Turn the hierarchy upside down for greater efficiency

The Budget should lay down the path and the intent of the government to be creative and unconventional. A management perspective should be evolved. The Government should unleash a national initiative of variety of micro measures that creates efficiency and effectiveness across the board. Investors will follow.

Firstly, as a five-year vision for the economy, the Finance Minister must emphasise efficiency and effectiveness as key to resource allocation for user constituents. An annual Budget exercise tweaks only about 5-7 per cent of the total revenue receipts. Revenue far in excess of this can be augmented with a five year plan with accelerating annualized targets for each of the major expenditure heads if driven by the objectives of efficiency and effectiveness of expenditure.

Firstly at national level, the objective should be to achieve a measurable increase in efficiency of at least 10 per cent in the first year, accelerating to 20 per cent from second year onwards. This should be seen clearly at two levels. First the output generated in terms of policies, proposals and sanctions by the existing government machinery be targeted to increase by the same level i.e. 10 per cent in first year and 20 per cent from second year onwards.

There is huge scope for this in the existing machinery. This efficiency drive should be supported by two moves. One is of technology that should encourage more and more ways of linking the actual users i.e. citizens with the ultimate decision makers. The entire pyramid of hierarchy should be turned upside down supporting the decision maker. This technology network may face initial teething troubles but will yield tremendous efficiency. We should harness our IT industry’s competence for this e-governance. An outsourcing model, which private parties can own and operate, should be deployed.

The second part of this initiative should to simultaneously encourage more self-governance to attain reduced governance. The Finance Minister must look at specific and concrete predefined areas here. We must also build deterrents and punitive measures with no compromises. These two go hand in hand as increased e-governance itself results in improvements.

The increased efficiency will benefit and relieve the exchequer. It will also help release productive energies in society. Reforms are needed at the state and local government levels with regard to inspector raj, local taxes, citizen entitlements etc which cause inefficiencies and costs.

Today almost $ 11 billion are annually spent for grants in aid to state. These grants are presumably given for specific conditions. State grants should be tied to the states agreeing to implement specific governance programmes.

Further, as part of the exercise, the government should look at all major cost and revenue heads for specific initiatives.

First, defence forces. As we enter the peace era with the neighbours, there is a need to enhance the peacetime role of defence forces. Defence is the most professional arm of the government and their role in infrastructure building, education and support to remote areas in achieving our social goals can be looked at. The forces have the multi tasking abilities and infrastructure and they can play effective role in peace time nation building.

Railways are the next with huge countrywide infrastructure. Ten per cent efficiency per annum on the expenditure is not difficult. In fact this organisation should deploy technology extensively and use experienced manpower in the other activities as bulk of manpower related activities such as energy, material handling, human resources, go to automation. There should be special focus on pilferage and revenue enhancement through improving capacity utilisation.

Interest is the biggest revenue expenditure of the government. There is need to look at creative ways on interest savings. It is possible to monetise the government’s available resources such as investments in PSUs, through a possible India fund wherein both low cost debt and equity can be used to replace current borrowings. Considering the huge value of the assets at the Government’s command, it is possible to actually replace the entire current borrowings of the Government.

In the new world order, it is clear that globally the foreign affairs of a state are governed by economic policies. Our current expenditure on external affairs is of the order of Rs 2000 crores. In the new environment, the government should look at using this resource to expand India’s foreign trade to countries with specific partnerships. Government should work an initiative of business partnership with business associations like CII, FICCI to leverage this resource to more meaningful business dimensions. We can name this the Ministry of External Business!

It is easy for any Finance Minister to resort to raising revenue to pay expenses. Statutes authorise this exercise of power but the real power of the Finance Minister is in paving the ways for pro-active, productive and possible initiatives that have long-term implications to curb expenditure through efficiency measures.

The author is a leading management and technology professional and currently Chairman, MGRM Net Limited