Many years ago there was popular song from an American musical which said "Anything you can do I can do I can do better". This seems to be the theme of Arun Jaitley's expenditure budget. He may even have outdone the previous government in including hastily cobbled together schemes, many with patently inadequate funding, that took over an hour to list in bullet points and taxed the listener's concentration.

The standard provision for these haphazard additions to the Central Government's already untidy portfolio of schemes seems to be Rs. 100 crores each.  So Shri Jaitley has provided Rs.100 crores for starting work on good governance (Yes! see page 7 of Budget Highlights) and another Rs.100 crores for a Technology  Development  Fund for Defence, which is the same as he has provided for a new scheme for promoting entrepreneurship amongst rural youth or for modernising madarsas. There are some 20 odd schemes with this default provision or something close to it. They are almost certainly just vague ideas that sounded good, like the setting up virtual classrooms as Communication Linked Interface for Cultivating Knowledge whose catchy acronym (CLICK) must have secured it the default Rs.100 crore

The provision for some of the new schemes, where the support must have come from the top,  is substantial like the Rs. 7060 crores for 100 smart cities, Rs. 1000 crore for “Pradhan Mantri Krishi Sinchayee Yojna” for assured irrigation, Rs.2142 crores for a new scheme “Neeranchal” to give impetus to watershed development, which incidentally is part of any number of existing schemes, and  Rs. 2037 crores for Namami Ganga, the Integrated Ganga Conservation Mission.  But all of them need to be connected with existing schemes that serve similar purposes.

Most of these Central schemes have to be implemented by the States. One wonders what sort of consultation took place before the schemes were included in the budget or whether any attempt was made to see whether the laudable objectives served by the scheme were already included in the many existing schemes which could have been better provisioned and tweaked to include activities that earlier were not covered.

A Government that believes in minimum government and maximum governance as also In empowering States must remember that every new scheme it introduces means one more Joint Secretary or Deputy Secretary in the Centre and more forms to be filled and reports to be filed by harassed State level and District level officers. What we need are not new schemes but massive rationalisation of existing schemes and effective decentralisation to State Governments and Local Authorities.

The proliferation of schemes is a result of the competitive populism that underlies political rivalries in India. Every administration, in fact every minister, wants to leave a mark in the patchwork quilt of public expenditure. This variety of populism was started by the Congress beginning with the 10-point and 20-point programmes during the Emergency. The next step of naming schemes after national or party icons was also taken by the Congress.  Had the National Urban Renewal Mission not carried the name of Jawaharlal Nehru, it may have been easier to fold the new things that the Modi Sarkar wants to do into the fabric of the existing scheme. But because JNNURM is identified in its very nomenclature with the Congress, this administration will insist on a separate new scheme.

Arun Jaitley had promised us an Expenditure Management Commission, which suggests that, despite the temporary surrender to special interests in the party and the bureaucracy, he intends to clean up the public  expenditure mess. The mandate of this Commission must be broad enough to cover the procedures for approval and implementation for all categories of expenditure, Plan and Non-Plan,

It should go beyond procedural reform to propose measures that can contain the tendency to prepare a new scheme when the earlier one has failed to deliver, say by requiring an independent evaluation of the old scheme as an integral part of the preparation and approval of the new scheme. It should recommend the consolidation of closely related schemes and a continuous review process for mid course corrections and inclusion of new goals or activities.

There are many other things the Expenditure Commission needs to look at, including caps on rates of growth of spending specified at the Ministry level. But the most important matter they need to examine is the role of the States in the formulation of schemes they will be required to implement. Centrally Sponsored Schemes are in effect conditional transfers to the States - they get the money if they do what the Centre wants. It is a way of centralising decision making on matters that the Constitution has assigned to the a States. The Expenditure Commission must consider limits on the magnitude of such Central Schemes relative to the fungible resources being transferred to the States.

There is a broader reason for this concern about public expenditure control. The Indian State has expanded its spending commitments, particularly for a plethora of welfare schemes without expanding its command over the resources of the economy. The tax GDP ratio has declined from a peak of 11.9% in 2007-08 to 10.2% in 2013-14. In the 2014-15 budget the tax revenue accruing to the Centre is Rs. 977 thousand crores. This is just enough to cover interest payments, defence, police, general administration and subsidies. And this is on budget numbers that require a sharp increase in the tax-GDP ratio to 10.6%. Everything else is financed by non-tax revenues, the sale of public assets including disinvestment in public enterprises and borrowings.

This is not sustainable.  The demands from defence and the high cost prestige schemes promised in the budget and the impending bomb of the Seventh Pay Commission will push public finances beyond sustainability.  A Government that wants to stabilise the economy, accelerate growth and  development has to ensure far greater efficiency in the deployment of public resources. It must also increase the command over resources by raising the tax-GDP ratio beyond the 11.2% by 2016-17 promised in

To be fair, Arun Jaitley's budget has made a good beginning on reforms in tax administration and in capital markets. But to realise the goal of low inflation and high growth he must discipline the spending habits of the sectoral ministries.