This column from Business World of 5 February 2004 is about the travesty of a budget presented by finance minister Jaswant Singh in 2004. GDP growth came down under the BJP government; Jaswant Singh suggested that that GDP should be replaced by gross national contentment. But he had no idea how to measure it.
An occasion for gross contentment
Was it a vote on account or a budget speech? In the last
session of the outgoing Lok Sabha or the first session of the year? Was it
improper that there was no customary President’s address? All these questions
are irrelevant. What is important is that the NDA government has made a mockery
of important parliamentary conventions. The President addresses Parliament at
the beginning of the Budget session. It is not a mere formality. The idea is
that the government, through the President’s speech, outlines the state of the
nation and the ruling party’s administrative intentions. It discloses to the
nation what it plans for the nation, and it gives the opposition a chance to
scrutinize and pick holes in its plans. The President’s speech is a part of the
openness that parliamentary governments are supposed to ensure. Although
shouting prowess has far outrun oratorical skills in our legislatures, the
President’s speech does generally evoke some significant speeches. It is a
crucial part of our democratic heritage; it should have been delivered at the
beginning of this session whether it was constitutionally required or not. It
might be argued that this government is going to resign in a couple of months
and cannot have a plan for the year. But it also hopes to return on
re-election; it could have used the President’s speech as a pre-election
manifesto, a statement of the case for its return to power.
The government called it an interim budget. That was quite
unnecessary. The debate on the budget is the most important task of a
parliament. The idea is that the government should not be able to tax the
citizens without their consent as expressed by their elected representatives.
It is true that the consent has become a formal matter; the ruling coalition
has a majority and can pass any taxation, however unreasonable. But unnoticed
points do come up, weaknesses are uncovered, and compromises are made during
debate. That is why a budget cannot be passed without extensive discussion; and
there cannot be one on whatever was presented on Tuesday. It was
important not to call it a budget; a vote on account was a perfectly good
description, supported by tradition.
But there is another, more substantial sense in which it was
not a budget. The finance minister has already announced tax concessions twice
in recent weeks. Some of it – for instance, the reduction in peak customs duty
and the abolition of special additional duty – were important. Others were more
detailed and complicated, and their rationale should have been explained. For
instance, duties were reduced on a range of inputs for auto ancillaries because
the industry complained that it would be unfair to make it face competition
from the Thai industry unless it was given a level playing field. Such are the
issues that should be aired in Parliament and, through Parliament, explained to
the people. Making such changes in taxes in a cavalier manner without serious
explanation, without giving Parliament a chance to debate them extensively, is
poor governance. And these ad hoc fiscal announcements have set a bad
precedent. It is wrong to keep making fiscal changes all through the year. They
should be made once a year, and after open debate. Less frequent changes would
also give more stability to business expectations.
Having said that, the Tuesday exercise was
indistinguishable from an average BJP budget. It was full of handouts for
constituents and for those whose money or votes the BJP covets. There were sops
for the egregiously political sugar industry, for the central and northern
states where the BJP’s electoral hopes are centred, and for small industry
where it counts devout adherents. There was special treatment for Industrial
Development Bank of India which, now that UTI and ICICI have been ceded to
professional management, is the prime remaining source of political patronage.
However, this deeply political, passionately partisan
government has stuck to one good thing: it has invested in infrastructure. The
finance minister has now set aside money for infrastructure for agriculture and
small-scale industry; what is required now is to breathe some substance and
practicality into it. Otherwise it will be just another empty promise like the
agro-industry consortia that Manmohan Singh had announced ten years ago.
The macroeconomics of the budget does not need discussion,
because the finance minister had no macroeconomic perspective. The significant
fall in the ratio of fiscal deficit to GDP is due to strong growth; whenever
the economy grows rapidly, budget balance improves. Altogether, a natural
budget for an intensely political party.
