The glass half full

Subir Gokaran

Tuesday, February 12, 2008 (New Delhi)

The most significant economic characteristic of the UPA government is undoubtedly the unbroken streak of GDP growth during its regime. The lowest rate recorded was 7.5 per cent, while in two out the three years for which the complete data is available, the growth rate exceeded 9 per cent. Our forecast for the current year (2007-08) is 8.6 per cent, which is about in the middle of the range. Next year, the last year of this government is also expected to be around the same. In short, the UPA term could well end up with a five-year average of close to 9 per cent, which, in most countries, would guarantee re-election! But, not in India, not because “we are like that only” but because, clearly, rapid economic growth does not necessarily translate into significant improvements in people’s quality of life. The benefits of growth can only be realized by people if various mechanisms relating to infrastructure and service delivery not just exist, but function with reasonable efficiency.

This has always been fundamental reason for persistent anti-incumbency. However good the macroeconomic numbers look, every voter ultimately looks at how much his overall quality of life has improved. Other considerations become significant beyond a minimum threshold of improvement. The UPA government clearly believed this explanation to be valid and began its tenure with both rhetorical and financial commitments to a number of broad-based infrastructure and welfare programmes. The Bharat Nirman Programme was an effort consolidate and synergise a variety of rural development schemes, while the flagship National Rural Employment Guarantee Scheme, now enshrined in an Act of Parliament, was aimed at providing a broad-based safety net to people in the poorest districts of the country.

Keeping in mind that that the upcoming budget will be the last regular budget before the next elections, it is critical for the government to take stock of how these various programmes are performing and what, if anything, the Finance Ministry can do to give them impetus in the last year of the government. This article provides a quick assessment of how some of the major programmes that the UPA government will be held accountable for have done. We emphasize the fact that this assessment is made on the basis of the government’s own disclosures and no attempt has been made to independently validate the achievements. Even within this constraint, it is clearly a case of the glass half-full. However, equally clearly, half-full is better than completely empty.

