On

SDG Financing and Implementation

Sustainable Development Goals – a background• “Transforming Our World: the 2030 Agenda for Sustainable

Development”

• It has 17 global goals with 169 targets..

• Most comprehensive compared to MDGs…

• Includes both developing and developed countries…

• Both public and private sector have significant roles..

• Many cross-cutting issues…(eg. Women and gender issues across the goals)

• No more one-size-fits all strategy

Introduction• Integration of SDGs with national/sub-national goals are the key

• Lessons learnt from MDGs should be the base for SDG planning

• What are the relevant questions here?• South Asia is classified as “off-track” in many crucial MDG indicators. Why?• MDG achievements are mixed and differed from one country/state to

another. Why?• Is there a link between divergence in growth and MDG achievements?• What is the relationship between public expenditures and development

goals? • What determines public expenditure efficiency and how to track? • Can SDGs be consistent with domestic marco-fiscal goals?• What is the extent of resource requirement?• Is there a fiscal space for SDG implementation?• What is the status of statistical system both at national and sub-national

level?

What is to be done?• Understand the overall SDG framework – follows bottoms-up approach compared to

MDGs

• Identify the relevant indicators for each goal – quantitative but few are qualitative

• Quantify the gaps in achieving the goals – regional issue becomes more important

• Assess the public expenditure needs to address the gaps

• Prioritise the goals – some need to be achieved by 2020/22 and many by 2030

• As private sector also has major role in SDGs, strategise to bring in pvt sector wherever feasible

• Integrate expenditure needs with the domestic resource mobilisation and (AAAA convention) as well as overall Budget making process

• SDG expenditure would have large macroeconomic implications –need for SDG consistent macro framework

• Focus should be at the sub-national – strengthen the database at sub-national/ district level

SDG achievements are poor in South Asia

SDG progress in South Asia(Source: Chandrasekhar & Ghosh, 25th March, 2019, BL)

SDG Gap analysis – an example

What has been done till now?

• Planning agencies (Ministry/Planning Commissions/NITI Aayog) have been in the forefront in coordinating and overall implementation in respective countries

• In India, many states have also initiated various strategies such as setting of SDGC, linking the issue of monitoring of goals with specific Ministries, etc..

• Prioritising the goals and preparing roadmaps at the regional/state level

• Integrating with various existing social sector programs with specific SDGs.

• But all these are not within a consistent framework

What is lacking right now?

• In India, unfortunately, there is ambiguity in the overall national development strategy – not clear what happened to Three Year Action Agenda

• Not clear what is New India 2022 Vision – what is the resource requirement for the vision? Does it contain some SDGs?

• Not many countries have relooked at their fiscal policies – (in the case of India, in new FRBM roadmap – revised targets do not even consider the SDG expenditures!!!) (Public debt target of 60% by 2023-24)

• No specific strategy to enhance domestic resource mobilisation..(tax/GDP ratio stagnant)

• Not clear if there is any work on how to integrate the SDGs with the medium term growth goals

• Still no discussion on public expenditure efficiency – more pressure on outlays

• Assessment on what determines human development – public expenditure? Growth? Governance?

• Need for outcome-based analysis that could put less pressure on public finances….

• Sub-national/District level focus is still missing…

Linking Development Goals with Macroeconomy

GDP

Capital

Labour

Prody Per

consumpn

Pvt Invest

Govt consum

Net Exports

or TB

Inflation

Money

RM

MM

CreditForex &

otherassest

Revenue

Non-tax

Tax base

Tax rateExpen

ODA MDG NA

Tax

Fiscal

balance

Int rate

Exports

Imports

Exch rate

World GDP

Forex avail

CAB

Return for

capReturn for

labour

Poverty,

inequality

Int, div,

remit, etc

Generic Simple Macroeconomic Model

SDG NA

How to finance SDGs? ---Fiscal Diamond

3. Deficit Financing

(% of GDP)

2. Domestic Revenues

Mobilization (% of GDP)

4. Reprioritization

& Efficiency of Expenditures

(% of GDP)

1. Official Development Assistance

(% of GDP)

Private sector has a major role….

Tax-GDP ratio in South Asia –very low

Trends in tax collections in SA

Source: Gupta (2015)

No. of tax payers in SALow tax/GDP ratio in SA

Source: Gupta (2015)

Trends in tax collections in SA

Source: Gupta (2015)

Why low tax-GDP ratio in SA?

Source: Gupta (2015)

Domestic resource mobilisation for SDGs

On tax revenue mobilisation, World Bank, suggests the following• Improve tax policies and administrations’ ability to collect revenues

• Equip revenue administrations with knowledge and tools to raise revenues in hard-to-tax sectors and reduce size of shadow economy

• Institute transfer pricing arrangements and mechanisms for resolving disputes between taxpayers and revenue administrations that secure a fair share of taxes on profits for developing countries

• Expand the tax net to include the digital economy, e.g., items sold on foreign marketplaces

• Fight tax evasion through early detection, smarter auditing, and effective investigation and prosecution that hold evaders accountable and create public confidence in the tax system

• Increase taxpayers’ voluntary compliance with tax laws through outreach and education to increase collection and address informality

• Close wasteful loop holes and reduce unwarranted tax incentives for investors

Domestic resource mobilisation for SDGs

• Simplify taxes for SMEs - can help to address corruption

• Institute e-filling to reduce the time and effort spent on filing

• Establish one-stop shops for registering businesses and obtaining VAT and company tax numbers

• Create swift and fair dispute settlement mechanisms that instill confidence among investors

• Ensure the predictability of tax policies and their administration, thus reducing corporate risks.

