Chhattisgarh Public Financial Management and Accountability Program

closed

The objective of the Chhattisgarh Public Financial Management and Accountability Program Project is to: improve accountability in the management of public finances; strengthen revenue administration; and improve efficiency in delivery of benefits in selected schemes, in the state of Chhattisgarh. India is among the world’s fastest growing economies and has made remarkable progress in poverty reduction and human development. Wide-ranging and ongoing macroeconomic, fiscal, tax and business environment reforms have enabled rapid growth. Already the third largest economy in the world in purchasing parity terms, the country is expected to grow at over 7 percent a year in coming years. Over the past thirty years, per capita incomes quadrupled, poverty retreated, illiteracy rates dropped, and health-related statistics improved. India’s extreme poverty rate halved from 46 percent to 21 percent in the two decades up to 2011. While growth in India has been impressive, it needs to be equally shared; India faces social, institutional and policy challenges. To meet the development goals, India needs to adapt its institutions to improve public sector performance and deliver services effectively to its citizens. Improvements in service delivery requires improvements in accountability, efficiency, and effectiveness along the chain from inputs to outcomes. Competition between states is part of a new dynamic to incentivize change, using funding to hold states accountable for progress based upon their own priorities. India has a federal, three-tier structure of Government comprising the national or Union level; states; and districts. The fiscal relationship between the Union and the States is reflected in revenue sharing, devolution of central taxes and assistance in the form of grants. Recent policy level changes at the Union level, have increased the share of Union resources devolved to the states, reduced the share of resources through tied transfers under Centrally Sponsored Schemes (CSS) and introduced a Goods and Service Tax (GST) that is expected to contribute to growth in state revenues. In the medium term, increases in untied resources are expected to result in states managing nearly 60 percent of total public expenditure. The move toward increased expenditure flexibility for states presents both an opportunity and challenge. The opportunity lies in the greater freedom to align local development needs and priorities with the resources available. The challenge lies in the development of robust public financial management systems that can allocate and deliver resources in line with policy priorities.