The chapter brings out the nature of public expenditure accountability in India especially at the federal level. The perversities - large role for off budget items, the process that leads to expanding expenditures with little functional but much procedural control, are brought out. The division of expenditure into Plan and Non-Plan is one the perversities since it leads to gaming by state governments to get central funds. Despite many cumbersome reporting requirements, there is little functional oversight or even corrective measures possible in the current system. General public concern for the fiscal deficit alone may not be the right approach, and attempts to reduce the same by cutting out expenditures may not be right especially when the elasticity of tax revenues with respect to investment expenditures in a recessionary situation is high. It argues for a structural approach to the fiscal deficit and shows the limitations of the sustainability approach. It also suggests that major changes are required in the process of budgeting, in the vast array of centrally sponsored schemes and in the mode of subsidisation.

Click here to download