobbies can substantially influence the budget. Though many social action groups have succeeded in creating much sound and fury about public policies, they have not been able, so far, to make any significant dent in the budget. This is largely because they don’t understand the relevance of the budget, and don’t have the professional skills or expertise to fathom public finance. In a fast-changing world, dominated by a very sophisticated persuasive mechanism, it is important that social action groups develop an adequate information base, skills and legitimacy, so that they will be heard when a budget is being formulated.

The work of DISHA provides hope in this direction. They have proved that the budget can be read and understood by common people, without any conventional academic expertise. Their work is testimony to the fact that budgetary knowledge is a powerful tool in the hands of activists. Hence, it is important to develop a network of social action groups that would be able to use budget analysis as a critical value addition in their public advocacy. Effective networking should ideally lead to a working group on a people-centred budget analysis and policy change. Such a working group would be able to initiate a process of pre-budget lobbying to ensure that resources are distributed in consonance with policy pronouncements and in the interests of the most deprived sections of society.

Increasing the Bargaining Power

The economic and industrial elites have the bargaining power of money, proximity to the policy-making and implementing system and the media, and the ability to twist information in their favour. Political parties maintain large votebanks to sustain their bargaining capacity in electoral powerplay. Social action groups have neither electoral power nor money power. Most of these groups are too scattered to make any cohesive or far-reaching impact on the political system. While many of them are effective at the micro level, their bargaining power at the macro level is very low. But many micro-level organisations with an adequate mass base and strong information base on macrolevel policies and other indicators have proved that they can have substantial bargaining power at the macro level, particularly in influencing state-level policies.

Most legislators and officials do not have an adequate understanding of the budget. By judiciously using budget information, social action groups can increase their bargaining power, especially when they deal with the government. What they would be doing is compelling bureaucrats, legislators and media persons to respect their arguments and positions. But as we have discussed earlier, bargaining power does not arise in isolation. It is a by-product of the simultaneous and strategic use of various functions.

Government is distinct from governance. While government is really fuelled by the budget, governance often suffers because of a lack of transparency and accountability. In our 51 years of independence, the government has increased quantitatively, in size and magnitude, but the quality of governance has sunk very low. So-called economic reform has not made any difference to the lives of around 400 million people who are still under the poverty line. These ‘reforms’ have helped to project the quantity of economic transactions, but they have done nothing in terms of the sub-structures of the Indian economy that would make a qualitative difference in the lives of the poorest. These reforms have never addressed questions related to the justice delivery system, law enforcement, the functioning of parliament or state legislatures, audit and accountability. The assumptions behind many such functions and institutions will have to be questioned in the light of increasing inequality, poverty, unemployment and overall deprivation. It is erroneous to measure growth merely in terms of economic volumes or per capita income, which conceal the gross inequality in the distribution of economic and natural resources.

The budget should not escape the scrutiny of the people. Unlocking the budget and opening the floodgates of information is the historical and political task of social action groups. So, budget analysis should be perceived as a means towards transparent and accountable governance that would ensure equity and justice to the marginalised millions of this country.

*This article has been taken from the book “Understanding the Budget: As if people mattered”, Edited by : John Samuel. Published by National Centre for Advocacy Studies in 1998.

Filed in: Budget Primers

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