Budget 2024 Primer – Gender Budget and zero base budgeting

11 Jan 2024 , 11:54 AM

What exactly are Gender Budgets

For a long time, budgets have been a general document by the government about its receipts and expenditure. However, in most countries, the budget is also about the people of the country that such a budget targets. Reforms at a macro level can only be useful up to a point. Beyond that, budgets need to become a lot more granular. One such recent addition, that is already been implemented in many countries is the Gender Budget or the Gender Responsive Budget. Gender-responsive budgeting is a strategy that creates budgets that work for everyone. After all, that is what budget provisions are meant to be. Such a budget considers and evaluates the unique and diverse needs of every person to ensure that its reforms positive touch all sections as well as results in a fair distribution of the resources of the economy. 

Need for gender responsive budgets

Since the Union budget is also an instrument of fiscal policy, a macro one-size-fits-all kind of budget runs the risk of ignoring the needs of a very sizable and significant chunk of the population of any economy. Let us take an illustration. The current economic models and budgets create and nurture fiscal policies that are gender-biased. For instance, not counting the global value of unpaid care and domestic work for women aged over 15 means we are missing out a segment that is indirectly contributing $11 trillion annually.  Just to put things in perspective, that is thrice the size of the global technology industry; across hardware, software, and high-tech. In a sense, that is patently unfair to women.

That is where Gender Responsive Budgets come in handy. These Gender-responsive budgets foster a sense of justice in fiscal policy. But, more importantly, it also strengthens the sense of government accountability, and also is in sync with better alignment of national budgets with Sustainable Development Goals (SDGs).

How can countries design gender responsive budgets

There are no one-size fits all model that can provided for a gender responsive budget since it is all about being sensitive to the unique needs of any economy or people. However, UN Women has identified a series of steps that can serve as a broad framework on how to design gender responsive budgets.

• The government must ideally pass laws mandating gender-responsive budgeting and also offer elaborate guidelines and tools for implementation. 

   

• Prior to the budget, there must be a detailed analyse of gender gaps and such findings must be used to shape and monitor future budgets.

   

• Today budgets are too macro and do not report with gender transparently. Governments must be asked to clearly outline how the budgetary funds are allocated and spent to address gender gaps. In addition, there must also be an action-taken report (ATR) to ensure that people can hold the government to account.

   

• In a country like India, gender gaps itself can vary widely based on religion, caste, socio-economic status, ethnicity etc. Hence the gender sensitive budgets must recognize such diversity and suggest changes to allocations with such sensitivities in mind. For this, it is essential to engage with women productively and proactively from varied backgrounds to ensure policies and public financing adequately support women and girls across the entire gamut of religions, castes, ethnicities, and economic backgrounds. 

How far have we reached in gender responsive budgeting

To be fair, a start has been made, but there is still a long way to go. That is because; gender-responsive budgets require a whole new government approach, robust institutional frameworks, political will, and laws to back it up. In many countries, including India, availability of reliable data on women’s economics is another issue. Either, the women are reluctant to come forwards to speak or the families are cagey about discussion such issues openly in from of the government representatives.

The good news is that more than 100 countries have already initiated efforts on gender-responsive budgeting to address gender equality. More importantly, this is about central budgets not investing enough in essential services for women and girls. However, out of the 105 countries analysed, only 26% had reliable data and comprehensive systems to track gender equality allocations in the budget. However, there is still some good news. Despite gaps in gender equality spending, data shows that most countries have made progress on gender-responsive budgeting and are working to improve their systems.

Where does India stand on gender responsive budgets?

Indian budgets have included gender budgets in their budgetary documents for nearly 20 years now. For the first time, in 2005, India started releasing a gender budget along with its Union budget. This provides a gendered lens to the allocation and tracking of public funds. However, allocations have been an issue. For example, the allocation to gender budgets in India as a proportion of the Union budget has remained constant in the range of 3% to 6% since 2005, when this was first initiated. Even in the last budget, the total allocation to gender budget was only 2% higher than the previous year. However, post the COVID pandemic, the allocation to gender budgets in India have stabilized at around 5%.

In India, the gender budget has 2 parts viz., schemes that allot 100% of funds for women (like maternity benefits) and schemes that allocate over 30% funds for women (like Mid-Day Meal scheme). It is the second part that has dominated gender budgets in India. In most years, nearly 85% of the gender budget allocation is done towards the latter part with allocates 30% funds for women and only 15% goes towards the former portion that allocates 100% funds for women. 

