Project Ppt Final

Sit back, relax, and now just Think for a moment………..

Group Members :-• Vikram Chawla• Aayushi Maheshwari• Gaurav Rastogi• Mitali Jalan• Ritesh Gandhi• Jitesh Mehta

“If unemployment projections prove correct, “says the IMF economists, “as many as 11.8 percent of all Indonesian households, 8.2 percent of Korean households, and 6.7 of Thai households would be affected, if one person per household were to become unemployed.”

What is of particular interest to India is the fact that in all three countries, government-sponsored social protection arrangements exist.

These includes for eg.

Pensions for old age, disability, and survivors; sickness and maternity benefits, and work injury benefits.

In Indonesia, for instance, pensions are largely confined to civil servants and military personnel.

In Thailand, only 10 percent of the labor force is covered by pension schemes.

Korea, though, is relatively better placed, as it has formal unemployment insurance.

Korea also has subsidies for health care, insurance and social welfare programs.

In addition, Korea’s “job-for-life” tradition has made Korean firms contribute significantly to the country’s social safety nets.

“However,” the IMF economists caution, “as pressures to restructure the corporate sector in Korea mount, it is unlikely that enterprises will be in a position to provide the same level of social protection as in the past.”

How do you know that your country is growing?

Who are the ones responsible for growth of a nation?

Let us discuss the role of the government in public investment

What is this PUBLIC INVESTMENT?

HOW will one benefit from it?

strengthening social safety netsWhich Includes targeting subsidies away from richer households, and expanding community-based public works programs, Governments may also have to maintain an effective system of food distribution, possibly with the aid of the private sector and NGOs.

INTRODUCTION

• Public investment is vital to the growth of the welfare society.• Investment can be many things such as investment in machinery,

buildings, facilities and computers. Operating expenditure on training, education and research is sometimes also regarded as investment.

• Physical investment is the most obvious, as it involves constructing new buildings, roads and facilities. This is the type of investment included in the public capital budgets, and it is also the focus area of the Government's strategic investment programme.

• However, this does not mean that operating expenditure on training, education and research is unimportant for the growth of a society. Expenditure in these areas is often, and rightly so, regarded as valuable investment for both individuals and society as a whole. However, such expenditure is not covered here because it is not included in the investment budget.

• Total public investment encompasses investment in physical infrastructure made by central government, local government and public corporation

• What types of expenditure can be characterized as public investment?• public investment takes the form of infrastructural outlays – for road

and rail networks, ports, bridges, energy-generating plants, telecommunications structures, water and sanitation networks, government buildings

• investment in low-income countries, particularly in infrastructure, is central to their development prospects

• weaknesses in public investment management have resulted in inadequate returns to public and private investment in many low-income countries.

• Low returns to public investment arise from poor selection and implementation of projects due to limited information, waste and leakage of resources, and weak technical expertise.

• a substantial scaling-up of public investment in a weak institutional environment runs the risk of potentially undermining its growth benefits as well as prospects for fiscal and debt sustainability

• country capacity to carry out technically sound and nonpoliticized project appraisal and selection, appropriate mechanisms for implementation, oversight, and monitoring of investment projects, and ex post evaluation.

• The transparency and accountability of these functions and processes contributes to ensuring that productive public investment is supported.

• Economic and institutional indicators that measure and capture these aspects can thus play a key role in guiding the assessment of the scope to increase productive public investment and its growth benefits.

ROLE OF GOVERNMENT IN PUBLIC SPENDING

• Role of the government revolves around strengthening social safety nets.

• This should include targeting subsidies away from richer households, and expanding community-based public works programs.

• Governments may also have to maintain an effective system of food distribution, possibly with the aid of the private sector and NGOs

• government- sponsored social protection arrangements should exist.  

• These include pensions for old age, disability, and survivors; sickness and maternity benefits, and work injury benefits.

South African government Initiatives

Expanded Public Works Programme (EPWP).:• Aims to create 1 million temporary work opportunities

accompanied by training between 2004 and 2009, for the most disadvantaged South Africans.

