STRATEGIC PUBLIC FINANCE

Governments in India often face challenges in each of the four stages of the annual cycle of public financial management - planning and allocation, release and expenditure, accounting and audit, and utilisation of current year data as input for planning for the subsequent year. The planning stage is hampered by the lack of outcome data, which restricts the effective allocation of funds to areas with the greatest need. Allocations and releases are also restricted by liquidity constraints, caused by suboptimal revenue collections. These limitations, compounded by inefficient fund flow channels, often result in funds not reaching the right destination at the right time impacting expenditure pertaining to complex activities associated with public service delivery. In addition, the dense and inconsistent accounting systems in government make it difficult to leverage it for analysis and planning. Finally, there is limited possibility of triangulating expenditure data with outcomes in order to plan correctly for the next year. 

Our Strategic Public Finance team supports the governments in strengthening public financial management by adopting a budgetary life cycle approach, addressing issues from planning and allocation to auditing by solving key problems in the budgeting process, improving sufficiency and efficiency, and ensuring smooth funds flow. Our work in this area is divided in four key streams:

• Strengthening revenue systems
• Fiscal exchange systems
• Quality of expenditure
• Macro fiscal and economic policy

These initiatives will ensure efficient fund allocation and flow, thereby improving financial efficiency and public service delivery.