Reinventing the budget | india | Hindustan Times
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Reinventing the budget

If Govt has to live in the same era as its citizens, it can't sell dreams without making a difference.

india Updated: Feb 20, 2006 18:26 IST

Every Budget has some regular features: a few grand targets must be set; some earlier deadlines must be deferred for want of action and there has to be a sweetener for everyone. It's a given that just like its election manifesto, the government won't be able to fulfil each and every promise made in the budget speech. But does it have to be this way year after year?

All governments claim that development and poverty reduction are ultimate aims of their economic policies. There is broad consensus that the state must find ways and resources for employment generation, education and health care. Yet, it is believed that we cannot innovate too much on macroeconomics because our local version of the debate is also going on everywhere else in the world. If the government of the day has to live in the same era as its citizens, it must not be allowed to sell distant dreams without being able to make a difference on the ground.

The big picture is that every budget abandons old promises, perhaps not meant for keeping, and still manages to make new promises. Populist schemes are often not notified or notified so late they can't be implemented within the fiscal. Portentous plans often come without clear monetary allocations.

HT Research team looks at the whole exercise of India's annual budget from the functional angle. The idea is to re-examine some misleading and populist aspects we can do without. If policy makers believe that their war on fiscal deficit would enable them to prioritize social sectors, they must be made to show it in practice. It is important to restore accountability in the budget because the lack of it has disastrous consequences for the financial planning of state governments and even municipalities. The moot point is that why must all economic obligations of the state hinge on a single announcement.

The first write-up discusses the obscure and secretive practices that lead to the budgetary build up. It brings out some inherent paradoxes through examples of schemes that were announced with gusto but never implemented. The next article discusses how several countries are moving away from grandiose single-event budgets. It lists advantages and disadvantages of new models being experimented in the rest of the world. In the end, HT's Business Editor looks at the possibility of taking long-term policy imperatives out of the budget, and what have the sucessive Indian governments done so far in that direction.

Fiscal deficit As % of GDP According to the Fiscal Responsibility and Budget Management Act 2003, the Centre has to bring down this deficit to zero by 2007. The government has extended the deadline to 2009.

Shrinking allocations 2005-06 (BE) 2004-05 2005-06 (RE) (BE) over 04-05 (RE) Swaranjayanti Gram Swarozgar Yojna 900 862.24 -37.76 Sampoorna Gramin Rozgar Yojna 4590 3600 -990 National Food for Work Programme 1818 5400 3582 Rural housing 2602 2492.81 -109.19 Other rural development programmes 354.53 340.43 -14.1 Figures in Rs crore Source: Expenditure Budget, Department of Rural Development.