The government’s final accounts for 2009-10 show that 22% of the approved budget was unutilized. Of that about 7% was for current expenditure. And a whopping 33% was money budgeted for capital expenditure.
But it’s not just last year, accounts for 2008-09 show that the government did not utilize 35% of the capital budget.
The government has a range of excuses for the huge deviation between funds budgeted and funds utilized. They point out that it is not always possible to predict when donor funds that have been committed are actually made available. They complain about the continued shortage of technical personnel, especially engineers. They fault the private sector for being weak and unable to undertake government contracts. And they complain that they are constrained by a lack of implementation capacity in the local governments.
But, overall, the government maintains that such lapses in expenditure are okay. They say that money not utilized one year will spill over to the next; that work that’s unfinished in one year will continue in the subsequent years.
Annual budgets provide a cost estimate for activities that will be undertaken in that year. And because they are estimates, they do not always match actual expenditures. But the deviations must be within tolerable limits. Otherwise the whole purpose of budgeting is lost.
Differences of 33% and 35% between budgeted and actual capital expenditure are not mere deviations. They are huge differences that indicate a failure in the budgeting system. Either our planning is weak. Or our implementation is bad. More likely, it’s both.
What’s disturbing is that this failure is chronic – every year we seem to underperform by unacceptably big margins.
What’s more disturbing is that this failure is systemic – last year’s accounts for capital expenditure show that the 10 central ministries underperformed by 30%, the 28 autonomous agencies by 40%, and the 20 dzongkhags by 30%.
But what’s most disturbing is the government’s attitude that all is well.