The third report covers the processes involved in government expenditure and the perversities therein that result in poor accountability. A very broad approach of the expenditure process has been taken. The discussions are driven by the need for and the feasibility of bringing change for the better. As such the potential for decentralisation, incentive compatible criteria for devolution through the Planning Commission and the Finance Commission, privatisation and private finance initiatives (PFIs) are discussed. The current dysfuctionalities in plan expenditure and the need to move away from the incremental dual budgeting processes are dealt with in detail. Similarly the problems in government procurement, inadequate framework of the audit processes, and the wastage in so many programmes are brought out. The finances of municipal bodies, lack of contract adherence by the state and the costs they impose, the potential of PFIs in the Indian context are also covered.

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