The Union Budget is the basic blueprint that specifies what the government intends to do in the financial year to come, and how it intends to spend and raise the resources to do that. Clearly, a Budget is an imperative or otherwise a government will drift aimlessly, though that often seems to be the case even with the most minutely specific Budget. Having said that, one must wonder why there is such a fuss each year when the finance minister of India is about to present the Budget?
If one analyses each of the 60-odd budgets that our finance ministers have presented over the years, little seems to have changed. This is not to say that the first Budget raised and spent revenues in the same way as this year's Budget would.
The first Budget presented by R.K. Shanmukham in 1947 was a Budget that stayed within the means available and did not rely much on borrowings. The pattern of taxing and borrowing changed hugely over the years, so much so that it is the extent of the borrowing that will be the most important aspect of tomorrow's Budget.
Last year, the fiscal deficit was well over the budgeted 5.3 per cent, and, at best, the finance minister can promise a lower by a tenth. So the interest provision will retain the same share of expenditure. Salaries are sacrosanct and will remain the nation's single largest expenditure. Given the current regional environment, defence is a sacred cow and will brook no change. And when it comes to subsidies, deserved and undeserved, open and hidden, and especially in a pre-election year, it is the government that is the scared cow. Plan expenditures brook little change and have to be provided for. Direct and indirect taxes also offer little scope for change, particularly when you see how beholden the government is to the members of the CII, Ficci and Assocham, particularly in a pre-election year. A back of the envelope calculation shows that over 95 per cent of the Budget is chiseled on stone. Besides, most of the tax increases and revenue enhancement steps, such as raising or reducing the oil subsidies and prices, are taken well before the Budget. So what's the hoopla about?
Budget presentations are now a major media circus, hyped because of the advertising revenues they generate. The usual talking heads in the idiot box, like yours truly, will shake their heads disapprovingly or cluck satisfaction, to fill the space between the advertisements.
Elsewhere in the world, budgets are preceded by an account of the year gone by and discussions among the representatives of the people in Parliament. We have none of that. Each year we get just more of the same, arrived at by an unnecessarily hush-hush manner, with a few embellishments and changes. When the unexpected happens, as in 1991 -dismantling of the Industrial Licensing Policy and the establishment that implemented it -it is well outside the budgetary process and even outside the purview of the ministry of finance. So while we cannot do without a Budget, we can do without the hoopla and the fuss.
(The writer is a Distinguished Fellow at Observer Research Foundation, New Delhi)
Courtesy: The Asian Age,
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