With the commitment of IMF in United Nations Secretary General’s High level Panel on Women’s Economic Empowerment, the issue of gender budgeting has reached the world stage as a human development-conscious economic growth agenda.
The commitment of IMF in November 2016 to conduct gender budgeting in member countries and to begin gender budgeting analysis in the Fiscal Affairs Department for the first time ever points to the future of gender budgeting as a radical institutional reform to attain gender equality . Once the policy commitment is set, the success of these attempts becomes crucial for economic “institutions”. There is an increasing recognition of the role of institutions in analyzing the processes of growth and financing sustainable development goals (SDGs).
Eric Maskin in his Nobel prize lecture “Mechanism Design: How to Implement Social Goals?” narrated that mechanism design begins by identifying desired outcomes (goals) – where he asks whether economic institutions (mechanisms) could be designed to achieve social goals – if so, what forms would institutions take? This is quite contrary to the “positive” approach that usually macroeconomists prescribe which excludes gender development-conscious economic growth. Usually public policy prescriptions are based on understanding existing economic institutions in predicting outcomes that institutions generate. The government is the mechanism designer which chooses the institution (procedure, mechanism or game) that determines outcome.
The outcomes are context-dependent and depend on the choice and priorities of the government. Why explorations on the role of mechanism design (institutions, procedures and public policies) in analyzing the “endemic social constructs” including patriarchy remain elusive? What makes this compelling?
Recall the debate set off by Amartya Sen when he claimed that millions of women were “missing”. This is a human catastrophe. There is a need to analyze the role of public policy and institutions in correcting these blatantly oppressive prejudices that run deep in the society and results in female survival disadvantage, as well as the role of institutions in upholding the “right to life” for girl children and women.
Obvious things are often the most invisible. Surpassing the blatant reality, mainstream economists have always searched for “economic reasons” for integrating gender in macroeconomic policies for enhancing growth. Empirical literature draws attention to these “efficiency and equality” dimensions of integrating gender perspective into macroeconomic policies. The dynamic interaction between the ‘statistically invisible care economy segment' of the economy, viz., the household and community production of non-marketed goods and services included as per the United Nations Statistical Division (UNSD) revisions in the Systems of National Accounts (1993), and that of market economy have marked the market-oriented foundations of engendering macroeconomic policies. This dynamics captures the intra-household intensity and allocation of time between the dual sets of economic activity. In the recent years, “time deficits” in the invisible care economy due to the deficiency in public infrastructure investment and related public policies itself have become the prominent research agenda globally. The macroeconomic policies for gender development – especially gender budgeting as “institutional reforms”– have started earning recognition.
The government, as mechanism designer, at the outset, if aware of the set of policy priorities required for optimal outcomes can subsequently design mechanisms for achieving it. The government can pass national law mandating that choice. Gender budgeting has been mandated by law in many countries including Mexico (Oaxaca), Korea and the Philippines. An “ought-to-be” reforms package designed by our Prime Minister may include a set of five choices, with gender budgeting rightfully included as one of those five priorities. For instance, a design may include environmental regeneration, ensuring universal basic income, GST, infrastructure (revising fiscal rules - FRBM targets - to enhance capital expenditure), as well as gender budgeting. However, as Hurwicz in his works on mechanism design had rightly pointed out that the simultaneity of Pareto optimality, incentive compatibility and fiscal prudence is unattainable, leave alone the chances of any two of these conditions likely to be attainable.
Unpacking the algorithms, researchers have suggested “atomized tax policies” to solve the mechanism design issues as citizens do reveal their preferences more “strategic than sincere”. The moment a citizen reveal his/her preferences strategic than sincere – for instance, gender development is no public good for him/her – the financing of this public good rise to a level of devastating dimension. A monotonicity in revealed preferences would then become conditional to implement mechanism designs of social goals, if we look close the narratives of design by Hurwicz. In other words, monotonicity guarantees implementability. While these algorithms remained inconclusive, narratives have catalyzed the notion that institutions are the “rules of the game” in a society (Douglas North) and these are the humanly devised constraints that shape human interaction, as articulated by Richard Nelson. Acemoglu and Robinson argue in their book, Why Nations Fail (2012) that institutions, and they alone, determine the prosperity of a nation. They emphasize the significance of “inclusive economic institutions” that enforce property rights and create a level playing field in a pluralistic manner. Gender budgeting from that perspective can be a transformative financing for gender equality.
Unpacking the “social content” of macroeconomic policies is pertinent for rapid economic growth. Right institutions and innovative tools should be adopted to strengthen the “gender lens” of public spending decisions and how gender differential outcomes of fiscal policy are measured. The role of Ministry of Finance, Government of India in owning and leading the nation in terms of gender equity considerations from fiscal policy perspective is commendable. However, the uncertainties involved in innovation, the inability of the economic agents to clearly visualize the appropriate measures, data paucity and the efficacy of the new institutional mechanisms to take it to logical outcomes were the formidable challenges posed to gender budgeting process.
While social mores cannot be fully transformed by fiscal fiats, a proactive mechanism design by the State is called for. Here, the crucial question that confronts ones mind is, “to design policy for what?” – for ‘economic growth’ or for human development-conscious growth?
The author is Associate Professor, NIPFP. Click here for detailed profile.
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