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The Right to Information Act, 2005, contains several exemptions which enable public authorities to deny requests for information. RTI Annual Return Reports for 2005-2010 give detailed information on use of these exemptions to reject RTI requests. Exemptions to requests for information under the Act are primarily embodied in three sections – section 8, section 11, and section 24. Section 8 lists nine specific exemptions ranging from sovereignty of India to trade secrets. Sec 11 provides protection to confidential third party information. Sec 24 exempts certain security and intelligence organizations from the purview of the Act. Of these, sections 8(1)(j), 8(1)(d) and 8(1)(e) are respectively the three most frequently invoked exemptions for the period 2005-2010, cumulatively amounting to almost three-fourths of all exemptions invoked. Section 8(1)(j) provides protection to personal information of individuals from disclosure in the absence of larger public interest. This exemption was invoked over 30,000 times during 2005-2010, which amounts to almost 40% of all invocations of exemptions. Among ministries, the Finance Ministry has invoked this sub-section the most, followed by the Ministry of Communications and Information Technology. Section 8(1)(d) provides protection to trade secrets and intellectual property from disclosure in the absence of larger public interest. This exemption was invoked almost 15,000 times during 2005-2010, which constitutes 18% of all invocations of exemptions. As with sec 8(1)(j), the Finance Ministry has utilized this exemption the most, followed by the Ministry of Petroleum and Natural Gas. Section 8(1)(e) provides protection to information available to a person in his fiduciary relationship from disclosure in the absence of larger public interest. This exemption was invoked 11,639 times during 2005-2010, which accounts for almost 15% of all invocations of exemptions. The Finance Ministry has invoked this exemption more than any other ministry, both overall and for each individual year during 2005-2010. The Finance Ministry accounts for more than 50% of all invocations of this exemption, having invoked it over 6000 times. The Ministry of Petroleum and Natural Gas is second, with a little over 1000 invocations of this exemption. Ministry-wise Rejections As discussed above, Finance Ministry has a large number of rejections, perhaps because of the larger number of requests that it receives. It is also possible that the Finance Ministry receives a larger number of requests related to private and confidential information (such as Income Tax returns) as well as those which are held in a fiduciary capacity (such as details of accounts in nationalised banks). Adjusted for the number of requests received, the Finance Ministry tops the rejection rate at 24%, followed by the Prime Minister's Office (12%) and the Ministry of Petroleum and Natural Gas (11%).
Recently, the Kelkar Committee published a roadmap for fiscal consolidation. The report stresses the need and urgency to address India’s fiscal deficit. A high fiscal deficit – the excess of government expenditure over receipts – can be problematic for many reasons. The fiscal deficit is financed by government borrowing; increased borrowing can crowd out funds available for private investment. High government spending can also lead to a rise in price levels. A full PRS summary of the report can be found here. Recent fiscal trends Last year (2011-12), the central government posted a fiscal deficit of 5.8% (of GDP), significantly higher than the targeted 4.6%. This is in stark contrast to five years ago in 2007-08, when after embarking on a path of fiscal consolidation the government’s fiscal deficit had shrunk to a 30 year low of 2.5%. In 2008-09, a combination of the Sixth Pay Commission, farmers’ debt waiver and a crisis-driven stimulus led to the deficit rising to 6% and it has not returned to those levels since. As of August this year, government accounts reveal a fiscal deficit of Rs 3,37,538 crore which is 65.7% of the targeted deficit with seven months to go in the fiscal year. With growth slowing this year, the committee expects tax receipts to fall short of expectations significantly and expenditure to overshoot budget estimates, leaving the economy on the edge of a “fiscal precipice”.
Figure 1 (source: RBI)
Committee recommendations - expenditure To tackle the deficit on the expenditure side, the committee wants to ease the subsidy burden. Subsidy expenditure, as a percentage of GDP, has crept up in the last two years (see Figure 2) and the committee expects it to reach 2.6% of GDP in 2012-13. In response, the committee calls for an immediate increase in the price of diesel, kerosene and LPG. The committee also recommends phasing out the subsidy on diesel and LPG by 2014-15. Initial reports suggest that the government may not support this phasing out of subsidies.
Figure 2 (source: RBI, Union Budget documents, PRS)
For the fertiliser subsidy, the committee recommends implementing the Department of Fertilisers proposal of a 10% price increase on urea. Last week , the government raised the price of urea by Rs 50 per tonne (a 0.9% increase). Finally, the committee explains the rising food subsidy expenditure as a mismatch between the issue price and the minimum support price and wants this to be addressed. Committee recommendations - receipts Rising subsidies have not been matched by a significant increase in receipts through taxation: gross tax revenue as a percentage of GDP has remained around 10% of GDP (see Figure 3). The committee seeks to improve collections in both direct and indirect taxes via better tax administration. Over the last decade, income from direct taxes – the tax on income – has emerged as the biggest contributor to the Indian exchequer. The committee feels that the pending Direct Tax Code Bill would result in significant losses and should be reviewed. To boost income from indirect taxes – the tax on goods and services – the committee wants the proposed Goods and Service Tax regime to be implemented as soon as possible.
Figure 3 (source: RBI)
Increasing disinvestment, the process of selling government stake in public enterprises, is another proposal to boost receipts. India has failed to meet the disinvestment estimate set out in the Budget in the last two years (Figure 4). The committee believes introducing new channels [1. The committee suggests introducing a ‘call option model’. This is a mechanism allowing the government to offer for sale multiple securities over a period of time till disinvestment targets are achieved. Investors would have the option to purchase securities at the cost of a premium. They also propose introducing ‘exchange traded funds’ which would comprise all listed securities of Central Public Sector Enterprises and would provide investors with the benefits of diversification, low cost access and flexibility.] for disinvestment would ensure that disinvestment receipts would meet this year’s target of Rs 30,000 crore.
Figure 4 (source: Union Budget documents, PRS)
Taken together, these policy changes, the committee believe would significantly improve India’s fiscal health and boost growth. Their final projections for 2012-13, in both a reform and no reform scenario, and the medium term (2013-14 and 2014-15) are presented in the table below: [table id=2 /]
