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Making budgets citizen-friendly

January 21, 2013

Jagadish Shettar, the Chief Minister of Karnataka recently announced that he would present this year’s budget for the state on February 8th. This announcement made in passing in a public function seemed to be done with the intent of communicating his Government’s continued survival rather than anything else. Last year the then Chief Minister claimed a major political victory on the grounds that he had presented the state’s largest budget till date. There has been no analysis or any clarity on whether this money was actually mobilized or spent, and what impact the budget had on the state’s finances or economy. There was neither a perceivable impact felt on the ground of this massive budget nor any clear understanding on the return on investment for the citizens of the state. I still remember as a child my father reading the budget speech in the newspapers as a very sacred duty and I could never figure out why he made it such a big affair. After all, we belonged to a middle class family and he was only a mid-level government official. Only later could I begin to understand how the lives of every Indian can and is affected by this annual affair. Whether it is a new tax introduced or a subsidy withdrawn, a new program or initiative of the Government or a reworking of the policy – all of them leave their own impact.

Such an important process is usually left to a set of bureaucrats and a few politicians to frame and finalize. One finds very little citizen involvement or engagement in this very important process. It is only recently that the Government, especially at the Central level, is making an attempt to consult key stakeholders. Is this enough to make our budget transparent, meaningful and hold the Government of the day accountable to the promises made in this document? While debating and approving the budget continues to remain a key legislative function, shouldn’t the common citizen be encouraged to participate and communicate their aspirations too? But will the state allow citizen participation in what it considers a sacred, highly specialized and a secretive function.

This past decade is seeing a few countries trying to make the budgeting process transparent and citizen-friendly. The British magazine ‘The Economist’ had reported about the ‘Open Budget Index’ from a survey that was conducted in 85 countries by an International NGO. While this showed countries like South Africa and Britain at the head of the table, India was lower down. Most of the poor countries were in the lower end of the table leading one to believe that poverty and budget opacity could be linked. China and Nigeria were two middle-income economies that were amongst the lowest in the rankings. India as a country and all the State Governments in the country can climb up the Governance ladder by bringing in incremental changes each year in its budget preparing process. All that is required is political and bureaucratic will to do so.

Governments are accountable to their citizens for what they do and how they do it. Accountability means, in part, that the policies and plans that a government develops should reflect the priorities, needs and aspirations of the people. It also means that government should provide an account of what it has done to implement those policies and plans together with the results of its efforts. Citizens for their part have a responsibility to hold their government to account. They should participate in public life, voting for people they believe in, monitoring the government’s actions, commenting on its policies and plans, and challenging it when things go awry.

Governments should take the first step and be proactive and encourage citizen participation by creating conditions that enable them to participate in a meaningful way. This begins by ensuring that citizens have ready access to government information. Access means not simply physical access to documents, but accessibility. Where the government’s work is highly technical, it is not sufficient to simply make technical documents available. One needs to understand that ordinary people can be overwhelmed by complex concepts and strange terminology. Access to information means access to information in a language and through formats that ordinary people can understand and appreciate. This idea is as true of government budgets as any other of the government’s policy and planning documents. Having access to key budget documents — the Pre-Budget Statement and Economic Surveys, the Executive’s Budget Proposal, the Enacted Budget, Year-End Reports, Reports of the Public Accounts Committees, Audit Reports of the CAG — is essential for people to be able to develop a full and clear picture of how their government is raising and spending public money. Apart from these routine budget and audit documents that Governments prepare, they need to have one more additional document: the Citizens Budget. This document should be specially produced for the ordinary person and explicitly developed for the public. Currently, other documents may be filled with so many numbers and so much technical jargon that the ordinary reader cannot understand what they mean. By definition, a Citizens Budget does not throw up these types of obstacles. By its very nature, a Citizens Budget is accessible to a reader or user who does not already have budget knowledge and related technical expertise.

