Examining the implications of classical budget theories in the local government budgeting process: Union Councils in Bangladesh

Abstract

Background: In many countries, local governments are neither well equipped nor properly accountable for performing their functions smoothly. They have also failed to become effective strategic partners of the national government and other levels of subnational governments. They have neither sufficient tax-base and local resource-entitlement nor full-bodied intergovernmental support. But the demands for services and goods continue to exceed the supply at local-government level in Bangladesh and elsewhere. As a result, the local government planning and budgeting issues become centrally positioned in the debate on the subnational level decentralisation, especially concerning fiscal decentralisation and political economics of local governments.

Aim: Keeping this fact in mind, the study examined the implications of classical budget theories in the local government budgeting process, particularly in the budgetary process and decisions of local government union councils in Bangladesh.

Setting: The data collection period was January 2018 to February 2018. The units of analysis of this study are ‘the classical budget theories’ and the lowest tier of the rural local government institutions in Bangladesh – that is, ‘the union. councils’.

Methods: The study followed ‘focused synthesis’ and ‘qualitative case research’ methods for data collection and used the epistemological view ‘positivism’ for data analysis.

Results: The study contributed to the literature stream of local government studies, public budget theory, subnational finance and budgeting, and the political economics of the local government.

Conclusion: This research reveals that ‘budgetary incrementalism’ and ‘high conditionality’ to inter-governmental transfers undermine the essence of community stakeholders’ consultations and spirit of local governance. It also unveils that central limitation towards effective functioning of a local government union council in Bangladesh is more related to the crisis of ownership and competence of the elected council rather than just to the external influences that somewhat affect their autonomy in the budgeting process and decisions.