In India, Budget speeches are also platforms for identifying issues that require fiscal attention. Finance Minister Arun Jaitley's speech this year focuses on agriculture, bank recapitalisation, and fiscal reforms. I was curious about how previous finance ministers (FMs) had dealt with these issues. So I did some reading of speeches made by past luminaries who held this office. (All quotes are from Budget speeches).
Explicit bank recapitalisation last happened in financial year 1995. Manmohan Singh embarked on "a basic restructuring of the banking system aimed at ensuring full financial viability of its operations" and spent Rs 5,700 crore on this. This would be around Rs 25,000 crore now. Mr Jaitley has allocated - surprise - Rs 25,000 crore towards recapitalisation recognising that "the strength of the financial sector is dependent on a well-functioning banking system". In FY09, there was also an effective recapitalisation when the government decided to waive farm loans. P Chidambaram's heart "bled for the farmers" and provided Rs 60,000 crore for farm loan waivers, around Rs 1, 00,000 crore now. With bank recapitalisation, it seems, history repeats itself all too often.
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Dr Singh was very concerned about agriculture. In 1994, he provided budgetary resources to Nabard. Mr Jaitley has created a long-term irrigation fund in Nabard as well. Dr Singh provided around Rs 9,000 crore (in today's prices) for agriculture in his 1994 budget. In 2008, Mr Chidambaram provided around Rs 8,000 crore (at today's prices) for it, and Mr Jaitley has provided around Rs 12,500 crore for different agricultural schemes.
The fiscal reforms story is a bit different. In 1994, Dr Singh was not able to meet his fiscal deficit targets. Jaswant Singh in 2003 focused on restructuring state governments' debt. He also missed his fiscal deficit targets. Good economic circumstances enabled Mr Chidambaram to comfortably secure fiscal consolidation in 2008. Mr Jaitley met his targets this year in more difficult circumstances. But the interesting thing about Mr Chidambaram's speech is the relatively limited space devoted to fiscal reforms, compared to National Democratic Alliance FMs.
Turning from substance to style, Dr Singh rose to present the 1994 Budget with "a sense of pride and humility." Yes, both. There were no quotations except in the last paragraph, where he let go a bit, quoted Rabindranath Tagore, and described India "as a bright torch which he was determined to hold aloft undimmed and untarnished." Impressive. Even fiery. For Dr Singh, especially so.
Mr Jaswant Singh used humour to great effect in 2003. When speaking of income tax, he said Albert Einstein found "income tax the most difficult thing upon earth to understand," and asked for the sympathy of the house, for, "I endeavour to make easy that which Einstein found so difficult." He used hinglish in his speech - "permit me sir to now address the paanch priorities." Mr Chidambaram took Tamil Saint Tiruvalluvar's help in many of his speeches, helpfully providing an English translation. Mr Jaitley has continued this tradition with several quotes in Hindi, but without an English translation. These flourishes, common to all our FMs, are effective ways of linking what would otherwise be a rather dry presentation to the idiom of the people, which is a politician's greatest asset.
Budget speeches have also been replete with incomprehensible and even hilarious statements. I suspect we have the civil service to thank for this. Dr Singh listed jams, jellies, sauces and baby food as "items of mass consumption" - this in 1994. He said "I propose to exempt ships for breaking up from countervailing duty…." which conjures rather fantastic nautical possibilities. Mr Jaswant Singh retained "exemptions for hand-processed fabrics but only if no power or steam is used in any process". He provided "relief to certain bilateral partners" (nothing naughty, just countries providing foreign aid). He set up an expert advisory council to enable the ministry "to remain better abreast of agriculture." Mr Chidambaram "brought HIV Aids out of the closet and promised bold and determined efforts to achieve zero level growth(!) of the disease". He said "I have good news for cat and dog lovers. I proposed to reduce the duty on pet foods…". In the case of the Mr Jaitley, I will refrain from citing examples, but would point the reader to paragraphs 104 and 105 of the Budget speech which are a masterpiece of incomprehensible drafting.
So, at the end of Budget week 2016, reflecting on Budgets past and present, there are many continuities. Fiscal reforms have been at the centerpiece of every FM's thinking since 1991. Contrary to popular perception, agriculture has also been at the forefront of many Budgets. Regrettably, so has bank recapitalisation. FMs have used political tools and rhetorical flourishes to convey their messages to the electorate, and to convey how their Budgets adhere to ideological commitments. Reflecting the chaos and complexities of our country, Budget speeches have consistently included amusing postulations. Thus, in India, the budgetary exercise has been as much a manifestation of the vibrant, chaotic, political debate that is the hallmark of Indian democracy, as a statement of the government's fiscal stance and track record. And that, in my view, is a very good thing.
The writer is director, National Institute of Public Finance and Policy
rr1@nipfp.org.in
rr1@nipfp.org.in
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