Budget on course

With the Supreme Court throwing out a PIL on Monday seeking postponement of the Union budget till after assembly elections in five states, a key reform measure is now on track. On February 1, the Fince minister is set to table the budget, an event which used to take place on the last working day of February in earlier years. Advancing the budget will bring forth a quantum improvement in how Central schemes are implemented and funds spent, many experts believe. The expectation is that even after demands for grants of different ministries are debated at length in the two Houses of Parliament, the Central government can get the budget passed in the first half of Budget Session and begin spending money at the beginning of the fincial year. This will cut down on huge time loss that has dogged the budgeting exercise for long. Earlier, the Fince minister would present the budget on February 28 and get the vote-on-account from Parliament to draw money from the Consolidated Fund in the first half of Budget Session. But he would have to wait till May end in the session’s second half for Parliament’s fil approval, after the grueling debate is over and he had made his closing speech. By that time, the rains would begin, and it would take several months for departments to float tenders, filize award of works and place orders with contractors. Three quarters of the fincial year would thus be frittered away, and then would begin the unhealthy practice of spending the allocated money pell-mell in the last quarter. This practice left open much scope for mismagement of scarce public funds and chronic irregularities. It is a wonder why successive governments at the Centre never saw the need to end this wastage all these years. With funds to the order of Rs 20 lakh crore or more being allocated overall for the Union budget presently, the responsibility to spend such amounts wisely and well has never been greater. It is this experiment that would have got derailed this fincial year too, had the PIL to defer the budget gotten through in the apex court. But the Supreme Court judges rejected its contention in no uncertain terms — that allowing the Central government to go ahead with the budget now would help it influence the electorate in state elections. The SC bench has ruled that presentation of Union budget cannot be tied to state polls ‘which keep happening’. With any possibility of uncertainty now removed, the country can now look forward to a preponed budget that will be unique in other ways too. It will be the first budget to classify the government’s spending as revenue or capital expenditure, rather than plan or non-plan expenditure as in the past; the Railway budget will also be subsumed in the Union budget from this fiscal onwards. And all eyes are on how Fince Minister Arun Jaitley goes about restoring the balance after the Prime Minister’s demonetization move. If he seeks to ameliorate cash flushout pains with populist measures, he risks in failing on his promise to cut the fiscal deficit to 3 percent of the GDP in 2017-18. Growth prospects for the country’s cash-dependent economy are dim in the short term, with the Intertiol Monetary Fund (IMF) slashing forecasts to 7 percent from 7.6 percent previously. The expected slump in consumer spending and contraction in services and manufacturing are likely to offset growth in indirect tax receipts by over 14 percent in December last. From the infrastructure and investment-led growth pattern in its past three budgets, the NDA government now has to shift to boost consumer spend, transferring money to the rural poor, providing incentives to small and medium industries, and give tax breaks to encourage better compliance.