There are also some gaps in the way gender budgeting has been implemented in India. For instance, several schemes which benefit women have not been considered. Women and girls are the most impacted by the availability of tap water in rural areas. However, the allocations to the Jal Jeevan Mission (JJM) are not reported in the gender budget. The second concern is that only schemes that have at least 30% allocation to women are considered. As a result, important schemes that allocate less than 30% funds for women get excluded from the gender budget. This includes important schemes like the Pradhan Mantri Awaas Yojana – Gramin (PMAY-G), Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) etc. However, what cannot be disputed is that despite challenge in data and the ethnic complexity, Indian budgets have been reporting gender budgets for the last 20 years.

What is Zero Based Budgeting?

We all know that budgets are set based on mark-ups to previous year. For example, the government, based on data, may increase revenue expenses by 10% over last year, capex by 30% over last year and disinvestment by 20% over last year. That is the standard type of budgeting that most countries, including India, follow. However, one popular method of budgeting that has been around for a long time is zero-based budgeting. Here is what it does in terms of the budget process.

Zero-based budgeting makes a fresh evaluation of all expenses during each budgeting cycle. That is unlike the current practice when estimates are marked up on the previous allocation. In zero-based budgeting, every item in the budget starts from the base of zero, including an evaluation of whether the item is required or not. In this type of budget, every expense has to be justified and debated from the ground up. The idea is that for all nations, it is a battle between far ends and scarce means. Hence it is essential to is to optimize resources and allocate to the strategic objectives that generate the highest value.

According to Peter Pyhrr, who first developed the concept of zero-based budgets in the 1970s, “There are limitations to the traditional methods of budgeting that rely on incremental adjustments to previous budgets. The need of the hour is a more rigorous approach to budgeting that ensures resources were allocated efficiently and aligned with strategic objectives.” That means, in the Indian context, each department and ministry of the government of India would technically have to justify every expense from the bottom up. This is one of the best ways to cut flab; which most of us take for granted in budgets.

Key benefits of zero-based budgeting

To be fair, zero-base budgeting does bring some visible gains. Here are a few such advantages of zero-base budgeting. 

• Zero-base budgeting can result in substantial cost-saving through a thorough evaluation of all expenses and scrutinizing each sub-item. This kills redundant costs. 

   

• Zero-base budgeting enhances efficiency by allocating scarce resources to the objectives that have the highest strategic import from the perspective of national priorities.

   

• Zero-base budgeting also results in increased accountability since each member down to the common denominator participates in the entire budget process. This leads to greater ownership from the various departments.

   

• ZBB is more flexible and adaptable. Traditional budgets rely on historical data and incremental adjustments. However, this results in ZBB better adapting to changing circumstances, emerging priorities, and new opportunities. 

   

• The net result of all the above is that zero-base budgeting results in better and improved decision making. In the process, there is a much better understanding of the cost structures, which enables better allocations and sharper prioritization. 

However, there are some shortcomings to ZBB too

While zero-based budgeting (ZBB) can be a powerful tool, there are some practical challenges which tend to limit the popular acceptance and implementation of zero-based budgeting, at least in terms of national level budgeting. 

• More often than not, the time and effort are just not worth it. Zero-base budgeting can be laborious and time consuming; requiring significant investment of time and effort. Also getting reliable data and stakeholder buy-in is quite difficult in this process. 

   

• There is the natural resistance to change and ZBB is no different. Adopting a new budgeting method like zero-based budgeting often requires a shift in thinking, which is quite tough when people are already strained for time. Also, decision makers may not be ready for a more rigorous approach, if the value add is not directly visible.

   

• The process of ZBB can become atrociously complex at a national level. It calls for very meticulous documentation and tracking systems, which normally do not exist. In most cases, departments may not have the manpower and technology for the same.

   

• It can create resource allocation challenges; especially when some departments see a reduction in the budget or lower expense allocation. Thorough evaluation of expenses from scratch can sometimes lead to difficult decisions and trade-offs and there is the human side to it, which is normally the toughest challenge.

While the theoretical merits of zero-base budgeting cannot be disputed, the bigger challenge is on the practical side or the implementation side. Quite often, the feeling for national level budgeting is that the ZBB does not add much value and to an extent, ZBB is anyways done by each ministry. But ZBB surely remains a concept that the Indian policy makers can look to implement once in five years, if not each year.