Fiscal Governance Reforms at District Level for Improving Fund Flow and Utilization in Development Schemes

The Trusts’ work has long been guided by the mission of “Building a Nation of sustainable People and empowered communities.” Through the Data Driven Governance portfolio, the Trusts take a systems strengthening approach, with a focus on the immense potential of data-reliant, citizen-centric planning. In this age, it has become important to recognize data and technology as cross-cutting layers, with the potential to bridge sectoral divides that characterized public policy approach to development-related issues.

Data Driven Governance (DDG) carrying the Trusts mandate forward, has worked extensively to provide directed technology and capacity building support to rural and urban decision making systems, and inculcate data as a way of life in the government’s DNA – thereby creating significant impact for underserved and marginalized communities. DDG’s work spans across 91 districts, 27 states and 8 cities.

While an important aspect of development is to understand needs on the ground and appropriately align planning activities, it is equally important to look at the budgeting and fund flow process to ensure effective implementation of these plans. In the Indian context, strengthening district level governments is critical towards realizing developmental outcomes that reach the community.

In a scenario of competing demands for funds from a large number of sectors, the country cannot afford sub-optimal utilization of budgetary resources. In this context, Centre for Budget and Governance Accountability (CBGA) and Tata Trusts have carried out a two-year project focusing on fiscal governance reforms needed at the district level for improving fund flow and utilization in development schemes across sectors. The Budget Trails series of knowledge products emerged out of our learnings from the project and comprises seven issue-specific Policy Briefs, six Notes from the Districts that discuss innovations and better practices in the social sectors, and a Summary Report.

Summary Report

This report documents the key lessons learnt from the project. The purpose, scope, objectives, methods, key findings and challenges have been documented in this report. The research findings call for revising the narrative that focused on poor utilization of funds in the social sector schemes in India and instead asks for increased attention towards poor quality of utilization. The Budget Trails series recommendations, as consolidated in the summary report, propose a number of actionable policy measures that could address the bottlenecks at the district level like, delays in fund flow, rigid guidelines and unit costs, human resource issues, and transparency and accountability issues.

Notes from Districts

The series includes 6 cases/best-practices from different districts, covering interesting innovations and other proactive measures by districts, such as:

• Exploring District Mineral Foundation Trusts (DMFT) fund in East Singhbhum (Jharkhand) to address resource gaps in schemes. Read more
• Use of revolving fund mechanism in Krishna (Andhra Pradesh) to tackle fund delay issues. Read more
• Expansion in Beneficiary coverage in Balasore (Odisha) to improve utilization of unspent funds under social security schemes. Read more
• Fostering cooperation between multiple agencies in East Singhbhum (Jharkhand), to improve plan outcomes. Read more
• Leveraging DISHA committee meetings in Bolangir (Odisha) to enhance transparency and accountability in fund management and use. Read more
• Using Online Treasury Portals to enhance fiscal transparency in Chandrapur (Maharahstra) Read more

Policy Briefs

Seven issue-specific Policy Briefs have been prepared which deal with various aspects of fiscal governance at the district level and impact the implementation of social sector schemes. These are:

• Policy Brief 1

  Extent of Fund Utilization in Social Sector Schemes – Does it conceal more than it reveals?

  The extent of Fund Utilization across districts, schemes, components and blocks is detailed in this brief. It also discusses the question of adequacy of funding for the social sector schemes. Quality of fund utilization across the SSS, is studied along three dimensions – a) Distribution of expenditure across quarters; b) distribution of expenditure across components; and c) Distribution of expenditure across blocks.

  Read more

• Policy Brief 2

  Factors Constraining Fund Utilization in Social Sector Schemes

  This policy brief documents a diverse range of factors that are affecting utilization of the available funds under social sector schemes and has suggested policy pointers to address them.

  Read more

• Policy Brief 3

  Delay in Fund Flow: Causes, Consequences and Remedies

  This brief discusses (a) how delays in fund flow affect the quality of fund utilization, (b) the factors that cause delays in fund flow, (c) the other impacts of delays in fund flow, (d) the possible policy measures that can address the delays in fund flow.

  Read more

• Policy Brief 4

  Fund Flow Mechanisms of Centrally Sponsored Schemes in Social Sectors

  This Brief discusses the ways in which fund flows to district and sub-district levels and the impact of changes in this mechanism in the recent times, like introduction of direct benefits transfer. It also identifies the gaps in the current mechanism and suggests policy measures.

  Read more

• Policy Brief 5

  Availability & Capacity of Human Resource for implementing Social Sector Schemes

  This Brief discusses (a) quantum and impact of staff shortage in the districts (b) issues pertaining to training and capacity building of the staff and (c) other issues like the recruiting contractual staff and their payment issues etc.

  Read more

• Policy Brief 6

  This Brief discusses the impact of rigid scheme guidelines on effective fund utilization. It highlights important questions like the lack of flexibility at the level of districts in terms due to untied funds and in beneficiary selection.

  Read more

• Policy Brief 7

  Strengthening Budget Information Architecture at the District Level

  A most viatal aspect of improving fiscal governance at the district level is the issue of financial transparency (or lack thereof) at that level. This Brief discusses the dire need for the same and gives recommendations to improve the budget information architecture at the district level.

  Read more