This was what we were discussing the other day, sitting in the winter sun at a
roadside dhaba: a financial analyst friend and I. “How can you govern this
country?” My friend asked. “You present a Budget, then the next 40 days go in
debating it and rollbacks and all that, and then, from 60 days before the
Budget, everyone forgets about the last one and is lobbying or double-guessing
the next Budget. So the Budget is actually relevant for only about 260 days of
That was a valid point, I had to admit. “And how do you plan long-term when the
tax structure changes every year?” my friend asked. “The uncertainty has reduced
a lot over the years, but you still have some changes in direct and indirect
taxes every year, which can impact all your projections.” Of course, if the
Finance Minister announces the much-needed reforms pertaining to direct taxes
and goods and services tax this time, all that could be a thing of the past. But
will he? Not too many people, I find, are betting on it.
In my days as a business journalist, I had to spend hours every year going
through the Budget papers. And quite often, the more fine print one read, the
more puzzled one became. Tucked away in nooks and crannies, one would find
bizarre stuff like excise duties raised on soles of rubber slippers, or reduced
on outboard motors below a certain horsepower for boats used specifically for
fishing. Some minor industry lobby somewhere had clearly managed to sneak
something in, that would quite probably remain below the radar of both the
Finance Minister and his top bureaucracy. One Budget, I remember, came down
particularly hard on readymade men’s shirts, of all things. Why? How much extra
money would the government make out of this? Who was it helping? Would millions
of men now make a beeline for shirt lengths and tailoring shops? But the
additional duties imposed disappeared equally mysteriously when the Budget
proposals were finalized after the mandatory Parliament debate.
Indeed, I remember a few Budgets which proposed
many measures, and then cleverly counterbalanced them in other sections, so the
net effect in real terms was zero. But by the time anyone could figure all that
out, the Budget was through, and the nation had moved on.
Then there’s the question of actual figures. When the finance minister presents
the Budget, he provides the last Budget Estimates and the Revised Estimates. The
actual figures about what the Government has collected and spent under a Budget
take at least 18 months to get collated and released. And hardly anyone bothers
to pay any attention to how much the Government really deviated from what it had
In fact, by the time these figures are revealed, businessmen and economists are
already worrying about the next Budget, the second one to be presented after the
one whose actual outcome we now know.
Over the last few years, the Government has also passed on the onus of tough
economic decisions to a significant extent on the Reserve Bank of India. Which
is a good thing, because the Reserve Bank is under less political pressure than
a coalition government. But it must also be acknowledged that the Government has
done this for its own selfish reasons, not out of some reformist ideal.
Governments want to make themselves scarce when these decisions need to be
taken, with the option to come back centrestage and take credit when the
decisions turn out to be correct. After all, an entity like the RBI can hardly
take credit, but it can always be blamed.
Right now, the finance minister must be wishing there was some RBI-like
supposedly-arm’s-length institution which could take the public call on petrol
and diesel prices.
Come Friday, we will all be watching and discussing and arguing about the
Budget. We will treat it as a strategy document, which is what the Budget should
ideally be, laying out the Government’s vision and priorities and a roadmap, and
not about nitty-gritties that affect specific industry segments. But, in
actuality, it is the rare Union Budget in India that is a true strategy
In a way, that’s not surprising. After all, the men and women preparing the
Budget are forced to focus on just one year. And the year is actually only 260
days long. Which is distilled into one day of hype and hoopla. And the real
report card comes only after 18 months, and no one notices.
Livemint, India, dated