Around 11 am tomorrow, Pranab
Mukherjee will present the third consecutive union
budget in his present avatar, and the sixth in his
long career. He knows the business of being a
finance minister. From the looks of it, Pranab-babu
knows all that is needed of governing a shaky
coalition — dousing many fires, interpreting subtle
semiotics of the High Command, mollifying an angry
opposition, whipping and cajoling recalcitrant
allies, chairing scores of Group of Ministers
meetings. You name it, Pranab-babu is there. The
budget is just one task, and the least of his
worries.
Before going onto what the budget should be, it is
worth asking why we have the annual hoopla. I’m not
referring to the importance of the Budget. It is a
key task of the government to present the fiscal
scorecard of the year that will soon have passed,
expenditures that it seeks to make, taxes that it
expects to garner and policies that it wishes to
implement in the year to come. I am referring to the
making of a great media event, to which I plead mea
culpa by writing such columns and happily baring my
mug on the idiot box.
It is not as if budgets were devoid of any public
and media interest in the rest of the world. I
remember the 1970s and early 1980s in the UK, when
people would huddle near the television to hear
Denis Healy and Geoffrey Howe sipping gin and tonic
and delivering their long-winded speeches; with
moans, groans and expletives for every tax hike on
fags and the pint, and every cut in National Health
budget. Soon enough, the drama of the UK budget came
to an end. Today, it is routine business, not a
media circus. The budget is presented sometime
between March and April, this year’s being on 23
March; the typical budget speech takes between 50
minutes and an hour; there is no TV overload unless
the Chancellor introduces key reforms or taxes; and
barring the next day’s Financial Express and some
pontificating stuff in The Economist, the event is
devoid of hard publicity and hype. It is business to
be done; and thus, done.
So too in the USA. I can’t remember when the annual
budget of the federal government was a issue of a
week-long televised orgy. Typically, the President
submits his annual budget request to the Congress on
the first Monday of February. The House and Senate
Appropriations Committees then draft the regular
appropriations bills that determine spending for
various federal programmes. The bills — often
combined into an omnibus bill — must pass both the
House and Senate and then be signed by the President
to give federal agencies the authority to spend.
Again, totally workmanlike, and usually devoid of
top-of-the-pops publicity.
One day, we too shall grow up. To treat the budget
as an important annual act of financial and fiscal
governance, and not an occasion for excessive drama.
I hope it comes sooner than we think, for it will be
sign of our growing up.
In the meanwhile, where does Pranab-babu stand? In a
damn good place, despite all the red faced
embarrassments that the government has faced in
recent times. Thanks to an expected GDP growth of
8.6% real plus 7.5% inflation, or over 16% in
nominal terms, and healthy tax collections, the
government’s fiscal deficit for 2010-11 will be more
like 5% of GDP, versus the budget estimate of 5.5%.
He has had a great run on tax revenue: customs is up
by over 60%; excise by almost 30%; and overall tax
revenue by almost 25%. And we are looking at a GDP
growth of between 8.5% to 9% next year. Despite the
recent hiccup in manufacturing growth, the buoyancy
is self-evident.
Which is why Pranab-babu must be bold. I would like
to see him reel in most of the concessions that he
had so generously offered during the global crisis.
I would him to make credible sounds about
restraining spending, especially on useless projects
where monies are promised but never spent. I would
want him to begin the process of implementing a
common goods and services tax (GST), start a
time-bound roll-out, and ignore the BJP-ruled
states, if these choose to be obdurate. I would like
him to re-start a languished reforms programme: give
a clear date for increasing FDI in insurance; start
the process of FDI in retail; beginning four to five
pilot projects on cash transfers to the poor which
makes more economic sense than anything that we do
right now; and implement some key provisions of the
proposed direct tax code, and so set the stage for a
more comprehensive rollout in 2012-13.
It is Pranab-babu’s last chance to prove his mettle
as a reformer. For one, the last two years of any
government is the time for fiscal populism, based on
a fond hope that sops win elections. This government
won’t be different, and Pranab-babu will have to
pipe the tune. This, therefore, is his real
opportunity to clean up the clutter, and present a
budget that is both fiscally honest and reformist in
intent. For another, he won’t get a batting pitch so
favourable to score an effortless century: one of
the best growth rates in the world; entrepreneurial
drive second to none; and a general sense that India
deserves its place in the sun. It is the time to
press the reform button, and regain the high ground
lost to apathy and corruption.
The big question is ‘Will he?’ Is Pranab Mukherjee a
reformer? Or is he a ploughman? Adroit, aware of how
the bread is buttered, but a ploughman nevertheless?
That’s for you to tell at 1 pm tomorrow.
Published: Hindustan Times, February 2011