An 'unconventional' interim Budget

Was Friday's Budget an act of constitutional impropriety, as the government's opponents have proclaimed, or was it justified, as its ministers insist?

With a speech that stretched over a hundred minutes the interim Finance Minister has announced major, new and sweeping policies that will have a significant impact on our people and economy. He called it an interim Budget but it definitely wasn’t. It was a full-fledged Budget. Not only does it bear no comparison to the interim Budgets delivered by Jaswant Singh in 2004, Pranab Mukherjee in 2009 and P. Chidambaram in 2014 but few full-fledged Budgets have been as ambitious as this one.  

So was this an act of constitutional impropriety, as the government’s opponents have loudly proclaimed, or was it justified and legitimate, as its ministers insist? 

Yashwant Sinha, a distinguished former Bharatiya Janata Party finance minister, has said that to use an interim Budget to announce major new policies involving sizeable expenditure and significant tax changes would be “unconstitutional”. His arguement is simple. Convention is as much a part of our Constitution as its written articles and today it’s a well-established convention that interim Budgets are just votes on account to ensure that the business of government continues. 

You could, if you want, add a moral argument to the constitutional one. No doubt the Modi government is a full-fledged one with a majority in the lower house and a mandate till the May 26 but on April 1, when the new financial year starts, it will only have 46 days left. Is it fitting for it to present a full-fledged Budget valid for 365 days which covers 319 under its successor? Having done so, it’s tied the next government’s hands in two important senses: given their populist appeal, it would be difficult not to continue with these policies and, additionally, it might have to find the resources to fund them. 

The government’s grounds for presenting a full Budget three months before the elections seems equally persuasive. To begin with, in India conventions don’t have the same force as they do in Britain. You could also argue that a convention exists only as long as it’s observed. When it’s not, it ceases to be.

More importantly, nothing in the Constitution actually disallows a government with just three months left from presenting a full-fledged Budget. Indeed, as Yashwant Sinha has admitted, “the constitution does not have a proviso that specifically deals with the presentation of the Budget”. So if it’s not specifically disallowed you could argue it’s permitted.

Finally, there’s Arun Jaitley’s view which is based on the needs and exigencies of the economic situation. “The larger interests of the economy always dictate what should be in the interim Budget”, he has said. At the present, he adds, there are challenges which “cannot afford to wait (and) there’s a necessity to address some of them”. 

This is not such a singular standpoint. In 2014, when P. Chidambaram made a series of changes in excise duty and service tax, he justified his actions with the following logic: “the current economic situation demands some interventions that cannot wait for the regular Budget”. Of course, Piyush Goyal went a lot further than P. Chidambaram. But you could say that’s a matter of detail. The justification is the same.

Piyush Goyal’s interim Budget also defies convention in one other sense and how it’s hereafter treated by Parliament might be another. The farmers’ income support scheme has been announced with retrospective effect. That’s not just unusual it’s never been done in an interim Budget. But then there’s always a first time.

The manner in which Parliament handles the Goyal Budget could constitute another breach. N K Singh, a former Finance Secretary, has pointed out that so far changes to the Income Tax Act have always been referred to the Parliamentary Standing Committee on Finance. Will that happen this time? It will be novel if it doesn’t. But doesn’t Parliament have a right to decide whether or not it should?

Now, when the Prime Minister describes the Budget as “a trailer” is he only alluding to the possibility his government has more surprise announcements up its sleeve or is he also hinting there are other conventions that could be disregarded as the government burnishes its electoral appeal? I hope not but, after Friday’s Budget, you can’t be sure.