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Tuesday, Aug 30, 2005

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Unheard of outcomes

THE Finance Minister Mr P. Chidambaram is no stranger to advocacy, paid or otherwise. That, after all, is his vocation. The distinguishing trait of successful lawyers, and indeed advertising copywriters and publicists of all kinds, is the capacity to craft new words for old; and the chutzpah to carry it off as something original and profound.

Mr Chidambaram did it recently by declaring, for instance, that ditching the policy of disinvestment was very much what his party had espoused all along — and has followed it up with something called an `outcome budget'. What is more, with Warne-like spinning ability, he has expanded on this, telling ministries to look at expenditures through the `prism of outcomes'. So, if your outlay to build, say, a hundred miles of roads is several crores of rupees, you should not merely rest content having spent the money, but also ask the profound question whether any roads were built at all and, if so, how many kilometres, and in what time.

Any housewife could have told him that this was elementary common sense. If she went shopping with, say, a thousand rupees to buy some Diwali clothes for her children, she wouldn't return home jubilant at the mere achievement of blowing up the budgeted amount — without asking if she actually got a good bargain, and the right clothes — that is, the "intended outcome" of her shopping, the very raison d'etre of the exercise.

After decades of governance, is this simple fact so earth-shatteringly new for a highly educated minister or his senior civil servants, one wonders. Did the ministries, which are now exhorted to look at results besides spending the money, manage all along presuming that government expenditure deserved no scrutiny, except for potential misuse of funds, and leakage?

The only criterion for successful completion of a project would thus be avoiding the dreaded accusing finger of the comptroller and auditor general. The actual result itself vis--vis the intent, was irrelevant. As any economist would tell you, the behaviour of the rational economic man or his agents depends on the perceived incentives and punishments.

The minister's new discovery implies thus that so far the civil servant and his masters have been under the assumption that no one would actually sit down and review their performance — nor link rewards to them. One recalls the shocked disbelief that greeted the attempts of Mr P.L. Tandon, one of the first CEOs from the private sector to move to head a public sector unit, to introduce performance budgeting in the State Trading Corporation. Till then spending allocated funds was in itself the desired goal, as elsewhere in government, despite the fact that the STC was an international trading company. It is tragic that nearly four decades later the same malaise — of looking at spending as if it had no bearing on results — ails the management of the entire economy. Clearly the Finance Minister ought to think more deeply before trotting out any more of his nuggets of wisdom.

S. Ramachander

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