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Over to Chidambaram's budget team
Bureaucrats, politicians, technocrats and economists have got together to create what promises to be a special event.
Bureaucrats, politicians, technocrats and economists have got together to create what promises to be a special event. Insiders are sure this will be a socialist Budget tilted towards meeting the common minimum programme. At the same time, it will skillfully push forward a pro-growth reform agenda.
It's primarily an all-male cast. The characters they etch are multiple and deal with a myriad of data, numbers, growth patterns, social concerns and political will. The script is written, rewritten and changed umpteen times. Yet, it remains secret till the last moment, barring key people in the government.
The guiding force remains a sharp and doughty Harvard trained lawyer, a winner of countless debates and stickler for detail. Anointed as India's finance minister, the veshti-clad P. Chidambaram is busy directing an effort that may well turn out to be another dream Budget. Insiders are sure of one thing: this will be a socialist Budget tilted towards meeting the national common minimum programme. At the same time, it will skillfully push forward a pro-growth reform agenda.
Guiding him in the task is a formidable team that has a wide variety of skills and attributes. Put together, they constitute the Alist in the finance ministry, allied ministries and even Prime Minister Manmohan Singh himself. Other people who are heavily involved in the Budget making exercise include Montek Singh Ahluwalia, the deputy chairman of the Planning Commission and C. Rangarajan, chairman of the Economic Advisory Council.
This is perhaps the first time that such a cast of characters -- bureaucrats, politicians, technocrats and economists -- are acting together to create what promises to be a special event in India's economic firmament. Incidentally, this is not the first time the Budget is being prepared in the absence of a finance secretary. Insiders recall a similar set up during one Budget under Yashwant Sinha. On the whole, while the Fi nance Ministry will continue with its main role on revenue generation, the Planning Commission is handling its job on the expenditure side. "In layman terms, the commission's role is seen in the Part A of the Budget speech, while the Finmin's role comes out in Part B, which deals with revenue generation", insiders suggest.
Formulation The calendar of current events started around a month ago with the Budget Committee of Secretaries that includes the four secretaries getting down to brass tacks. While a lot of things are routine, some things are different this Budget.
For starters, the Prime Minister is involved in the nitty-gritty. It is reported that the PMO is going through the Budget speech. This may be unprecedented but is not out of order as the overall political needs of the ruling coalition may have dictated this event. Unfortunately, the shroud of secrecy that surrounds the Budget preparation makes it difficult to find out the actual details in this regard.
According to the grapevine, the Planning Commission took an inordinate amount of time in furnishing the Gross Budgetary Support amount. The expenditure department sweated it out over this issue.
The Budget document is expected to run to around 260 pages -- including Part A and B, the FM's speech, Budget at a Glance, Finance Bill among others.
It is also believed that while the CBDT and CBEC officials' involvement is limited, the Tax Research Unit and Tax Policy Unit have been heavily tasked by the Finmin.
The Montek Singh Ahluwalia (Deputy chairman, Planning Commission): The Planning Commission with Montek at the helm will continue to play its normal role on the plan side like outlining priorities for expenditure. However, Montek's influ ence is not limited to this alone. Insiders reveal that Montek's style of functioning means there was very little pressure on the commission than was the norm for the time of the year. The Planning Commission deputy chairperson has a very busy schedule and interacts regularly with key people including the Prime Minister.
"If a Cabinet minister wants to discuss allocations, the deputy chairman makes it a point to visit him. He (Montek) is heavily involved in the process as well other tasks. He shares a personal relation with the PM and in that way is working on various (non-traditional) macro-economic objectives," insiders said. This is perhaps why Montek has virtually stopped interacting with the media. Other members of the Commission -- Kirit Parikh, Abhijit Sen -- are also seen as crucial players in outlining plan priorities.
Kamal Nath (Minister of Commerce and Industry): Opening up of the economy, integrating it with the rest of the world, boosting exports through special economic zones and taking other initiatives to boost industrial activity are core issues that Nath is dealing with. Therefore, it is only logical that Kamal Nath's ministry has a more than functional relationship with the Budget-making exercise.
Sharad Pawar (Minister for Agriculture): With the ruling coalition keen on improving the lot of the Indian farmer, Pawar is seen as pushing for a pro-agriculture, prorural economy Budget. Key initiatives being looked at include revamping agriculture research and reforming the agricultural markets.
Parthasarthi Shome (Adviser to Finance Minister): Shome is widely perceived as the key pointsman on taxation issues. Sources say Shome's influence on tax-related policy is marked and will bear out in the forthcoming Budget through new measures. Rakesh Mohan (Secretary, Department of Economic Affairs): The redoubtable Mohan, who quit as advisor to the finance minister in May 2002 and joined the RBI as deputy governor, is now handling this massive department. There are close to 20 odd units under him, including the crucial Budget division that prepares the actual budget. Key DEA officials include chief economic adviser Ashok Lahiri and joint secretary U.K. Sinha.
D. Swarup (Secretary, Department of Expenditure): Currently on an extension, Swarup supported by Adarsh Kishore, officer-on-special duty. As secretary, heavy industries, Kishore was instrumental in negotiating with Suzuki. Swarup was the addi tional secretary, Budget, for many years. In late 2003 he was appointed OSD in charge of department of expenditure.
K.M. Chandrasekhar (Secretary, Department of Revenue): India's former ambassador to the World Trade Organisation handles the department that controls all matters relating to direct and indirect union taxes. C. Rangarajan (Chairman, PM's Economic Advisory Council): One of India's foremost economic minds, a former RBI Governor Rangarajan is also seen as a key pointsman in the Budget exercise.
THROUGH THE YEARS
NEW ERA WITH MANMOHAN
In the four Budgets that Manmohan Singh presented in the early nineties, he opened the economy, encouraged foreign investments and reduced the peak import duty from 300 plus to 50 per cent.
SERVICE TAX DEBUT
Manmohan introduced the concept of service tax. He said in his 1994-95 Budget speech that though the tax base had been widened for direct domestic tax, services, which accounted for 40 per cent of the GDP remained untouched.
SMALL BEGINNING
Manmohan first levied service tax on just three services -- telephones, non-life insurance and stock brokers. It was at five per cent. Three more services were added to the list in the next Budget.
NET SPREAD WIDER
Chidambaram and Yashwant Sinha (right) expanded the service tax list.
At present, 70 services are taxed and the burden is passed on to the users.
CONGRESS OUT
Singh (right) presented the interim budget for 1996-97 as elections were slated for May 1996. After the elections, a non-Congress ministry assumed office.
ANOTHER FIRST
The final budget for 1996-97 was presented by P. Chidambaram of the then TMC. This was the second time that interim and final Budgets were presented by ministers of different political parties.
NO DEBATE
Following a constitutional crisis the I.K. Gujral ministry was on its way out and a special session of Parliament was convened only to pass Chidambaram's 1997-98 Budget. It was passed without a debate.
BREAKING TIME BARRIER
Yashwant Sinha presented the budget for 1999-2000 in the forenoon. Earlier the Budgets used to be presented at five in the evening on the British pattern, since 5 pm in India is about noon in London.
