 "Experts divided over Dec Budget")
This suggestion is said to have not made to it the list of final recommendations culled from around seven presentations by groups of secretaries on topics such as 'Accelerated growth with inclusion and equity', 'Employment generation strategies', 'Health and education: Universal access and quality', 'Farmer-centric issues in agriculture and allied sectors', and 'Innovative budgeting', among others. Sources in the government said, that the proposal wasn't rejected either; it might be explored.
Presenting the Budget a good three months before the start of a financial year comes with both advantages and disadvantages.
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Plus
Retired and serving officials say the biggest plus would be that the Finance Bill, incorporating the Budget proposals, could be passed by February or March. So, government departments, agencies and state-owned companies would know their allocations right from April 1, when the financial year begins.
In the existing system, the Lok Sabha passes a vote on account for the April-June quarter, under which departments are provided a sixth of their total allocation for the year. This is done by March. The Finance Bill is not passed before late April or early May. If the Budget is read in December and passed by February-March, it would enable the government to do away with a vote on account for the first three months of a financial year, said a retired senior.
It would also help the private sector to anticipate government procurement trends and evolve their business plans. And, civil society could deliberate on and give feedback in time for the parliamentary ddiscussions, the person said.
A serving official used the example of the current drought in parts of the country to illustrate how advancing the Bill's passage could help. "The vote on account provides a sixth of the total allocation to a ministry and this includes salaries and operational expenditures. Hence, departments have not had enough money to put into rural schemes till the Finance Bill sees passage. Had the Bill passed before April 1, the government could have had more monetary resources to deal with the drought."
The Finance Bill was passed last week and Cabinet Secretary P K Sinha has directed all departments to hasten drought relief work under the Integrated Action Plan.
Minus
However, one big disadvantage of advancing the Budget preparations is lack of comprehensive revenue and expenditure data. Currently, work on the Budget begins in earnest by December. By the time it is finalised in mid-February, data on revenue collections and expenditure trends is available for the first nine months of the financial year, i.e April-December. Based on which, projections for the full year can be made.
"To read the Budget in December, you will have to start preparing it by early October. To go by less than six months of data and making projections for the full year and the next year, based on such an incomplete picture, will be an impossible task," said a second official.
Former Reserve Bank of India governor C Rangarajan, also an ex-head of the Prime Minister's Economic Advisory Council, said advancing the Budget dates would be fraught with practical difficulties. Effective Budget planning also depends on the monsoon forecasts for the coming year, making the advancing the whole exercise even more difficult.
"On balance, there is no great advantage in shifting the Budget presentation from February to December," says Rangarajan.
A GOOD-AND-BAD IDEA
Upside
- Finance Bill, incorporating the Budget proposals, could be passed by February or March
- Government departments, agencies and state-owned companies would know their allocations right from April 1
- Would help the private sector to anticipate government procurement trends and evolve their business plans
- Lack of comprehensive revenue and expenditure data
- Planning depends on the monsoon forecasts for the coming year, making the whole exercise more difficult