Programmes / Schemes	Targets	Achievements	Our Quick Assessment
Bharat Nirman Programme
- Rural Electrification	1,25,000 uncovered villages and 2.3 crore households to be provided electricity by 2009.	43,403 villages have been electrified by the end of September 2007. 14,18,385 BPL households have been given electricity connections free of charge.	After two years of the launch of the programme, 34 percent of targeted number of villages have been connected but the programme has been unsatisfactory in providing electricity to BPL households, with a mere 6 percent households having benefited.
- Rural Roads	66,802 habitations are to be provided an all-weather road by 2009. Target for 2007-08 is to connect 20,071 habitations by constructing 43,990 km rural roads and upgrading 59,316 km existing rural roads	Number of habitations covered upto September 2007 are 2613, by constructing 8738 km of rural roads and upgrading 10,878 km of existing rural roads.	The performance has been below the mark. As against targets set for 2007-08, the mid-year outcome reports only 13 percent of habitations been covered, 20 percent of rural roads been constructed and 18.3 percent of existing roads been upgraded
- Drinking water	55,067 uncovered habitations and all habitations suffering from problems with regard to the quality of water to be covered by 2009	Drinking water has been provided to 1,07,152 habitations till March 2007	The coverage of uncovered habitations progressed very well but there is no number reported for quality- affected habitations.
- Rural telephony	66,822 villages, which have not yet been provided with a Village Public Telephone (VPT), are to be covered by November 2007	Till September 2007, 50,520 villages have already been covered	The outcome can be judged as satisfactory as 75.6 percent of uncovered villages have been covered.
- Irrigation	Additional irrigation capacity of 10 million hectares (100 lakhs) is to be created by 2009. The target for 2007-08 is 28.50 lakh ha.	Creation of 25.87 lakh ha irrigation capacity has been achieved by March 2007. 12 projects have been completed during 2007-08.	Against the target capacity of 43 lakh ha in the first two years, with 25.87 lakh ha, only 60 percent of the target is achieved.
- Rural Housing	60 lakh houses to be constructed by 2009. 21.27 lakh houses to be constructed during 2007-08.	30.50 lakh houses have been constructed during the first two years of this programme. Upto October 2007, 6.13 lakh houses have been constructed and 7.92 lakh houses are under construction.	50 percent of the targeted number of houses have been constructed after two years of the launch of the programme. The performance against the target set for 2007-08 is also fairly good with 66 percent of the target achieved (putting together houses constructed and those under construction) by October 2007.
National Highway Development Programme
- Golden Quadrilateral (GQ)	Total Length of 5846 Km to be four-laned	5629 km has been completed and the balance length is under implementation. During the calendar year 128 km length has been completed.	Although there is a delay with respect to targeted time frame, with 96 percent of work accomplished, the project is nearing completion.
- North-South & East-West Corridors	Total length of 7300 km to be four laned.	Out of 7300 km, 1559 km length has been completed and 4762 km length is under implementation. During the calendar year 707 km length has been completed.	The project is running into delays but progressing and different stretches are at different stages of completion. There is relatively uneven progress.
Port Connectivity Project & Other National Highways	380 km of Port Connectivity and 945 km of other National Highway to be completed.	Under port connectivity, 163 Km has been completed and 211 km is under implementation. During the calendar year 28 km length has been completed for the Port Connectivity. So far 337 km of other national highway has been completed and four laning of 605 km is under implementation.	The total project is expected to finish by February 2010 as per the status given by NHAI on 31^st December, 2007.A reasonable percentage of the target appears to have been met.
Special Accelerated Road Development Programme for North-East (SARDP-NE)	The programme was approved by Govt. on 1.10.2007 and envisages widening of 3846 km of National Highways and improvement including widening/improvement of 4891 km of State roads. This will ensure the connectivity of remaining 58 district head quarters to the National Highways / State Roads in the 8 North-Eastern States	Ministry has set up a High Powered Inter Ministerial Committee to approve and co-ordinate individual sub projects under SARDP-NE. Till date Committee has approved various sub projects covering 664 km length at an estimated cost of Rs. 1613 Crore under Phase “A” of the program.	The programme got approved only in October 2007. It’s too early to measure performance.
National Rural Employment Guarantee Scheme (NREGS)	To expand the scheme from the earlier level of 200 districts to 330 districts in 2007-08. The remaining 266 districts also to be covered by the scheme 1st April, 2008.	So far, nearly 216,48,117 households demanded employment to which 212,76,824 households have been provided with employment and 6400 lakh person days works have been taken up. Of the total available funds during 2007-08 amounting to Rs. 12,842 crore, Rs.8,758 crore were released till October,2007.	Out of the total employment demanded, 98.3 percent have been provided which shows a huge success of the scheme, but after the reports of a complete opposite picture and of irregularities in allocation of funds, the CAG has been asked to review the performance of the scheme in consultation with the state governments. The government’s numbers look sensational and, if true, this will stand out as a significant achievement of the UPA regime. However, we need to wait and see what the CAG has to say.
Jawaharlal Nehru National Urban Renewal Mission (JNNURM)	The mission was launched in December 2005 and the duration of the mission is seven years beginning from the year 2005-06. The mission aims at encouraging reforms and fast track planned development of identified cities. The objective is to prepare City Development Plans (CDP) indicating policies, programmes and strategies, and financing plans; to prepare Detailed Project Reports(DPRs); to release funds for urban infrastructure sector across the country; to incorporate Private Sector Efficiencies through Public Private Partnership (PPP) arrangements.	The proposal in budget 2007-08 to increase the allocation for JNNURM from Rs. 4595 crore to Rs. 4987 crore in 2007-08 has been implemented. City Development Plans (CDP) were received in respect of 61 cities out of 63 cities selected under JNNURM. Of these, 47 have been appraised. Memorandum of Agreements (MoA) for implementation of identified reforms have been negotiated and signed so far in respect of 41 cities. 21 meetings of the Central Sanctioning and Monitoring Committee (CSMC) have been held so far and 169 projects were approved at a total cost of Rs.12,512.54 crore..	So far the performance has been good and is expected to go a long way in fast tracking planned development of the cities and towns with focus on efficiency in urban infrastructure and service delivery mechanisms in 5,161 cities, including 63 larger ‘mission cities’. However, with urban population growing exponentially, the concern is that progress is way too slow to keep pace and improvements in the urban quality of life for a majority of residents look rather elusive in the near future.
FRBM benchmarks
- Total Non-Debt Receipts	As a proportion of budget estimate during the first half of fiscal year, the total non-debt receipts is targeted to be not less than 40 percent.	During the first half of the financial year 2007-08, it is reported to be 44.8 percent	The government met the half-yearly target comfortably.
- Fiscal Deficit	This is targeted to be not more than 45 percent of BE.	The fiscal deficit as proportion of BE is 53.8 percent	Higher than the targets but some improvement against the last year’s 58.2 percent for the same period.
- Revenue Deficit	Revenue Deficit is targeted to be not more than 45 percent of BE.	As a proportion of BE, RD is reported at 53.8 percent.	Higher than the FRBM target and also worse than the last year’s 81.8 percent.

Moving from the investment and welfare programmes to fiscal discipline, a key performance indicator for the government is going to be its progress in meeting the deficit reduction targets laid out by the Fiscal Responsibility and Budget Management (FRBM) Act. As per mid-year estimates by the government, it is on track to meet the overall fiscal deficit target, given the significant buoyancy in revenues seen during the year. Things may be a little more challenging on the revenue deficit target. However, the trend is clearly towards convergence with the targets. The ambitious expenditure plans of the government relating to, for example, the employment guarantee scheme, have apparently not threatened fiscal discipline. Revenue buoyancy is the combined outcome of rapid growth and administrative and enforcement improvements, which have helped to widen the base. This is, undoubtedly, to the credit of the government.

Conclusion:

On a variety of fronts, the data on performance suggests progress, in varying degrees. Of course, the real impact of this progress on quality of life needs to be evaluated in detail and the picture that emerges may well be different and, certainly, more complex.

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Bharat Nirman Programme

After two years of the launch of the programme, 34 percent of targeted number of villages have been connected but the programme has been unsatisfactory in providing electricity to BPL households, with a mere 6 percent households having benefited.

National Highway Development Programme

FRBM benchmarks