We need to remember that Government’s money is people’s money. The government’s revenue comes from the people through the taxes and fees they pay. It comes from exploiting natural resources that are part of the national assets that belongs to the people. Even when revenue comes from loans, it is the people who will have to repay them in the end. The Government is accountable to the people for this money. Making the budgets it develops publicly available is one way to provide an account. Another is through publishing financial reports that explain how the money has been spent. The challenge, of course, is that budget information can be complex and is produced by different parts of the government at different times. It is thus disjointed and located in different documents. In many respects, these documents are written for the internal use of government, and so use technical terms that most ordinary people do not understand. If they cannot understand what is presented to them, they cannot ask questions about it. The people are, in effect, unable to hold their government to account. Citizens Budget seeks to address this shortcoming and is a document that summarizes and explains basic budget information. It is a report to the people, presented in an accessible format using simple and clear language they can understand. Being able to understand, individuals can then carry out their responsibility as citizens in a democracy of asking questions that ensure that the government explains what it has done in their name.

The citizens are, of course, the primary beneficiaries of a Citizens Budget. The very purpose of a Citizens Budget is to increase their knowledge of what the government is doing and enhance their capacity to participate in governmental affairs. However, governments also benefit from Citizens Budgets. It is an opportunity for the government to enhance public knowledge about the budget. It is also a medium through which the government can communicate its perspective about the budget to a broad audience. In these days of mis-governance and corruption, a Citizens Budget can also be a particularly effective way for a government to demonstrate that it holds itself accountable to the public. Most people know very well that the budget is central to the functioning of the government, and that the budget is also key to their own well-being. Thus a demonstrable effort by the government to explain crucial fiscal policy information and budget decisions in a form that is more readily understandable to ordinary people can greatly enhance the government’s legitimacy in the eyes of the public. One only needs to be cautious that our political systems do not denigrate it to be a piece of propaganda, but allows the government to explain the reasoning behind the choices it made in putting the budget together.

A Citizens Budget can also serve as a tool for civic education. It can be a vehicle for explaining how the budget is formulated, enacted and executed, and who is responsible at each stage. Through a Citizens Budget, a Government can clarify which level of Government and which specific Ministry or Department is responsible for performing different governmental functions and providing services. This greater clarity can ease the government’s work by minimizing misdirected inquiries or requests for information.

A Citizens Budget is also a way of encouraging the people themselves to participate in a range of governmental affairs. If the content of the Citizens Budget is appropriate and the presentation accessible and encouraging, and if it comes out on a regular basis, it can be an invaluable tool in helping to initiate and sustain a dialogue between the government and citizens.

Preparing and presenting a Citizen’s budget takes a lot of political courage and will. It begins with faith in ‘participatory democracy’ and ‘citizen entitlements’. It needs to move away from the mindset of a patronizing Government to one that recognizes the role and legitimacy of an empowered and enlightened citizenry. And only when this happens, can our Chief Ministers and Governments claim to be promoting Good Governance. Till then we will have to live with the mediocrity that they dish out year after year.


Categories: Musings
  1. January 26, 2013 at 1:33 am

    Thanks for your post on this topic, it is indeed a very important one. The newest iteration of the Open Budget Index was actually just released this week at http://openbudgetindex.org. The OBI 2012 finds that while the state of budget transparency around the world is dismal (77 of the 100 countries’ budgets assessed fail to meet basic standards of budget transparency), there has been steady progress since the first Open Budget Survey in 2006 and that rapid are possible (and necessary) in a variety of contexts. The International Budget Partnership (who produces the Open Budget Index) also has much more information on Citizens Budgets and other crucial budget documents at http://internationalbudget.org/what-we-do/open-budget-survey/advocacy/advocacy-tools/budget-transparency-guide/.

  2. Anand Narayan
    January 22, 2013 at 10:39 am

    Kudos Balu, for the wonderful article on Budget & the need for Citizens budget,this article should be widely circulated to the finance ministry officials[ bureaucrats] of both state and central government, and a feedback from the power makers the politicians, who can understand the real budget and the citizens budget.

  3. Shanthi
    January 21, 2013 at 6:50 pm

    Dear RB, Well written.

    It is so very correct that we need to engage with budget. For this, having access to the budget with related documents is the first step. But this is not sufficient. I as a citizen need to understand the Budget reports regardless of my academic degrees or professional background.

    It was a great opportunity working with you on budget issues 🙂

  4. January 21, 2013 at 2:37 pm

    Thanks for these incisive thoughts, Balu.

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