Not a bad idea

While purists will decry the possibility of a vote-on-account instead of a full-fledged budget for 2004-05 in case the government goes in for early elections, the move may actually be a good one from the economy's point of view.

For one, the logic for advancing elections is to enable the ruling NDA coalition to take advantage of the feel-good factor of the economic upturn, the good monsoon, the wave in its favour as evident in the recent state elections, and of the complete disarray in the Congress party.

If the logic works for the NDA, and for the BJP particularly, and the ruling coalition emerges stronger, that can augur well for economic reforms. Only governments that are not in danger of falling can possibly undertake any form of change.

Looking at it another way, what were the major changes one could possibly expect from a full-fledged budget?

Since much of the government's expenses are committed "" in the sense that it has little control over expenditure on interest payments, salaries and defence, the only cut in expenditure that could be envisaged would be one on subsidies on items like fertiliser.

Whatever economists might say about the need to do the right thing, or about how users don't mind paying more for quality services, it's unlikely that any government would increase user charges just months away from a general election.

So, even if the government had stuck to the original plan of holding the election in September, a bold and reform-oriented budget would have been unlikely.

Analyse any government's functioning over the past, and you'll find that rarely does anything meaningful get done in the last year of its tenure.

In any case, with the government more or less meeting its targets on tax reforms, with the exception of reduction in customs duties and the introduction of the value added tax (VAT) regime, not much is left to be done in the field of taxation.

Further streamlining of tax procedures needs to be done, but that does not require a budget presentation "" it can be done anytime.

Other important "pro-reform" measures, like the introduction of more flexibility in labour laws, further debureaucratisation and speeding up the process of privatisation, are all really outside the ambit of the budget.

Traditionally, governments have announced such reforms during the budget speech of the finance minister.

That has raised expectations, but the government has failed to deliver on many of those promises, usually due to opposition within the ruling coalition.

The fact that there has been no movement on making labour laws more flexible despite Yashwant Sinha announcing it in his budget speech three years ago, for instance, makes it clear that various constituents within the NDA are not allowing this to happen. The same holds true for speeding up the privatisation process.

In other words, the government is firmly in its no-action phase. In which case, an early election can only be a good thing. And a vote-on-account is not a problem.