• Increase taxes on wealthy through taxation of properties and capital gains

• Use the tax system to provide incentives for better social outcomes (specific cess)

On financing SDGs

Source: UNDP

What needs to be done?

• Assessment of the resource needs for implementing SDGs (recent ESCAP Survey suggests an additional investment of US$1.5 trillion/year for 2016-2030 -about 5% of AP GDP) –about 11% for India

• But does resources alone sufficient? It is just a necessary but not sufficient condition..

• There are other factors such as governance and public expenditure efficiency that are essential.

• A case of Madhya Pradesh

Madhya Pradesh – An Example

• MP witnessed average double digit growth of 10.2% with an agriculture growth of over 20% from 2011-15.

• However, the state has been classified as ‘off-track’ in terms of achievement in most of the MDGs.

50.2

64.4

88.4

0

10

20

30

40

50

60

70

80

90

100

DIN

DO

RI

SIDH

ISIN

GR

AU

LIP

AN

NA

UM

AR

IASA

TNA

ALIR

AJP

UR

SHA

HD

OL

AN

UP

PU

RD

AM

OH

SHEO

PU

RM

AN

DLA

REW

AK

ATN

IB

AR

WA

NI

DA

TIAC

HH

IND

WA

RA

CH

HA

TAR

PU

RTIK

AM

GA

RH

JHA

BU

ASA

GA

RK

HA

ND

WA

BA

LAG

HA

TR

ATLA

MSH

IVP

UR

IB

HIN

DB

ETUL

SEON

IA

SHO

KN

AG

AR

GU

NA

RA

ISENR

AJG

AR

HB

UR

HA

NP

UR

KH

AR

GO

NE

SHA

JAP

UR

MA

ND

SAU

RV

IDISH

ASEH

OR

EM

OR

ENA

NEEM

UC

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AR

SIMH

AP

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RU

JJAIN

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LPU

RB

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PA

LIN

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Source: NIPFP-UNICEF (2016), Madhya Pradesh State MDG Report: 2014-15

EXTENT OF MDG ACHIEVEMENT IN MADHYA PRADESH (in %)

Additional public expenditure required for achieving development objectives

Shajapur 32.1

Ujjain 28.3

Rewa 39.2Satna

44.4

Damoh 42.1

Sagar 36.6

Ratlam 36.1

Mandsaur 32

Neemuch 31.6

Umaria 45.3

Raisen 33.6Sehore

31.8

West Nimar (Khargone)

32.2

Indore 11.6Dhar

28.3

Dewas 27

Bhopal 16.4

Vidisha 31.9

Rajgarh 32.9

Barwani 37.9

Betul 35.4

Mandla 41.9

Dindori 49.8

Jabalpur 21.6

East Nimar(Khan

dwa) 36.5

Alirajpur 44.2

Shahdol 44.2

Ashoknagar 34.9Guna

33.6

Balaghat 36.4

Jhabua 36.6

Singrauli 46.9

Sidhi 47.9

Anuppur 43.6

Seoni 35.2Chhindwara

37.1

Panna 46.3

Chhatarpur 36.8

Katni 38.7

Hoshangabad 23

Harda 28.8

Bhind 35.6

Morena 31.6

Sheopur 42

Narsimhapur 29.2

Tikamgarh 36.7

Shivpuri 36

Datia 37.7

Burhanpur 32.2

Gwalior 24.2

Chart 10.3: Additional Human Expenditure (% increase) required for Achieving MDGS

> Than 40%

between 25% and 40%

Less than 25%

Legends

Relationship between Human Development and Governance

Prioritizing Governance dimension

Note: Districts are arranged in ascending order based on MDG index taken from NIPFP-UNICEF report, 2016

On Public Expenditure Efficiency

Mohanty & Bhanumurthy (2019)

On Public Expenditure Efficiency

On Public Expenditure Efficiency

To sum up…

• Clearly there are efforts by the countries in the region, both at national and sub-national level.

• However, the overall effort lacks a framework that take care of Needs Assessment, SDG gaps, resource mobilization, fiscal space, interlinkage with macro-fiscal targets, etc…

• Focus on strengthening databases is still missing…sub-national/district level information becomes very crucial for SDG localization

• There is also a need to emphasize on outlay-output-outcomes based assessments to put less pressure on fiscal and also ensure efficiency. Auditing at each stage becomes very crucial

• Strengthening local capacities for independent assessment is the need of the hour

Thank you