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Home > India > Business > Columnists > Guest Column > A K Bhattacharya

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Why interim budgets are irrelevant

February 11, 2009

Economic reforms have been extensively debated in this country for quite a few decades. Much before Manmohan Singh ushered in economic reforms in 1991, policymakers and economists within the government and outside have been examining the appropriateness of opening up the economy and substituting discretionary policies with a transparent and rule-based policy regime.

It was from the 1980s that licensing controls began to be relaxed and a low-to-moderate tariff-based system began replacing quantitative curbs.

This journey may have been slow because of the intense nature of the debate. On many occasions, therefore, policymakers have had to go back a step after having taken two steps forward. But never has there been any doubt on the trajectory of the direction of economic liberalisation.

The unprecedented balance of payments crisis and fiscal indiscipline in 1990 hastened the pace of reforms as it was felt that without those measures the country's economy could have collapsed. Since then, it could be argued, economic reforms have gone beyond the purview of debates.

Economic reforms have remained an article of faith for all the governments at the Centre in the last 18 years, irrespective of the political parties that formed them.

Legal reforms, too have gone through a similar phase. There have been debates on how comprehensively the country's legal system could be made more efficient to deliver justice without delay. Our courts are clogged with cases and cannot deliver justice within a reasonable period of time.

While a lot has been achieved by simplifying procedures in civil cases, by specifying rigid time frames to complete formalities before the cases can be argued, the use of information technology in the functioning of courts has begun to make a difference to litigants and lawyers alike.

Undoubtedly, the use of information technology can be even more widespread. But a small beginning has been made in the courts at least in some states. There are many states where nothing has changed and, hopefully, the current debate will result in some action there as well.

But the fact that a debate on the need for legal reforms has started is a positive sign. As veteran policymakers will argue, starting a debate for a change is the first concrete step towards achieving the final goal of reforms.

As another session of Parliament is slated to start from tomorrow, questions are bound to surface also over the slow pace of reforms in our parliamentary procedures and convention.

Till 1999, for instance, the Union Budget was always presented at 5 pm in the evening. There was no apparent logic except that this was the convention. It was a practice that dated back to the days of the British Raj.

But the practice of presenting the budget at 5 pm was continued for 52 years even after independence and no finance minister or parliamentary affairs minister during those years thought of switching over to a different time that is logical from the Indian government's point of view.

It was left to Yashwant Sinha to take that decision and at around noon on February 27, 1999, he presented the budget for the following financial year.

What about the convention of interim budgets? Why should the finance minister of a government that is going to polls in a few weeks be allowed to wax eloquent on what the achievements were in the previous five years? Worse, why should he be given the opportunity to present some indirect tax changes to make some populist gestures?

The legislative requirement of an interim budget is to let the government seek Parliament's approval of its expenditure for a period of three to four months by when elections would be completed and a new government in place to present a regular budget.

So, why not restrict the interim budget to only seeking Parliament's approval for those expenditure allocations for different ministries? Why should the aura of an interim budget ornament an exercise that is mostly an attempt to woo the electorate to vote the ruling party back to power?

Even more unjustifiable is the presentation of interim railway budgets. On February 13, Lalu Prasad will present the interim budget for the railways. While doing so, he will beat his own drum on how well he has managed the Indian Railways and what more he wants to do in the coming financial year.

But why should he be allowed to talk about his plans for the next year if a general election is to be held in a few weeks?

Why can't Lalu Prasad simply seek Parliament's approval for the Indian Railways' expenditure in the first four months of the coming financial year and let the new railway minister after the elections, whoever he or she may be, outline the grand plans for 2009-10?

Unfortunately, no debate questioning the relevance of interim budgets has begun in this country. Interim budgets are treated more as a parliamentary spectacle and an opportunity for ruling party politicians to take credit for their government's achievements and announce some populist schemes.

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