Manmohan Singh's stamp on Chidambaram's budget

PM spent an unprecedented seven sessions with Finance Minister discussing philosophical thrusts and policy orientations of the budget.

The national budget for this fiscal year will have a clear stamp of Prime Minister Manmohan Singh who spent an unprecedented seven extended sessions with Finance Minister P Chidambaram discussing its philosophical thrusts and policy orientations.

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The finance minister is scheduled to present the government's annual statement of revenue and expenditure for 2004-05, popularly called the Budget, to the Lok Sabha, or Lower House of Parliament, at noon on Thursday.

In the month-long run-up to its preparation, Manmohan Singh, who himself was finance minister during 1991-96, and Chidambaram spent seven formal sessions and numerous informal ones on the sidelines of other meetings to essentially give the budget a human face, officials said.

"Prime ministers are generally known to take some interest in the budget. But the present prime minister, having himself presented five budgets, has gone into the fine print with a magnifying glass," said an aide familiar with the process.

"Each of his sessions with the finance minister and his team overshot the appointed time. And he not only discussed key issues but also often wanted them to be backed by numbers. And that's where the difference lies," the aide added.

In one such session, the economist prime minister got so immersed in discussions that the meeting extended well beyond his lunchtime and his doctor had to prod him to call it an end.

But Chidambaram is also no novice to this annual exercise. Both his previous budgets were presented under the compulsions of coalition politics, guided by a general policy document agreed upon by coalition partners - the first in July 1996 and the next in February 1997 that was widely acclaimed as a 'dream budget.'

This time too his policies will be guided by a similar policy document called the common minimum programme, which forms the basis for the United Progressive Alliance government with an added emphasis on the country's agrarian economy.

Manmohan Singh said in his address to the nation last month that his government will give a "new deal" to rural India and one of the tools for implementing the same will be the national budget.

"The kind of statements that the new government has made since coming to power last month has made it very clear that agriculture and rural development are going to be its priority areas," said economist DH Pai Panandiker.

"The main areas that are likely to get addressed in the budget are hiking public investment in agriculture research and boosting rural infrastructure and irrigation systems in a major way," Panandiker told IANS.

At the same time, the finance minister has to ensure that populist measures are announced without losing sight of the objective of containing the fiscal deficit, more so after having notified the Fiscal Responsibility and Budget Management Act last week.

The legislation binds the government to reduce the revenue deficit by at least 0.5 per cent of gross domestic product (GDP) each year and the fiscal deficit by not less than 0.3 per cent of GDP annually.

The legislation also prohibits the government from borrowing from the Reserve Bank of India after April 1, 2006.

By undertaking to accept this discipline upon itself, India joins a select group of countries that are serious about managing their public finances well and have similar legislation.

While the common minimum programme may prevent Chidambaram from resorting to any adventurism, his ingenuity will lie in how he balances the task of raising public finances and managing expenditure without appearing to be hurting the poor.