Effective use of financial resources has been highlighted in the United Nations Sustainable Development Group (UNDG) Reference Guide as a critical dimension in the achievement of Sustainable Development Goals (SDGs). Further, in the SDG India Index, NITI Aayog has also recognised that financial resources are a fundamental driver for achieving the SDGs on time. However, audit reports on various development initiatives and the finances of the Center and states have frequently highlighted inefficacies in expenditure.

These include:

• Persistent non-spending of allocated funds: The persistent problem of unspent balances is a direct consequence of India’s broken governance structures (at various levels), which have been highlighted in various reports. For instance, a CAG report on the Clean Ganga Mission pointed to an unspent balance of approximately Rs. 2500 crores in 2017.
• Diversion and parking of funds: The CAG report of 2017 on performance audit of disaster management in Jammu and Kashmir reported that 25 percent of the expenditure meant for disaster mitigation purposes was diverted towards ineligible works.
• Irregular and wasteful expenditure: The CAG report in 2020 exposed several irregularities and wasteful expenditures to the tune of hundreds of crores by various Goa government departments.
• Misallocation/misutilisation of funds: Welfare schemes such as the Sarva Shiksha Abhiyan, Mid-Day Meal Scheme, PM Awas Yojana, Swachh Bharat Mission, etc. are riddled with misallocation and leakages. A Parliamentary Standing Committee report highlighted the issues of widespread corruption, insufficient funding and huge pending payments for wages in schemes like the MGNREGA.

The Voluntary National Review (VNR) Report and Three Year Action Agenda have listed out several measures for improving expenditure efficiency and effectiveness, which are as follows:

• Reorientation of the Budget with SDGs: Preparation of the Outcome Budget mandated since 2006-07 has not been as effective as envisaged and there is a need to reorient the Budget with SDGs. States like Haryana, Maharashtra, Assam etc. have taken some preliminary steps in this regard.
• Expenditure reforms: These include the following:
  • Introduction of sunset clauses in all public expenditure programmes.
  • Effective utilisation of the Public Financial Management System for tracking all expenditure flows.
  • Rationalisation of schemes through merger and dropping of overlapping schemes.
  • Use of technology like e-procurement and adoption of a Government e-Marketplace (GeM) model etc.
• Intervention at the stage of formulation of schemes: The schemes need to be formulated after adequate consultation with the state governments. There should be specific Ministry-wise Councils so that the Ministries formulate schemes in tandem with the existing state schemes for optimum utilization of resources.
• Need of an expert institution: The NITI Aayog or a body like the Centre-State Expenditure Commission can give directives and lay down the priorities with respect to expenditure.

In addition, improving efficiency of expenditure would need to be established through suitable audits. Further, a decentralized and local approach can help in achieving efficiency while incurring expenditure.