3. Why the new govt needs to prioritise governance over big spending

Jun 9, 2024, 21:49 IST

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Progress amid challenges

In its 75th year as a sovereign republic, India proudly stands as the world’s fastest growing large economy and celebrates its vibrant democracy showcased in the recent elections.
However, profound challenges persist, including gaps in education, health, public safety, justice, social protection and job creation, which hinder individual and national progress.

Big clash

As a new government takes charge, the intuitive response to these challenges might be advocating for increased budgets across critical sectors.
However, research indicates that merely raising sectoral budgets doesn't guarantee better outcomes, whereas even modest investments in governance enhancements can yield far greater impacts than conventional spending increases.

Strategic focus

A key message for the new government is that higher public spending by itself will not solve our massive social and developmental problems.
Rather, we need to focus much more on improving the effectiveness of the Indian state.

Governance reforms

India possesses the knowledge and technology to implement vital governance reforms to strengthen public systems. Key areas for improvement include:
(b) public personnel management including hiring, training, postings, and rewarding performance; (c) boosting quality of public expenditure by reducing allocations to ineffective spending items, and spending more on effective but underfunded ones; (d) increasing the quantity and quality of tax revenues; (e) greater decentralisation of funds and functionaries for service delivery; and (f) building better regulatory and procurement capacity for making markets function better, and leveraging private actors in the public interest.

Returns for development

High-quality research across various sectors has shown that strengthening governance and state capacity can offer a return on investment (RoI) over ten times the cost, suggesting a ‘free lunch’ for accelerating development.

Shared priority

Enhancing state efficiency should be a top priority across the political and ideological spectrum.
It enhances service delivery to the marginalised, aligning with left-leaning values of equity and justice, while also boosting public spending efficiency and fostering sustainable growth, attractive to right-leaning perspectives.
Likewise, building effective public systems demands collaboration across all government levels. More here

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