The Budget, presented annually by governments is perhaps the most important policy document in a democracy. It outlines the priorities of governments and gives citizens an idea of where the government is spending their hard-earned tax money. It is therefore incumbent upon governments to make the document as understandable and accessible to citizens as possible.
This blog post is an effort to simplify and visualise the 2018-19 budget of the Municipal Corporation of Greater Mumbai (MCGM) at the most elementary level, and also to give a brief overview of the numbers involved therein. I will also delve into the process by which it is presented; it paints an interesting picture. The idea is to try and get more and more citizens involved in the governance and budgeting process of our cities, so that we can inch towards a more accountable and transparent democracy, one citizen at a time! Also, as you will deduce from the blog, city or local governance is severely ignored, which is dangerous for a democracy since it is governance at the city level that impacts our day-to-day lives. It is at this level, then, that citizenry should be most active.
Even though all details pertaining to the budget of the MCGM over the years have been made available on the MCGM website, the budget itself is extremely codified, complicated and unnecessarily cumbersome to go through and understand. It is broken down into ‘A’ (General budget), ‘B’ (improvement), ‘C’ (BEST), ‘E’ (Education), and ‘G’ (Water and Sewerage) budgets, which are then further broken down into ‘fund codes’.
Contrast this with the budget analysis by the Independent Budget Office of New York City, the explanation of each term is simple and easy to understand for everybody. Similarly, the New York City Council has also made it extremely easy for everyone to understand how their budget works.
In India, the national and state budgets are prepared and presented by their respective finance ministers, both of who fall in the deliberative (elected) wing of the government. At the city level in Mumbai and many other cities in India, the story is much different. The budget is prepared and presented by the Municipal Commissioner, a bureaucrat and an unelected member of the executive branch of government appointed by the Urban Development Ministry at the State level.
The power of running the city, therefore, rests indirectly with an unelected official. There does not exist a structure wherein different agencies and stakeholders report to a single authority running the city that comprises of elected representatives. This undemocratic disease is prevalent not just in Mumbai, but in many cities across India due to a systemic defect.
Further, there needs to be a setting of some basic service-level benchmarks in terms of outcomes of the budget. A budget is nugatory if there is no outcome-based approach which encourages monitoring and tracking of expenditure. Interestingly the Indian Government has created an ‘Output Outcome Framework for Schemes’, wherein they adopt an outcome based approach for monitoring the expenditure on schemes in the budget.
Just like the ‘power of the purse’ at the national level is with the Lok Sabha, the elected House, the preparation and presentation of the budget should be a responsibility of the elected (deliberative) body of the MCGM.
Before we dive into the numbers of the MCGM budget of 2018-19, let us understand some common terms used frequently in all budget documents. Understanding these will drastically simplify most budgets across the world.
Budget Estimates (BE) – an estimate of how much the government plans to spend/earn in the coming Financial Year (FY – 1st April to 31st March).
Revised Estimates (RE) – an indication of a more realistic spending figure that governments work up typically towards the end of the calendar year following the release of the BE. Governments revise BE numbers based on spending and other factors. Bear in mind that the Revised Estimates can be higher than the Budget Estimates.
Actuals – What the government actually ends up spending. This is why you would get Actuals figures of 2016-17 in the 2018-19 budget, since the FY of 2017-18 hasn’t been completed when the budget is presented.
Let us say I am preparing a budget to track and plan my own expenditure. After doing some analysis of my previous expenditure and some planning of the future, I set Rs. 1000 as my proposed expenditure over the next year. This number becomes my Budget Estimate. Now, towards the end of the year, I see that I have only spent Rs. 300. Seeing that it will not be realistic to spend the full Rs. 1000, I revise my initial estimate of Rs. 1000 to Rs. 700. Rs. 700 will be called my Revised Estimates. In April of the next year, I find that I actually spent Rs. 600. My ‘Actuals’ will then be Rs. 600.
Additionally, Estimates are typically broken down further into Capital Income and Expenditure & Revenue Income and Expenditure. These can be succinctly explained as; capital expenditure refers to expenditure on proposed projects, while revenue expenditure refers to everyday/regular expenses. For example, money spent/received on salaries and water taxes comes under revenue expenditure and revenue income respectively. On the other hand, money to be spent on building a sea link or a metro rail would be Capital expenditure, since we are investing capital in a long-term asset. Grants from State/Central Governments usually fall in the Capital Income category.
Still confused? Check out ‘Part II’ in this PRS explanation, which helped me understand the terms used in the budget.
The procedure that a budget document follows in the MCGM is; once the Budget Estimates (BE) are presented by the Commissioner in March, the elected bodies, namely the Standing Committee and the General Body just debate on it and make small modifications. The budget then goes into effect for the financial year from April.
In case you’re wondering, the numbers on the Y-axis are indeed in crores. The Budget Estimates of MCGM for the year 2018-19 are Rs. 27,258 crores! It is the largest civic body in Asia. The MCGM’s budget of 2018-19 is almost double the 2018-19 budget of the entire state of Tripura.
One of the underlying themes of virtually every MCGM budget across departments is under-utilisation, which means that even though the civic body has money to spend, they are not being able to spend it. In my opinion, there can be two reasons for this poor usage of funds; either the MCGM does not have the administrative capacity or capability to spend such a large pool of money efficiently and effectively, or the initial budget is prepared haphazardly, without any scientific approach, and large numbers are presented by the administration to please the citizens and the elected representatives.
Department-wise budgetary allocation
Unutilised money (comparing BE and Actuals) in 2014-15, 2015-16 and 2016-17 respectively:
Roads & Traffic: 13%, 39%, 73%
Health: 33%, 35%, 35%
G Budget: 48%, 33%, 15%.
Storm Water Drainage (SWD): 25%, 48%, 35%
Solid Waste Management (SWM): 33%, 29%, 27%
For SWD, Actuals were higher than RE for the year 2016-17. In the same year, Actuals were also higher than RE for ‘G’ Budget (Water and Sewerage Operations).
‘Establishment Expenses’ comprise of salaries for MCGM employees. The MCGM plans to spend 57% of the total Revenue Expenditure in 2018-19 on salaries. Even though many object to this mammoth allocation, I feel that civic governance ultimately boils down to service-delivery, which can’t be provided without manpower. Catering to services for the 12.5 million people of Mumbai will require a proportionate allocation of resources.
While the general public would assume that a lack of resources is what causes infrastructural and governance problems, it is actually the lack of efficient management of these resources that is to be blamed. The only cure for this is for citizens to be actively engaged – There is a need for accountability of the administration, and transparency and accessibility of the budgets for democracy to function at its best.
The voter turnout for the Indian General Elections and Maharashtra State Assembly elections in 2014 was 66% and 64% respectively. The voter turnout for the 2017 MCGM elections was 52%. This clearly shows that citizens are prioritising State and National elections over city elections. This order needs to be reversed. The maximum voter turnout should be in city, then state, then national elections. Citizenry must be most active at the city level.