INDIA BUDGET- 2005

The month of February sees hectic activity in the Indian economic, business and political community with only one word being the guiding force behind all their actions and inactions and that is “BUDGET”. That way the budget is somehow given a larger than life image in India, so much to say that a finance or corporate affairs professional is considered incompetent if he or she does not watch the parliamentary budget session live and does not have in his or her fingertips the budget proposals even as they are spelt out. Hence due to professional compulsions I myself had to go through the grind for about three hours today morning.

But analyst worldwide have expressed their opinion that the Annual Budget in India or for that matter anywhere in the world does not have much relevance when looked practically, among others for the following reasons mainly :

• The highly volatile socio-economic and political conditions in

India and the world over makes it difficult and uneconomic

to plan financial expenditure on an annual basis and more so

in the absence of a machinery to monitor the progress on

the budgetary lines.

• The business and economic community in India have become so

intellectuals that they devise methods to neutralize the financially

detrimental effects of the budget on individual classes of the

community, even before it is put in paper.

Despite all this budget announcements in India sparks unprecedented activity among business and economic cirles in the form of indepth analysis, debates, disintegration of its various points and discussion on its implications on mainly the rich and affluential (officially quoted as common man). But unfortunately all these discussions revolve only around what the people will gain or lose from their pockets. None of these discussions focus on the impact of the proposals on the development of the country, strengthening of its infrastructure, long term benefit for the people, efficiency in utilization of the budgeted revenue etc

This year the honourable Finance Minister, himself excellent in his academics, alongwith his elite group of the cream of finance and economic analysts and advisors have devised a highly futuristic, optimistic and politically balanced budget with each of their development proposals given titles that would sound nothing but sweet music to the listeners. Full marks to them for their efforts in the formulation of this budget (no political strings or overtones attached to this statement).

But the real problem is that that there is no mechanism or infrastructure to monitor and publish the extent to which actual performance conform to budget not only on overall fiscal basis but in terms of the individual budget proposals, the progress made thereon, the benefits derived therein, deviations from the budgets and finally achievement of the budgeted goals. Again the so called budget analysis, debates, brain storming etc..(I hope I have used the flashy terminologies) never look into the previous years economic performance and compare it with the budget at all. In fact the absence of such a debate makes the politicians conveniently overlook the budgetary performance each time every time.

So my personal opinion is that budgets are definitely necessary for a fiscal discipline, healthy macro-economic planning and achievement of desired growth in proper direction for the country just as it is necessary for every individual family, but unless there is a proper and detailed follow-up with comparison of the actual performance with the individual budgeted goals, the whole exercise with its huge commercialization and all the prefixes and suffixes accompanying it, becomes meaningless and nothing more than just a display of intellectual glamour.