KARNATAKA - of Planning Commission

Financing Human DevelopmentExpenditure allocation todistricts is determinedhistorically, rather thanon the basis of groundlevel requirements.likely to agree to changes in the subsidy pattern ifthere is a corresponding improvement in humandevelopment indicators in their villages.ConclusionsDespite the recent acceleration in economicgrowth in Karnataka, the performance ofhuman development in the state is just aboutaverage, and, in fact, below the achievementlevels in some of the neighbouring states.The human development indicators in thenortheastern districts of the state are very low.Considerable effort is required to achieve thetargets set for the Tenth Plan and the MDGs.The problem is particularly challenging inrespect of improving the human developmentindicators in the relatively backward districts ofKarnataka. Improving the welfare of the peoplein the state requires considerable augmentationof investment, in both physical and humancapital.The analysis of human development spendingin Karnataka shows that over the decade of the1990s, there has been deterioration in the SAR,SPR and HER. This declining trend in these ratiospresents the nature and magnitude of challengesin achieving the MDGs and the targets set forthe Tenth Plan. The declining trend in the shareof expenditure for rural development, nutritionand, to an extent, family welfare, in particular, is amatter of concern.The analysis of human development expenditureincurred by the rural local governmentsin Karnataka, in particular with respect toeducation and health sectors, shows that theexpenditure allocation to districts is determinedhistorically, rather than on the basis of groundlevel requirements. In fact, there are somedesign and implementation problems withthe decentralisation process in the state. Thescheme-wise transfer of functions, functionariesand fi nances had resulted in lack of autonomy,fl exibility and accountability of the employeesto the rural local governments. This had alsoresulted in segmentation of expenditures. Theanalysis of decentralisation of expendituresshows that the local governments do not haveaccess to adequate resources for spending; nordo they have enough fl exibility to spend on itemsof their choice, in the way they want to. In short,decentralisation has yet to improve the deliverysystems. Recent steps to rationalise schemesand devolve more functions to Panchayat RajInstitutions (PRIs) are designed to address theseissues and should impact service delivery.Where does Karnataka stand in terms ofachieving the Tenth Plan and MDGs? The majorchallenge appears to be in the reduction ofpoverty in rural areas. The declining expenditureon rural development may pose a setback to theachievement of the goal of poverty reductionin the rural areas. In addition, one of the majorgoals in health, i.e. the reduction in the infantmortality rate, particularly in rural areas, will beachieved only if the decline continues to occur atthe past rate. The declining trend in expenditureon nutrition and poverty alleviation schemes willhave to be arrested to maintain the past rateof growth. In terms of school attendance, whilethere has been a large improvement in the recentpast, further improvements will need substantialinvestments, more specifi cally, for improving thequality of education. The projected expenditureon elementary education by the ‘DepartmentalMedium Term Fiscal Plan’ is much lowerthan the required amount suggested by variousstudies.Ensuring adequate allocation to humandevelopment expenditures is seriously constrainedby the fi scal health of the state. Additionalallocation to social sectors in Karnataka willhave to come by increasing the stagnantrevenue-GSDP ratio, improving the power sectorfi nances, levying appropriate user charges onirrigation, ensuring greater effi ciencies in powerand irrigation, rationalising grants and fees forhigher educational institutions and containingunproductive administrative expenditures. It isalso necessary to target expenditure on backwardregions and districts and improve the deliverysystems to enhance productivity of expenditure.The debt swap scheme introduced recently wouldprovide some fi scal space to the state governmentto enhance spending on human development in48