By Vasundhara Jain
Of much importance to civil policy-making is the efficacy of any expenditure. Some of the development expenditure heads among health, agriculture, education and social security, do not have the required effect in increasing incomes and reducing poverty, especially agriculture. In the current situation of our country, the role of corruption cannot be ruled away and numerous loopholes are prevalent at every stage, especially in ambitious schemes for the rural areas including NREGA and the upcoming Food Security Act. Arun Maira, member of the Planning Commission, confessed to The Economic Times on 27th March 2012: “The definition of who is poor and who deserves to get assistance is ultimately a political decision.” With this background, and that Rs. 9 have to be spent to give one rupee benefit to the final beneficiary (Economic Survey of India, 2012), one actually wonders if our situation has worsened from the times of the Prime Minister-ship of Rajiv Gandhi, who had made the bold acceptation that of every rupee spent by the government it eventually gave benefits of only 15 paisa. Has corruption gnawed away at the largest democracy of which we are so proud?
Not all the benefit of the Developmental Expenditure intended by the government is delivered. The major drawback for ambitious government schemes remains the defunct local government system, especially in rural areas; this can be plugged by better-focused service delivery systems. For this, the Aadhaar or Unique Identification Number (UID) as proposed by UIDAI under Nandan Nilekani’s guidance, is a good approach, wherein the target beneficiaries would receive the benefit directly in their accounts and thus increase the impact of Developmental Expenditure by the government as desired. And yet, it is ironic that one of the reasons why UID has been facing problems is that it would legalize the immigrants in India by entering them into the nation’s database. On the other hand, the illegal immigrants form a major chunk of the poor population in India. They go unaccounted for in the nation’s population but their presence in reality utilizes national resources and thus influences the impact of national expenditure.
In the 2012 budget, Finance Minister Pranab Mukherjee addressed the “structural” problems of our agricultural sector, and how this has led to inflation. With limited land sources, which are further being divided, the smallholdings are not attractive for large investors. Secondly, investment in agriculture gives marginal results as the land resources cannot be increased, which refers to the diminishing returns concept. Investments in industrial sector lead to an increased revenue as more inputs can be employed. Thus if investors were to invest in such a scenario, they require higher returns on investment, and as the yield cannot be increased at par, the prices of the output is increased. We are still looking for solutions to these!
Vasundhara Jain is currently pursuing Masters in Economics at the University of Warwick, UK. She has interned at the State Planning Commission MP, where she specifically studied how the banking system met the growth needs of the state. She has volunteered in different capacities at several NGO’s, including ones for development of underprivileged children, and for HIV+ and rehab-seeking residents. . Her further interests including traveling, writing and playing squash. She blogs at www.vasujain.com, and can be contacted at vasu@vasujain.com.
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