Do away with the hoopla
An element of mystery and mystique has become part and parcel of the budget day exercise. Corporates, policy makers and even the hoi polloi are curious to know how their daily lives are impacted by the time the FM completes his speech. The important thing is does one need this hype and hoopla about a budget speech? Why can?t policy imperatives be taken out of the budget speech?india Updated: Feb 19, 2006 23:13 IST
An element of mystery and mystique has become part and parcel of the budget day exercise. Corporates, policy makers and even the hoi polloi are curious to know how their daily lives are impacted by the time the FM completes his speech. The important thing is does one need this hype and hoopla about a budget speech? Why can’t policy imperatives be taken out of the budget speech?
In many ways, the previous dispensation had to some extent managed to unveil this process where several big bang reformist announcements were made in the run up to the budget. The best case one can cite is the Pravasi Bharatiya Diwas where Jaswant Singh rolled out big bang foreign exchange liberalisation measures. Interestingly, the Union Cabinet meets practically once a week and takes stock of various matters. In fact the Cabinet Committee on Economic Affairs meets with the same frequency and takes economic decisions. And this is something that the Manmohan Singh government should get credit for.
So, if this is a regular phenomenon and economic decision making at the highest level is taking place with great gusto and regularity, then why keep the budget such a big secret? Should the budget speech then become like the State of the Union address in the US? Or should we have a budget, which essentially tells us about allocations under various heads? Should long-term economic policy be kept out of it completely? In many ways important fora should be used to make such vital policy decisions that may be evolved over time in a methodical manner.
Another recent example came up last month. Even as three key functionaries of the government – the Finance and Commerce & Industry Ministers and the Deputy chairman Planning Commission - were set to fly out to the World Economic Forum conclave in Davos, the Cabinet met and cleared a radical FDI rationalisation policy. This sent out a signal loud and clear to the global investor community that India was ready to do business despite coalition compulsions. The present government’s Group of Ministers (GOM) approach, though cumbersome, is also a welcome step for issues that cannot be resolved by the cabinet are often left for GOMs and empowered GOMs to decide. The Mumbai and Delhi modernisation plan, with a few mishaps along the way, is an example.
Last year, the same Government decided to scrap the controversial Press Note 18, which impeded the progress of joint ventures, at another CII summit in Kolkata. Policy should become a way of life for the government and needs to be isolated from the budgetary exercise. In many ways the President’s speech this time was a refreshing change for he provided the essence of what one can expect in the budget this time round.
Clearly, India’s elaborate and secretive annual exercise has run its course and time has come to open up the debate for economists and general public alike. The US Government’s budget is available on the website a whole year in advance. As a result, the Federal Reserve Chairman’s comments and board meets are far more important than any other event in the economic landscape of the world’s largest economy.