I n a few days’ time, you shall be presenting your fifth budget. We hope that like your earlier budgets, this time also you would resist the temptation of populism in the pre-election year, and focus on further consolidation of the fiscal path, while bringing in more transparency. Maybe you can try to bring in a little more openness and more participation in the budget too. Under the guidance of the Prime Minister, your government has dismantled many of the remaining vestiges of our colonial past. The traditional secrecy that surrounds our budget-making which excludes our billion plus population from participating in the process of finalising a document that will guide their lives for the next one year remains an aberration that now needs to go. The babus who remain locked up in the North Block during the entire time that it takes to finalise the figures and the ritual of Halwa ceremony that releases them from this forced lockup are anachronistic to a mature democracy. It is time to junk them into the dustbin of history and make the budget truly a people’s budget.
As you are aware, the Open Budget Index (OBI) prepared by the International Budget Partnership (IBP), a global organisation promoted, among others, by the World Bank, UNICEF, the European Commission and other government and civil society organisations in Europe, Africa and North America, assesses the budgeting processes of different countries according to three parameters ~ oversight exercised by the legislature and public audit institution on the budget outcomes, transparency of public access to timely and comprehensive budget information and the extent of public participation in the budgeting process. Each parameter is assessed on a score of 100 using a number of indicators. The scores of a few countries in its 2021 survey are as follows:
It would seem that while on oversight, we are faring not too badly compared to the advanced nations, our performance in transparency, and especially on participation, leaves much to be desired. Even Nepal, Sri Lanka and Bangladesh score much higher than us in participation (24, 19 and 13 respectively). While many of us have a tendency to treat such rankings prepared by international organisations with contempt, often for valid reasons, we need to look into our processes and practices and compare them with the international best practices before discarding these scores as yet another of the West’s attempts to undermine Indian democracy.
It is indeed shocking that a document as important as the budget that sets the developmental course of a nation for the next one year is enveloped in such a thick veil of secrecy that even those who prepare it cannot be trusted to interact with outsiders during its making. Gone are the days when the budget used to throw surprises in tax rates in respect of income and commodities which perhaps justified such secrecy, but now the budgets are far more predictable as far as taxation is concerned, with very little changes in existing rates and slabs in respect of income. After the GST, taxes on commodities are under the purview of the GST Council rather than the budget. The budget is now watched primarily for the expenditure proposals including new government schemes for which transparency rather than secrecy is much more desirable where informed inputs from experts, grassroot workers and citizenry can help policy makers, who often work from their silos. This will help avoid mistakes of the past and formulate schemes which can deliver without compromising the ruling coalition’s political objectives.
Many countries have used innovative mechanisms for encouraging public participation in their budget processes. South Korea ensures public participation through an advisory committee that is involved at every stage of its multi-layered budgeting system, both at the central and departmental levels. The advisory committee consists of both government and civil society organisation members as well as outside experts, and improves openness, transparency, and complementarity of budgetary processes at every stage. To ensure transparency, South Korea follows a Digital Budget and Accounting System.
Canada conducts pre-budget consultation exercises by its House of Commons Standing Committee of Finance as part of its federal budget process. The consultation process takes place not only in the capital Ottawa but across the country and includes both oral testimonies and written submissions. The results of the process are published online. The work of the Committee focuses on aggregate spending, tax policy, deficits, and surpluses, and not on detailed departmental allocations. To start the public consultation process, through a press release, the Standing Committee on Finance invites Canadians to give their opinions about the upcoming budget, outlining the specific themes they would like to be addressed by the witnesses who agree to testify. Any individual or group is eligible to participate in this public consultation process. Witnesses can testify in person or submit briefs online. Based on these pre-budget consultations, the Committee forms its recommendations, which are publicly available on its website. The online consultation process remains open for 60 days. Canada, which has an April-March financial year like us, presents the main estimates on 1 March, while the budgeting process is completed by the executive between June and September, and the government’s budget consultations with the public take place from September to December. The executive is not obliged to adhere to the Committee’s recommendations based on the public consultation process, but the public does not feel left out of the process. Many advanced countries where public participation is high generally put a set of their tentative budgetary proposals on their website well ahead of the budget, seeking public opinion and comments on these.
The proposals are only in the summary form without detailed estimates which may not be necessary for public participation. Seeking public comments without putting in place an institutional mechanism to respond to them is useless, hence they have designated officials to sift through and filter the comments for appropriate responses and for seeking further clarifications. Studies conducted all-over the world ~ and not simply in developed economies ~ indicate that public participation corrects and validates the budgetary assumptions and improves the budget performance. Some countries, like Georgia, have instituted an electronic platform called “Budget Transparency and Engagement System” that enables the inputs provided by the public to go directly to the concerned budget department officials.
The South Korean model of pre-budget consultation through advisory group has been emulated by five African countries ~ Benin, Liberia, Nigeria, Senegal and South Africa ~ using a collaborative approach to advance public participation, under a Fiscal Openness Accelerator project jointly launched by the Global Initiative for Fiscal Transparency (GIFT) and IBP in 2020.
Apart from creating a partnership between citizens and the government and building the mutual trust that is necessary for the success of any public policy, the experiences in these countries highlighted how the level of public awareness about the budget can be raised, preconceived notions in budget making can be challenged and corrected, and views of various stakeholders, especially the marginalized and vulnerable sectors, can be accommodated. They taught how bureaucratic resistance can be overcome, and demonstrated that higher public involvement can improve the outcomes of budgetary spending, improving fiscal transparency as a whole and reducing corruption and missing funds.
At the local level, following the success of the Porto Allegro experiment in Brazil to involve people in municipal budget making where citizens negotiate with government officials over the municipality’s budgetary allocations and investment priorities leading to increased expenditure and improved outcomes on basic sanitation and health services, many cities across the globe now follow similar practices. Even in our own neighbourhood, in Bangladesh, Union Parishads, the lowest level of the local government, are obliged to prepare and present their budgets to local people in an “open budget session”.
The annual income and expenditure statements of the Parishad are presented at these open budget meetings along with the succeeding year’s income and expenditure plans for public discussion. We are a much older democracy than Bangladesh, but nothing like this is known here. If introduced and practiced widely at the local level and followed all the way up, it could see a transformational revolution.
Madam, it is for the Union Budget to show the way. Your officials will probably tell you that people are stupid, they want everything without wanting to pay anything, that an uninformed and financially illiterate public can hardly offer suggestions worthy of any consideration, that the public have little of value to offer to the policy makers. You, being a seasoned politician from the grassroots, know better. It is time to open the “Black box” of budgeting and decision-making and to assure people that it is not the babus but they ~ the people ~ who will have the ultimate say in what is good for them.