Whether we are interested in all the sessions of parliament or not, we always follow the budget session. Headlines of every single newspaper are filled with the budget’s news the next day of its announcement. Budget of July 1991 had perhaps the biggest fiscal adjustment of all time. P.V. Narasimha Rao was sworn in as India’s Prime minister on 21st June 1991, heading a minority Congress-led government. By mid July 1991 the nation’s foreign exchange reserves were down to ₹2,500 crore, just enough to meet two weeks of imports. RBI had parked gold holdings with the Bank of England in July 1991 to avail financial assistance. Thus government was forced to launch a series of reforms to liberalize India’s economy, by going against Nehruvian Socialism. As a result, budget announced on 24th July 1991, had a huge burden of not going against the popular vote and of extending the reforms in order to end the license raj. We still praise the then Finance Minister Dr. Manmohan Singh for presenting a good budget and averting the ignominy of defaulting on debt payments.
This year’s budget may not have such a huge pressure, but still it has a very big burden mainly because of following reasons:
Inclusion of railways’ budget
For the very first time after 92 years, general budget will be inclusive of the railways’. Currently the railways is undergoing dramatic reforms right from proposing a new policy for revenue generation, under which a company can buy consolidated media rights for branding the entire train and railway stations, to developing infrastructure for bullet trains. Only time will tell about the success or failure of these reforms. However, the upcoming all-inclusive budget has to find the balance between governance and accountability of the railways. At the same time, government has to ensure that merger of two budgets does not lead to miscommunication between different departments, unnecessary delays and increased red tape which in turn can hamper railway’s modernization.
Upcoming state elections
Following the announcement of election dates for five states, almost all political parties questioned the timing of budget alleging that BJP will use it to woo the voters. If the party was in opposition, it might have adopted the same tactics. In fact, India has seen such presentation of budget by ruling party in past, especially before Lok Sabha elections. About 16 political parties had requested the Election Commission to postpone the budget date.
Demonetisation
Till 8th November 2016, Modi government did not give the Opposition any substantial issue to slam the government. In Lok Sabha, Finance Minister Arun Jaitley refuted the accusations over Lalit Modi issue on factual grounds. He went on to say that unlike previous government, the incumbent one has registered a case in FEMA Act so that a red corner notice can be issued against the accused. Entire opposition had to rely on issues such as PM’s foreign trips, intolerance etc. to criticize the government. Demonetization decision taken on 8th November 2016, however, had a direct impact on the whole nation as people had to suffer hardships. More than 4 lakh people had either lost their jobs or had lost their earnings. Opposition has been slamming the government for the same. Meanwhile, PM’s speech on New Year’s Eve, though termed as sop by many experts, has raised hopes of citizens. Common man wants the interest rates of loans to be reduced further and expects some tax relief. Moreover, big companies from various sectors are waiting for 1st February budget to launch their IPOs (Initial Public Offering). 14 IPOs worth ₹8,020 crore have already been approved while another 10 firms have filed prospectuses to raise a total of ₹15,000 crore. Thus, upcoming budget has to withstand the pressure of hopes of a billion Indians.
Let’s hope for a better budget and my best wishes to the Finance Minister Arun Jaitley.
Saket Aloni
(The views expressed by the author in the article are his/her own.)
