Model Answer

Introduction

Public expenditure management (PEM) refers to the efficient use of government financial resources to achieve good governance, encompassing fiscal discipline, resource allocation, operational efficiency, and macroeconomic stability. Since the liberalization, privatization, and globalization (LPG) reforms of 1991, PEM has presented several challenges for the Government of India, particularly in the context of budget-making.

Challenges in Public Expenditure Management

1. Exposure to Global Economic Shocks

The integration of the Indian economy into the global market has made it vulnerable to external economic shocks, such as the 2008 global financial crisis, fluctuations in crude oil prices, and trade wars. These shocks significantly impact domestic budget estimates and economic stability.

2. Fiscal Policy Constraints

The government faces pressure to increase spending on infrastructure and welfare schemes while adhering to the Fiscal Responsibility and Budget Management (FRBM) Act, 2003, which mandates keeping the fiscal deficit within 3% of GDP. Balancing these demands is a considerable challenge.

3. Banking Sector Challenges

Post-liberalization, the government has had to recapitalize public sector banks, which struggle to operate profitably while ensuring financial inclusion. This creates a burden on public finances.

4. Privatization and Disinvestment Pressures

With the private sector’s capabilities expanding, there is growing demand for the privatization of inefficient public sector enterprises (PSEs). The government must navigate this transition while maintaining public service delivery.

5. Narrow Tax Base

Despite rising incomes, the income tax base has not expanded proportionately, limiting the government’s ability to increase social spending. The growing subsidy burden exacerbates this issue, diverting funds from capital investments.

6. Inadequate Institutional Capacity

Many government schemes suffer from poor implementation, leading to underutilization of allocated budgets. This inefficiency results in cost overruns and ineffective resource allocation.

Conclusion

The post-liberalization period has seen increased per capita income and government expenditure; however, the tax-to-GDP ratio has not improved correspondingly. This disparity has rendered public expenditure management a significant challenge for the Indian government. The Bimal Jalan Committee has recommended rationalizing subsidies and sticking to a disciplined fiscal path to unlock the growth potential of the Indian economy. Effective PEM is crucial for sustainable economic development and governance.

Model Answer

Introduction

Women empowerment in India is a critical issue, as gender disparities persist in education, health, employment, and political participation. Gender budgeting, a fiscal tool aimed at promoting gender equality, has emerged as a solution to bridge these gaps. It ensures that government budgets respond to the different needs of women and men by allocating resources specifically for programs that benefit women.

Requirements of Gender Budgeting

1. Gender Analysis of Expenditure and Revenue: Governments must assess how public funds impact women and men differently, ensuring that budget allocations address the specific needs of women.

2. Dedicated Schemes and Fund Allocations: Gender budgeting requires the establishment of specific schemes aimed at improving women’s socio-economic status, such as in education, health, and employment.

3. Institutional Mechanisms: An effective gender budgeting process involves setting up dedicated institutional frameworks like gender cells within government departments to monitor and evaluate gender-related programs.

4. Capacity Building: Training government officials in gender analysis and sensitizing policymakers to the need for gender-responsive budgeting is essential.

5. Data Collection: Accurate data on gender-specific outcomes is necessary for effective monitoring and evaluation of the impact of budgetary allocations on women’s welfare.

Status of Gender Budgeting in India

India adopted gender budgeting in 2005-06, and since then, various ministries have integrated gender perspectives into their budgetary processes. However, the progress is mixed:

• In 2021-22, the Gender Budget constituted only 4.4% of the total Union Budget (Source: Ministry of Finance).
• Several flagship schemes like Beti Bachao Beti Padhao and Pradhan Mantri Matru Vandana Yojana focus on women’s empowerment. However, the National Institute of Public Finance and Policy (NIPFP) found that many schemes lack proper monitoring mechanisms.
• Only a few states, such as Kerala and Bihar, have made notable progress in implementing gender budgeting at the local level.

Conclusion

While India has made strides in incorporating gender budgeting, its impact is hindered by inadequate implementation, lack of accountability, and insufficient focus on addressing systemic gender issues. To truly empower women, there must be stronger institutional mechanisms and targeted interventions backed by gender-disaggregated data and transparent monitoring.