The right figures

The Budget should have used up-to-date data on revenue

A crucial part of the evaluation of any Union Budget is not only a straightforward calculation of revenue and expenditure, and how the gap between the two will be financed, but also to determine how and where revenue estimates have changed between years, and which heads of expenditure are being given greater or lesser prominence over time. It is in the allocations and particularly their comparison over time that such insights are to be gleaned, not from the statements of priorities outlined in the Budget speech. A Budget is primarily a budgeting exercise. It is unfortunate, therefore, that the Union Budget for 2019-20, presented on Friday, made both these basic forms of analysis — perhaps unnecessarily — difficult. 

The speech itself, as Finance Minister Nirmala Sitharaman acknowledged in a postscript, is a departure from convention in not mentioning the actual allocations at all. Usually the part of the speech dealing with expenditure states clearly what the outlays are — in this case, however, those mentions were largely absent. However, this led to a delay of a few hours until the Budget papers were generally available and could be scrutinised. At that point, however, other concerns arose. This year there were three points of comparison for, say, revenue gleaned from direct taxes. The Budget Estimates of revenue in 2019-20 needed to be compared to the past; the three points of comparison were the last Budget Estimates (BE), presented in 2018 for 2018-19; the Revised Estimates (RE) for 2018-19, presented in the Interim Budget of February; and the Provisional Actuals (PA). Here also there was some confusion, as in some cases the revenue actuals reported by the ministry of finance do not gel with those from the nodal agency, the Controller General of Accounts (CGA). This made the task of determining where and how revenue had fallen short, or where the government was being optimistic or conservative regarding revenue growth, very knotty indeed.

In most previous Budgets this task has been less onerous. When the Budget was presented on February 28 for a financial year ending on March 31, the Revised Estimates could take into account at least three quarters of actually realised revenue and expenditure, till March. Now that the Budget is presented at the beginning of February, the Revised Estimates on many heads sometimes do not reflect the reality and are thus not useful. Since this was an election year, however, there is no excuse for the full Budget documents failing to use the up-to-date figures, namely the Provisional Actuals available from the CGA. This is particularly perplexing since those figures were available for and incorporated in the Economic Survey, released the day before the Union Budget. These figures would have revealed that the Budget’s hopes for revenue realisation were somewhat optimistic and that there might well be a hole of tens of thousands of crores that will have to somehow be filled. The finance ministry has a responsibility to Parliament and people use the most recent figures. The government’s credibility with data should not be further eroded.