Rural Development - the main casualty

By S. Swaminathan

The irony of governance in a federal polity is that while esoteric debates dominate in the realm of fiscal policy, more and more States are getting entrapped in irretrievable fiscal constraints. The familiar refrain at the Centre is about how to usher in a new regime of fiscal responsibility regardless of how the correction of deficits will impact on economic growth and employment. At the level of the States there is the eternal quest for funds through the ``devolution route'' even if over the last two decades, many State governments have driven themselves into financial bankruptcy through a combination of reckless non- development expenditure (including indiscriminate subsidies for the non-deserving sections of the population) and total indifference to efficient resource mobilisation. Much of the high-decibel harangues on fiscal responsibility will make little difference to the States as long as they remain unwilling to practise a semblance of financial discipline. If the issue is that of political vulnerability, there is little prospect of laggard States exerting their fiscal muscle.

All this has become an obvious reality. But what seems to have been obscured from the public eye is the fact that the major adverse consequence of fiscal mismanagement at the State level has been the acute starvation of development funding suffered by the rural areas. Contrary to all the solicitude for rural development articulated by many successive governments at the National and State levels, the resource constraints have hurt the rural population the most. Far from a digital divide producing new forms of social frustration, there already exists an enormous rural-urban disparity which the distortions of fiscal policy continue to aggravate.

Annual Plan shortfalls

At a time when globalisation has become a red-herring in the development debate in the country, it would be instructive to look at how many State governments (and not only the chronically backward States) have found it difficult to spend the funds that they had themselves earmarked for their annual Plans. Mr. Arun Shourie, Union Minister of State for Planning and Programme Implementation, informed the Lok Sabha on November 22 that ``while most of the States have not been able to fully utilise the outlay approved in their discussions with the Planning Commission, there has been a huge gap between the approved outlay and expenditure in case of States such as Uttar Pradesh and Bihar.''

The Minister rightly attributed the mismatch between Plan outlay and actual expenditure to the inability of the States ``to raise the projected level of States' own resources.'' There is another aspect to it which is the failure of delivery mechanism in many States that accounts for shortfalls in spending. The more worrisome aspect of the slippages in Government spending is that these occur more in the schemes relating to rural development (roads, schooling, supply of drinking water, sanitation and public health) than elsewhere.

As the accompanying Table shows, in Bihar, Orissa, Uttar Pradesh and West Bengal, over the period 1997-2000, shortfalls in Plan expenditure have been chronic. At the other end of the spectrum, in Maharashtra, Tamil Nadu, Karnataka, Andhra Pradesh and Kerala the fulfilment of Plan outlays has been commendable whether or not additional resources mobilisation (ARM) has been accomplished. There are grounds for believing that even in these ``progressive'' States, the escalation in public debt has been of a high order, eroding fiscal viability.

Dismal scenario

The Table also sets out data on utilisation of total funds available for States during the three years, 1997-2000, on various schemes coming under the purview of the Union Ministry of Rural Development.

The data were furnished by the Union Minister, Mr. M. Venkaiah Naidu, to the Rajya Sabha on November 22. The figures of funds available include the States' own resources.

Answering the main question relating to West Bengal, Mr. Venkaiah Naidu said that the State ``utilised Rs. 554 crores out of total available funds of Rs. 816 crores during 1997-98, Rs. 546 crores out of Rs. 850 crores during 1998-99 and Rs. 612 crores out of Rs. 880 crores during 1999-2000.''

Here again, Bihar, Karnataka, Kerala, Madhya Pradesh, Orissa, Punjab, Rajasthan, Uttar Pradesh, besides West Bengal, have fared none too well giving room for serious doubts about the State governments in question addressing the vast unmet needs of the rural population.

What is striking about the data is that outlays on rural development have been so meagre considering that in most of these States, the rural population constitutes 70 per cent or more of the total population.

Unless the States have other components of Plan expenditure benefitting the rural population (and not included in the data set out by the Minister), the impression is inescapable that rural India has been thoughtlessly victimised in the name of developmental planning (or what remains of it in the new dispensation of liberalisation). In the name of fiscal responsibility, are further inequities likely to be heaped on the rural masses?

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