C S Radhakrishnan
Every year, around end of February to end of March, it is the budget season in India. Starting with the Railway Budget, then the Union Budget, and then the State Budgets on different dates, a lot of psychological pressure builds up on the economic front. The media and the Who is Who of the Business empires make efforts to build up pressure on the Government in favour of or against certain policy initiatives. Strong lobbying and Business delegations waiting on the Authorities goes on till the eleventh hour. Is all this hullaballoo justified?
The Budget exercise consists mainly of three parts: Part one consists of determining Capital Outlay needs and the raising of resources for them, servicing of existing debt obligations and the allocation of existing resources towards ongoing committed expenditure. Part two consists of identifying those new activities which need to be taken up for achieving social or economic objectives to be set for the coming year. Part three will be the resources becoming available through Central Schemes for the States, or through Centraly sponsored Schemes to be implemented by the States, to achieve National Objectives, and the States share a part of the burden.
The Five Year Plan for the ongoing five-year spell would have already been discussed and approved outlays for each year also earmarked. Presently the State Governments tend to keep carrying forward Plan schemes from one Plan period to another, eitherÂ because the schemes were planned faultily, resulting in incomplete or ineffective implementation, or because they could not be implemented for reasons not within the control of the respective Departments. This creates the need for keeping the scheme as it is for another Plan period of five years.
It is not as though there are some hard and fast rules requiring such carry forward of schemes. In many cases, the departments manage to get the scheme shifted to Non-plan, in order to get better allocation on the Plan side for new schemes. Another reason why old schemes from previous plans are carried forward has been the reluctance of Finance department to transfer Plan schemes into Non Plan Expenditure after the expiry of a Plan.
It is now sixty years since we started the Five Year Plan system of Economic Planning, modeled on the Seven Year Plans of the erstwhile Soviet Union. It is high time we have a second look at the utility of this dichotomy in Financial control. An attempt was made a few decades back, when the State of Maharashtra introduced Zero Based Budgeting as a Policy. Later Shri. Shankarrao Chavan, as Union Finance Minister had tried to introduce it in Central Ministries and U.T. Administrations. Considerable improvement in financial discipline had accrued from the exercise. The Indian Institute of Public Administration had provided training to Goa Officers also in the new method. The original enthusiasm cooled off and without a formal decision, and the practice has been given up. The country deserves to have a similar approach to fiscal discipline.
Holding the Departments responsible for results from the Money spent from the Exchequer is a priority. Performance Budgeting and Efficiency-cum-performance Audit (ECPA) have remained cosmetic activity. Internal Inspections have become mere cash counting exercises rather than effective ECPA. These areas need to be given higher priority. Once this is done, budgeting can become a very simple affair.
Another area of concern is the tradition of budget secrecy. It is a colonial vestige we are unnecessarily carrying forward. Poor DineshÂ Trivedi as Railway Minister has become a victim of this practice. He was oath – bound not to discuss the details of the proposed fare revisions with his party boss and she has made it a prestige issue, not realizing that she also could not have done it, if she was having someone else as the Party chief at the time when she was the Railway Minister.
There are two sides to the Budget secrecy. One is that a proposal to be submitted to the Parliament or State Legislature is a privileged communication and therefore cannot be let known to others beforehand. Another is the possible impact on the Revenues of the Government if proposed changes in Taxation or incentives etc are known to the interested parties in advance. In the modern era of communications, almost the entire data on which the decisions are based is in the public domain.
Government is not the sole depository of Economic and commercial expertise . If anything, there are as many experts outside as there are inside, if not more. It is not at all difficult to anticipate the probable contours of the National or State Budget. The only area difficult to guess is the extent to which political expediency may over-rule financial prudence, immediately after or before an election.
Coming to the Privilege of the Legislature, it has also lost its punch since today the Budget Proceedings are Broadcast live and nothing remains the secret of the House .Even other proceedings are extensively reported in the media, except when a closed door session is ordered by the Presiding authority. In such circumstances, the Houses can well do away with the general privilege and prescribe it only for discussions concerning National Security and any Emergency situations. The more we call something secret, the more we make it vulnerable to espionage and leakages.