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Homechevron_rightOpinionchevron_rightEditorialchevron_rightThe credibility of the ...

The credibility of the budget

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The credibility of the budget
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The country has witnessed  in the budget presentation by acting Finance Minister Piyush Goyal what will happen when a government with a life of 46 days presents a budget for 365 days.  Counting from the day the budget is to take effect i.e. 1 April,  there will only be 46 days left till the end of the current government's term on 26 May. 

The precedent  in such situations so far has been to present either a vote-on-account or an interim budet.  Though rules of business are silent on this,  presenting a full budget is both inappropriate and contrary to the spirit of the constitution.  There is also the question whether a government elected for five years can present six full budgets.  Further,  as has been pointed out by many,  there is also the possibility that a government afraid of losing the elections,  can put a succeeding government in trap by leaving behind a huge economic burden. 

Regardless of whether we call it  budget or interim budget,  what stands out in Piyush Goyal's budget is its being an interim exercise and of lavishness made possible solely by that ad-hoc nature.  For quite some timel  already budgets and their figures have lost their infallibility.  Even fiscal deficit and rate of poverty have come to be represented in different ways using different criteria and methodology.   With the abolition of five-year plans and the Planning Commission,  the budget has become irrelevant in many economic decisions.  When Good & Services Tax (GST) came in force, a major part of indirect tax went out of the scope of the budet and came under the of GST Council.  The practice of repeated changes in excise duties is also now outside the budget process.  What more, even the grand event of demonetisation was not done through any budget.  CAG itself had blamed the Central Government for making capital borrowings without including it in 2016-17 budget.   And we also witnessed the case of Aadhaar law,  which was passed in the garb of a finance bill,  only to circumvent budget and economic scrutiny of parliament.   In short,  the numbers in the budget suffered a serious dent in their authenticity and credibility.  And the budget itself in many aspects turned into an occasion for verbal acrobatics.   Add to these the compulsions of an imminent election,  and the result is the new union budget.

True, the budget does have much to mention by way of declarations,  but all predictably of the kind to suit electoral campaign requirements.  Financial assistance to farmers,  huge outlay for defence and raising of income tax slabs all can be seen as handy to garner votes.   With them are also elements targeting the basic poll pool of the sangh parivar.   At least for this budget, promises galore is not a mere idiom:  for outlaay and in tax reliefs,  it is truly a no holds-barred exercise.  At the same time, there is not much as a policy document that can creatively energize the economy.   Giving farmers free aid without addressing their basic problems,  will only end up as an interim measure.   How can one celebrate the step of giving a gift of Rs 2,000 every four months to any one when his very life is at a standstill?

 

And it cannot be overlooked that the allocation for defence will not suffice to meet the long-pending demands raised by the men in uniform.    A criticism has already surfaced that the game played by chartered accountant,  and long-time former treasurer Piyush Goyal is a jugglery of numbers.    Out of a mere 13 of the total figures in the budget speech scrutinised by 'Fact Checker',  it was found that four were absolutely wrong and two were partly wrong.   The numbers provided by the minister regarding housing,  LED bulb distribution,  skills development programme and mobile manufacturing units were wrong. 

Defence outlay,  although higher than previous years,  is not that high in terms of percentage of GDP.  Even in the growth figures,  some manipulations appear to have been made:  until the eve of budget presentation,  the growh rte of 2017-18 was 6.7 per cent,  but just before the budget it was made 7.2 per cent.  Even the statistic that as an impact of the note ban,  the growth rate of the previous year was limited to 7.1 per cent,  was corrected to read as 8.2 per cent.  The recent resignation of the chairman of National Statistical Commission was in protest at the government not providing the figures necessary to arrive at GDP (including of job opportunities).   The attempt of 'revisiting' data in order to hide the damage of demonetisation has also come to the public domain.   All put together,   the budget suffers from a background of having hurt the credibility of economic statistics of the country.

The budget proposals are inadequate to solve the problems of the farmers.  In a similar vein,  two serious issues have not come under the consideration of the budget.  One is unemployment. Although disturbing official data do exist,  the government has been holding them.  The picture drawn by that report which leaked out of the office of National Sample Survey,  is too alarming to be covered up by any budgetary gobbledygook.   Another major issue is the growing economic inequality.  The gravity of this is all to clear from the figures in the latest Oxfam report.   In the era of crony capitalism,  billions of poor become poorer,  and a few billionaires get richer.  It is a simple economic principle that without addressing income disparity directly, the country will not prosper.   Goyal's budget shows gross indifference to this too.

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