Costing studies aim to provide comprehensive and disaggregated costs of the implementation of a given programme or scheme.
In short, these answer the question: What does the programme cost?
Costing for India's Welfare Programmes
Imagine you are a part of a high-level policy task force that aims to set up a new programme across the country. What are among the first things that you will consider?
In all likelihood, you will want to know about money or finances you can allocate to the programme.
Costing studies help in determining exactly how much it can cost to launch and sustain a programme. Take a look below and you'll know more.
The First Insight: The Basics of Costing
What do you mean by 'costing'?
Researcher
Costing is simply trying to figure out how much money something will take. Imagine setting up a new office or redoing your home and deciding the amount of funds that you will need to make this happen. The government allocates money too to each of its welfare programmes. Decisions are made on what is required to achieve pre-decided goals, what isn't required or is beyond means.
But what are these welfare programmes?
Researcher
They are usually large-scale and run for multiple years till the goals decided under the programme are met. For instance, these could aim to reduce malnutrition across the country, provide education to all students, health services to every family, and so on.
So, how does costing feature into these programmes?
Researcher
To understand this, we should first know about the policy cycle, or how a programme is created.
The Second Insight: Understanding the Policy Cycle
The Basics of a Policy Cycle
Allocations and Budgeting
The objective of budgeting is to determine existing resources, incoming resources via revenues, allocations for various interventions by the government, and likely expenditures. In addition, the goal is to determine future funding needs. A budget typically covers what will be spent on various parts or components of a programme or multiple programmes, annually.
Resources are typically scarce in developing countries like India, and any expenditure at-scale requires careful prioritisation between competing needs. Cost estimates can contribute to a more informed debate on priorities, and help make choices clearer for policymakers.
Implementation, Monitoring, Evaluation and Feedback
As a programme is implemented, various issues may surface simultaneously. Via monitoring, evaluation, and feedback channels, these issues can be identified and addressed. Often, governments also have to respond to evolving needs (such as the COVID-19 pandemic) which require their intervention.
Based on feedback, certain parts of the programme might have to be changed. An important part of costing is the breakdown of the programme into specific components or smaller parts. This information on costs of each part can help decide whether the change should be made or not.
Cost requirements can also be benchmarked against the programme's allocated funds, releases, and expenditures. In this way, gaps between requirements and actual commitments can be identified. Therefore, such analyses can serve as an accountability tool.
Scale Up
Often, programmes are started at limited scale, and then expanded if the programme works well, or if issues are identified easily and addressed. Cost analyses can therefore be used to plan for such an expansion. These can help with determining the pace of rolling out the intervention. For instance, if it is to be staggered across years or across components.
This could include multiple scenarios as well, which can indicate the paths a programme can take. For example, some programmes may provide services to a limited number of people. What if this was increased? Or what if the quality of services provided has to be increased and therefore costs increase too?
What Our Researchers Will Tell You
Costing studies aim to provide comprehensive and disaggregated costs of the implementation of a given programme or scheme.
In short, these answer the question: What does the programme cost?
The Third Insight: How can Costing be Used?
Okay, so I now understand how costing fits in the policy cycle! But one thing that I'm still wondering about is - how do policy-makers even decide which interventions to implement?
Researcher
Once a goal has been decided, such as reducing malnutrition, there may be different options to choose from. Costs can again play a role here!
How?
Researcher
Through cost effectiveness studies. These tell us the 'gain' or benefit we make for each rupee spent. These can help policy-makers decide which interventions to go for, and which interventions may be most cost-effective (not to be confused with cost-friendly).
Can you give an example?
Researcher
Sure, interventions that provide micronutrients such as Iron and Folic Acid to pregnant women and lactating mothers provide massive gain for each rupee spent. The gain here can be measured by lower disease and death. If resources are very scarce, then such interventions should be prioritised over interventions that provide lower gains.
Hmm, that's quite interesting! I had no idea this could be done. But one thing though. Policy-makers are understandably busy all the time, and cannot conduct costing studies for everything they plan on doing. Can this complicated process be made easier?
Researcher
Of course it can! Data from costing studies can be presented in a usable format like a toolkit, which only requires inputs for population and unit costs with formulas in place.
Such toolkits should be regularly updated, and policy-makers and members of planning groups should be trained to use such data as effectively as possible.
Ah, that sounds useful. What more can such a toolkit do?
Researcher
Additionally, various inefficiencies in programme functioning could be covered too, so that all information is available in the toolkit. For example, the impact of vacancies on programme implementation is huge. In the absence of key officials, work slows down and outcomes are affected.
In this way, all information for policy-makers can be streamlined for easy use!
Get our new Nutrition Costing Note to Understand More.
Produced by: Ritwik Shukla & Avantika Shrivastava