Delhi Health Infra: Where the Money is Going?
| CA Jugraj Singh Bedi, Thought Leader (Finance), Delhi - 02 May 2021

Delhi on Sunday (May 02, 2021) reported 20,394 new Covid-19 cases and witnessed over 400 Covid deaths for the second straight day. Delhi Health Minister Satyendra Jain lost his father to Covid-19. Now the active cases tally stands at 92,290 while the death toll due to the virus stands at 16,966. The city has so far recorded 11,94,946 cases, of which over 10.85 lakh have recovered. Out of the 21,483 COVID beds in various hospitals of the city, only 1347 are vacant on record, to which patients find almost impossible to get. A total of 50,742 other patients are recovering in home isolation. Delhi CM Arvind Kejriwal’s govt is hurriedly trying to create some health infrastructure after increasing numbers of the Covid deaths in the Capital City. People are crying for beds, oxygens and ventilators. What happened to the Delhi Govt’s so much hyped Aam Aadmi Mohalla Clinics? Why No New Public Health Infrastructure was created in the past 5 years? 
 

BY CA JUGRAJ SINGH BEDI

In the wake of recent issues in Public Healthcare due to Covid 19 people, the Delhi Government and the policy makers are not taking note of the core problem. To begin with, have we noticed any new Hospital being constructed in Delhi. The AIIMS, Safdarjung, GTB, Hindu Rao etc all hospitals were constructed in the past. No new Public Health Infrastructure has been created in the past 5 years. This is because the Government spending is more of revenue nature. An analysis of the Government spending for last 10 years is given below.

As can be seen from the table above, the Govt Spending on Capital Assets has reduced in terms of percentage from as high as 41.32 in 2009-10 to 24.93 in 2021-22. In addition to this, as an Accountant, I understand and realize that it is easy to audit the capital expenditure done because it gives a clear audit trail.There is some asset which can be seen,checked and investigated upon by any of the subsequent Govt, Agencies or Auditors. However, when the expenditure is done on revenue there is miniscule chance of getting the audit or the verification done of the expenses which have been made.

In addition to the above,Using public spending to stimulate economic activity has been a key option for successive governments since the 1930s when British economist, John Maynard Keynes, argued that public spending should be increased when private spending and investment were inadequate.  There are two types of spending:

•   Current spending, which is expenditure on wages and raw materials. Current spending is short term and has to be renewed each year.

•  Capital spending, which is spending on physical assets like roads, bridges, hospital buildings and equipment. Capital spending is long term as it does not have to be renewed each year – it is also called spending on ‘social capital’.

If the spending is on capital items, then infrastructure can be developed, which can help improve competitiveness and economic growth. Infrastructure projects are usually far too expensive for the private sector to tackle on its own.

Based on the above principle, the Government intent and its long term vision with respect to the public spending is paramount. In a report on the public spending the World Bank gives detailed reason for the nature of Government Spending done:

Government decision-making – and one more easily applied to understand the reasons for adopting fiscal rules to limit government deficits – can best be characterized using a political economy analysis. Government politicians are interested in re-election or maintaining power since they derive monetary or non-pecuniary benefits from being in power and therefore undertake actions to maximize political support.

Nevertheless, the nature of the distortion created by the existence of such “bad” governments is unclear. In one perspective, “bad” governments are those with short-term horizons, which value the political and social benefits from current spending, while the discounting the associated costs, to the extent they may be deferred to the future.

Such governments may receive political support from voters who either misperceive future costs or who discount the future more highly than is deemed ethically acceptable. Evidently, such myopic behaviour in government creates a prima facie case for restrictions on government borrowing. Notice, however, that myopic governments will discount too heavily the future benefits derived from public investment, as well as the future tax costs of debt finance.

In such cases, myopic decision-making would result in too few public investment projects, with net long run benefits, being taken. A fiscal rule that imposed tighter restrictions on borrowing for the operational budget, while treating capital projects more leniently, would therefore constitute an appropriate “screening mechanism” – since good governments are more patient than bad governments – so that the behaviour of bad governments is restricted and good governments have more leeway to pursue appropriate spending policies. Source: http://documents1.worldbank.org

In view of the above, is it possible that, the Delhi Government is spending only to keep itself in power without realising that in near future if the Infrastructure is not created by Capital Expenditure, there will be no one to rule.  

ABOUT THE AUTHOR

(Jugraj Singh Bedi is a Qualified Chartered Accountant and a Specialist in Government Accounting. He has over 20 years of experience in the field of Finance, Audit and Consulting and  specialises in Debt Syndication, Public Finance Management, Due Dilligence Audit, e-Auditing and Information System Audit and Management. He has helped and advised clients in raising Secured and Unsecured large scale funds in the form of equity or debt from Banking, Financial Institutions and Unorganised Funding sector. He is currently Partner in Budhraja Adlakha & Co in Delhi. Contact - jugraj@coeictindia.com The views expressed in this article are his personal.)

Image - Arvind Kejriwal CM, Delhi – Source -Twitter handle of Arvind Kejriwal


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