• EPWP has adopted an integrated approach to infrastructure development and increased the coordination among various government agencies

• It has produced concrete results for the individuals engaged in the public works programme in terms of incomes, skill levels and work experience.

• Impact on the communities was also evident due to improved services brought about by better infrastructure.

Government must do’s..

• Developing countries can significantly reduce rural poverty, stimulate agricultural growth, and move toward food security if they recognize that public investments are indispensable tools for achieving these ends and if they make the right investments.

• Investments in low-potential lands can bring equal, if not greater, returns to investments in high-potential lands

• Increase overall investments in rural areas, given their higher populations and large, if not dominant, contribution to national GDP,because these investments will provide a longterm solution to the problem of food security and poverty.

• Improving the targeting of programs designed specifically for poverty alleviation, or use the funds for investments that promote long-term solutions.

• Use funds for rural development and soil and water conservation to improve the productive capacity of soil and water resources, as well as to build roads.

• Give priority to R&D, education, and roads, which yield the largest poverty and productivity impacts.

• Channel additional investments to less-developed areas, while maintaining expenditure levels for developed areas

• In the financing of public investment, particularly infrastructure, relates to the role of states and municipalities

• In most emerging markets and certainly low income countries, the needs for urban infrastructure are great from the perspective of providing basic universal services and critical in terms of providing the infrastructural services necessary for attracting private investment

• Yet most urban areas lack a sufficient revenue base to finance these investments.

• Provinces or states rely on four principal sources of fiscal space: grants from the central government, local borrowing, user fees and private sector financing (direct investment or PPPs).

Role of central government

• While recognizing the importance of local autonomy, the central government must have some role in ensuring fiscal solvency by subnational governments and some stake in ensuring that large investment projects are assessed and managed rigorously.

• Moral hazard considerations arise with regard to both issues and the central government needs to ensure that the incentives of a subnational government are to be fiscally prudent and that it does not borrow or spend on unproductive projects.

Role of central government

• Central government should put in efforts to ensure standardized project assessment systems are warranted as well as a strengthened institutional capacity to manage PPP contracts and projects.

• Limits on subnational government borrowing are particularly necessary in situations where a subnational government has limited sources of local revenue to service any new debt

SPECIAL CASE OF PUBLIC SPENDING IN INDIA AND CHINA

AGRICULTURAL R&D• Government expenditure on agricultural R&D

increased agricultural growth in both India and China.

• Two and a half times greater than that of the second most significant investment: roads in India and education in China.

• But for reducing poverty agricultural R&D expenditures ranked second.

• R&D brought substantial indirect gains through greater agricultural yields

Result: higher incomes for farmers, declines in food prices for consumers, improved wages in nonfarm activities.

Cont….

Education

• In China, spending on education brought the greatest number of people out of poverty.

Result: developed the skills of rural residents,

enabling them to earn higher wages in nonfarm employment, adopt new farm and nonfarm production methods and technologies.

Cont…

• In India, spending on education helped the poor, but it did not increase growth and reduce poverty as robustly as did spending on R&D and roads.

China directed educational spending at rural areas

India directed these investments largely to institutions of higher learning in the cities.

Roads

• Contributed more to poverty reduction than did the other investments

• Increased consumers’ access to food markets• Agricultural productivity growth• Second largest investment return

Less Favoured Regions

• The poverty reduction effects were greater in low- and midpotential areas than in high-potential land

• Higher aggregate social returns• “Win-win” possibilities, in terms of growth,

poverty reduction, and regional equality.

Conclusion / Recommendations

• Significant progress has been made in raising infrastructure spending to levels more in line with development needs and objectives and in improving mechanisms for expenditure budgeting and planning. Nevertheless, the transformation of expenditure policies remains incomplete.

• Improve transparency by reforming accounting systems for expenditures

• Improve the allocation of public expenditure by raising spending on education, health, science, and other social/development needs, as a share of overall spending and relative to GDP, to the extent necessary to achieve development goals and objectives.

• Improve accountability of state governments by establishing more explicit criteria for performance

Thank You