Speech by Shri Rajeev Chandrasekhar, MP During the Debate in Parliament on Union Budget 2011-12

March 10, 2011

Sir, at the outset let me compliment the Finance Minister for a speech that has a clear and precise articulation of the challenges facing our economy and country – including the phenomenon of Corruption.

My colleagues have spoken at length about the various aspects of the Budget. I will restrict myself to the challenges of Governance.

In the budget speech, the Finance Minister said, “We have to seize in these developments (these developments meaning recent instances of corruption), the opportunity to improve our regulatory standards and administrative practices, Corruption is a problem that we have to fight collectively.”

I agree with him – but Sir, corruption is not the problem – but rather, Corruption, Nepotism and Special interests are the symptoms of a deep-rooted malaise in our government system that is threatening to dismantle and derail the concept of public life and democratic government that our founding fathers envisioned.

Sir, the need to usher in better Governance is not an academic issue nor is it only about morality and probity in public life as discussions on corruption invariably boil down to. Good governance has very tangible benefits in terms of money! It improves fiscal position of and allows Governments to more directly impact the lives of more people in our country that need government support AND also creates a more sustainable and prolonged growth cycle by making more and more investments for the future. A good example of benefits of governance - is the impact this year of the decision to auction 3G/BWA spectrum despite pressure and lobbying from many quarters, including the leaders of business – which garnered the Government approx. Rs.140,000 crores – representing about 14% of the total Budget outlay, which the Finance Minister himself has recognized has helped in the faster fiscal consolidation despite increased spending!

Sir, let me draw the attention of the House to interesting language in the Economic Survey authored by the Finance Minister’s Economic Advisor Shri Kaushik Basu - “For India to develop faster and do better as an economy, it is, therefore, important to foster the culture of honesty and trustworthiness.” It also states – “Hence, to cut down on corruption and pilferage, we have to design policies in such a way that there is no incentive for ordinary citizens and the enforcers of the law to cheat.”

Sir, the problems of Governance arise from the issue of “unfettered discretion” - Unfettered Administrative discretion in dealing with Public assets and unfettered administrative discretion in doling out Government contracts and spending with very little oversight and failure/compromise of institutions like Independent Regulators – leading to repeated instances of public policy and regulatory capture by vested interests.

The current telecom scam is such an example of compromised regulators, public policy capture by vested interests and administrative discretion being used to the fullest to benefit some private interests.

The solutions for this are obvious – The Finance Minister must usher into the government a value for money culture – a culture that reinforces the truth that Government is only a trustee of public money and assets. The spending of this money and the handling of public assets must always pass the test of national good, and not in the misused public interest argument that’s often used to give scarce national assets to private interests.

I would propose a four point strategy for this –

Firstly, Statutory disclosures by all Government departments on commercial decisions. Disclosures are the best way to keep Government departments honest. Knowing that their financial decisions are available for media and people to scrutinize without relying on RTI - is a great way to encourage honesty.

Secondly, More effective Finance Ministry oversight on all decisions relating to Spending, contracts and public assets.

Thirdly – and you have already mentioned this – increased use of technology for ensuring better disclosure and expenditure management. Specifically, the TAGUP’s recommendations of an Expenditure Information System should be implemented.

Fourthly, A relook at the Independent Regulatory institutions.

These four, if pursued, will be catalysts for introducing a culture of fiscal responsibility and value for public money within the Government.

I have no doubt that there will be the usual arguments made from within some parts of the Government that these would slow down administrative decision making – But those should be brushed aside. To quote John F. Kennedy – “The problems of this world cannot possibly be solved by skeptics or cynics whose horizons are limited by the obvious realities. We need men who can dream of things that never were.”

Sir, let me dwell a bit on the last issue of Regulators which the Finance Minister had touched upon in his speech and the Prime Minister spoke about last year. Sir, in recent years, Independent regulators have become parking spots for bureaucrats – They cannot and should not become another layer of bureaucracy. We must create motivated, public service oriented and specialist people who want to serve as Independent Regulators.

Telecom is a classic case where very poorly equipped or people with questionable motivation were put as regulators and they have presided over the public policy capture by vested interests. The Supreme Court also has said recently that the CVC need not be chosen from retired bureaucrats. Creating a set of credible regulatory institutions is one of the most important requirements of delivering governance and improving the state of Governance. In the words of a contemporary Indian historian - “We have to repair one by one, the institutions that we have inherited and build new ones to help us meet the challenges of the coming years”.

Sir, let me end by raising two specific budget requests –

The Service tax on health service providers has had the consequent impact of raising health costs across the board by 5%. While a small part of our society will absorb that, most patients have to bear the pain of this. This is even more painful because there is no related increase in Health reimbursement or insurance backstop for this additional cost.

In our country where Health delivery by the public health system is still very patchy – this service tax is being referred to as Misery tax. I accept the basic logic of ensuring all services come under the service tax, but I urge you to exempt health from this – till such time the Government is able to target and exempt the poor from this additional cost.

Lastly, the issue of One Rank, One Pension for our Veterans. Sir, I feel disappointed that as a nation that we are seeing a need to have this discussed in Parliament at all. These proud men and their families have served our nation selflessly, with a certain belief that the nation and their people will look after them, when it comes to their turn to be looked after. At a time, when there are visible signs of crony capitalism and hundreds of thousands of crores of largesse and benefits being given to vested interests, how can we look into the eyes of these veterans and deny them their legitimate demand quoting budgetary constraints. Let not a few hundred crores come in the way of our duty to these men and their families. I hope the Finance Minister and Defence Minister respond to this plea.

Sir, let me end by saying that the headwinds of risk are building up globally with rising Oil prices and uncertain global environment. This is the time for Government to take the right decisions and work hard to building a consensus with opposition of key issues of National interest and I quote “In a complex and rapidly evolving economy, the Government cannot profess to be the sole repository of all knowledge.  Indeed, in a democratic polity, it stands to benefit from inputs from colleagues on both sides of the House.  They must lend their voice and expertise to influence public policy in the wider national interest.”

Thank you.
Jai Hind.