Finance Minister Pranab Mukherjee is facing competition, something few of his predecessors in the last decade faced. With the Union Budget for 2009-10 less than a week away, his colleagues in several other ministries are working overtime to announce a series of initiatives in fulfilment of the agenda set out by the re-elected Manmohan Singh government.
So, instead of waiting eagerly for the Budget announcements to be made on July 6 and pinning all one’s hopes on that document, everyone is busy discussing what the various ministries have announced in the last couple of weeks and how those initiatives will or will not make a difference to their lives. The big challenge for Mr Mukherjee, therefore, is to produce a Budget that draws all the attention away from these schemes and makes everyone sit up on what he has to offer instead and, of course, on what new direction he gives to the economy.
There was a time when the Union Budget would announce not just fiscal policy changes and the new rates of taxation, but also policy initiatives in different areas of governance. That practice lay buried by the turn of the last decade, when finance ministers realised that there was little they could do to ensure the implementation of policy announcements, which did not come under their direct purview.
Union Budgets, therefore, began simply focussing on fiscal policy changes and the government’s expenditure allocation programmes, where the finance minister had some decisive say. Why talk about labour reforms, cutting government staff strength in different ministries or privatising the national air carrier? As it turned out, all these announcements were made in Budgets some years ago, and none of them could be implemented either by the finance minister concerned or even by his successors.
A consequence of that approach was that Union Budgets became less interesting. With the focus sharply restricted to the government’s fiscal deficit numbers, tax rates and expenditure programmes, these annual financial statements began losing the aura that their predecessors used to enjoy. In the past few years, however, what came to the finance ministers’ rescue was the failure of other central ministries in thinking big and announcing initiatives that usher in reforms and improve the way people in this country live and do business. Thus, the only ministry that raised expectations of some policy change and reforms in the last few years was the finance ministry and the document that people eagerly waited for some signals of those policy changes happened to be the Union Budget.
That has changed with this government. Consider what Mr Mukherjee’s colleagues in the Union Cabinet have managed to achieve in the last couple of weeks. The prime minister himself chose the IT industry’s poster boy Nandan Nilekani to head the new government’s most challenging, if not controversial, project to provide a unique identity card to all Indian citizens. Law and Justice Minister Veerappa Moily has announced an action plan for judicial reforms and a system to ensure disclosure of personal assets by sitting judges in different courts. Environment and Forests Minister Jairam Ramesh is talking about environment tribunals to grant speedy clearance to projects. Urban Development Minister Jaipal Reddy has outlined a grand scheme to renew urban infrastructure in different metropolitan cities. Road Transport and Highways Minister Kamal Nath wants to revive the virtually stalled national highway projects and build 20 kilometres of new highways a day. Commerce Minister Anand Sharma is keen on concluding the Doha round of multilateral trade talks, of course, on terms that do not compromise the interests of developing countries like India. Human Resources Development Minister Kapil Sibal plans to set up an independent regulator for institutes of higher education and bring about sweeping reforms in primary and secondary education.
This is a long list of grand policy announcements. This is also an action plan that any finance minister would have been proud to incorporate in his Budget speech. The challenge for Pranab Mukherjee, then, is to produce a Budget that outdoes and outshines the array of policy measures announced by his colleagues. The good news is Mr Mukherjee is not known for shying away from challenges. Next Monday, therefore, expect some fireworks.