Public Administration Mains 2017 : Model Question and Answer - 25

Public Administration Mains 2017 : Model Question and Answer

(Public Administration Paper II / Chapter: Financial Management)

(Current Based) Question : Good Economics and Bad Politics cannot coexist in a sound budgetary process." Discuss. (30 Marks/350 Words)

Model Answer :

 The Government of the day has a vision at the beginning of the year to play the role of a welfare state and by means of its budget allocate expenditure to the various departments and simultaneously ensure adequate revenue so as to not land in an undesirable deficit. Good Economics would aim high revenue which can meet the expenditure of the State. Maintenance of fiscal deficit under 3% of GDP, to meet its expenditure (FRBM Act 2004) and not incurring any form of revenue deficit. Bad politics is one that can interfere in the process of meeting these goals.

An example is when the UPA Government was trying to pass the Food Security Ordinance it faced severe opposition from the parliamentarians on grounds of increasing the fiscal deficit beyond the benchmark since it would lead to expenditures over and above the budgeted amounts. Another example of bad politics is where the ruling government routes the allocated money to meet their personal aspirations and hence lead to high expenditures, yet not meeting the developmental goals e.g. indulgence in Fodder Scam and embezzlement of close to 940 Crores. In a competitive political situation like in our country, the opposition party would not leave such an event unnoticed and will ensure that the responsible minister gets due punishment.

Another example of a competitive political environment is in the United States where the Republican party is at loggerheads with the Democrats for passing the Affordable Care Act. Good Economics is applied here where the government revenue/borrowings is being invested in ensuring a healthy human capital that can contribute towards the development of the country. However the ideological differences in political factions led to non approval of budgetary expenditure from the Senate. This brought a stop to all budgeted government activities in the United States and 8,00,000 employees remained unemployed for over 2 weeks.

The objectives of good economics can be sanctified with an equally stable political environment which can ratify the budgetary process and ensure its effective execution. (Total Words- 333)

(Good Economics and Bad Politics, Bad Politics and Revenue Deficit, Good Economics and Competitive Political Situation)

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