It is good governance at the implementation level that becomes a pre-condition for achieving the goals through improving public expenditure efficiency.
This article is part of the series — Post-Pandemic Development Priorities.
COVID-19 and the subsequent stringent lockdown has created large disruptions to economic activities in the short run, has brought a permanent loss of output and has impacted long-term potential growth. A similar disruption occurred to public policy choices — leading to their shifting away from achieving long-term development goals such as the Sustainable Development Goals (SDGs) to minimising disruptions to short-term growth. With the increasing pressures on governments to undertake austerity measures and with dwindling fiscal space, it appears that focus on the SDGs could have been reduced. But, in our view, the pandemic actually provides an opportunity to recalibrate public policy towards a long-term sustainable development path as this could also absorb unanticipated shocks, such as the COVID-19 pandemic, in the future. Indeed, Goal 8 of the SDGs aims to “promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all,” and front-loading policies to achieve this goal could help post-pandemic recovery in a sustainable way.
In India, in our view, while the public policy discourse is limited and scattered among few states and at the Central government level, integration of the SDG goals within the long-term national and sub-national goals is limited. As the SDGs provide a neat analytical framework towards 2030, the domestic macroeconomic policies could have integrated these goals as part of the national strategy. For instance, the most important fiscal rules that India has adopted is the Fiscal Responsibility and Budget Management (Amendment Act) (FRBM), 2018 — which is based on the FRBM Review Committee report of 2017 — does not even include SDGs in their report. While this is based on anticipated expenditures, costing could have been included as part of the rules; the report and the subsequent Act completely ignore that the SDGs need assessment expenditures. Hence, this leads to risk of failing on both counts — missing the fiscal rules as well as missing the achievement of goals. In a way, such flawed fiscal rules could be one of the main reasons for slowdown in the output growth even before the pandemic hit the economy. We do hope that the 15th Finance Commission report, that was recently submitted, could have addressed such flaws by making robust fiscal rules that include long term goals such as the SDGs as well as the growth aspirations of the country. We do have two other medium-term goals such as the New India 2022 and the aim of making India a US$ 5 trillion economy by 2024-25. Looking at the terms of reference to the 15th Finance Commission, these two goals appear to be independent of the SDG goals, which is puzzling. Now the pandemic has only worsened any such integration plans, if there were any integration plans at all to begin with.
SDG-8 is not necessarily a new one for India as the erstwhile 12th Five Year Plan, indeed, focussed on most of the aspects covered by this SDG. Although there was no formal review of the outcomes of the Plan, the dismantling of the Planning Commission along with the subsequent shocks due to demonetisation and messy GST implementation, there appears to be large shocks to the growth potential of the economy. With all these factors, and primarily due to the dismantling of the Planning Commission, there is an institutional vacuum that can focus on the SDGs. However, at the state level, as there are still State Planning Boards and some have already constituted SDG commissions, planning and implementation appears to be better.
Of late, NITI Aayog has started undertaking measures that are shifting focus towards some aspects of these goals. However, there is less focus/assessment with regard to the “decent work” aspects and also the MSME sectors that are the focus of SDG 8. The painful reverse migration immediately after the lockdown that caught both state and central governments unaware suggests that achieving “decent work for all” needs a lot more policy focus than what has been done till now. Similarly, while there were so many demands to provide fiscal support to the MSME sector, especially since there have been high mortality due to three subsequent shocks (demonetisation, GST, and COVID-19/lockdown), the governments appear clueless regarding the existence, survival and demise of MSMEs. In other words, there were no databases/records about this sector, thus, weakening the policy efficacy. Regarding formalisation of the informal sector, which is one of the aspects of decent work, there seems to be some improvement. However, the closure of MSMEs do look like they will hugely out-weigh the numbers that have entered the formal sector.
Now, the question is, what needs to be done to recalibrate public policy towards achieving the SDGs in the post-pandemic period? As we still have a decade to achieve the goals, it is necessary to mainstream these goals into the country’s long term economic and human development goals. As we learnt during the Millennium Development Goals period, it is important to prioritise the goals, identify indicators, assess the gaps, assess the financial needs and, at the end, integrate them all with the overall macroeconomic framework. In a sense, we need to have what is called an ‘SDG consistent Macroeconomic Framework’ that is quantifiable, trackable as well as easy to implement. Further, while financial resources are crucial, our own studies at the state level suggest that increasing allocation alone is not sufficient to ensure better outcomes. It is good governance at the implementation level (at the district level) that becomes a pre-condition for achieving the goals through improving public expenditure efficiency. As all the SDGs are interlinked, in our view, at least for developing countries such as India and also for the Least Developed Countries, it is important to focus on Goal-17 to “Strengthen the means of implementation and revitalise the global partnership for sustainable development” (especially 17.18 and 17.19) in order to achieve the rest of the goals.
To sum up, while the pandemic did, indeed, bring a major disruption in achieving the SDGs, in our view, it also provides an opportunity to rebuild with a focus on long term economic and social goals such as the SDGs. For this, there is a need to prioritise and integrate these goals into mainstream macroeconomic policies with strong democratic institutions that help in ensuring good governance.
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Prof N R Bhanumurthy has taken charge as the first Vice-Chancellor of Dr. B.R. Ambedkar School of Economics University (BASE University) Bengaluru. His research areas ...
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