Budget trivia

The bandobast for how the media responds to the finance ministry is a big affair for the Press Information Bureau officials.

On Budget day, PIB officials land up in the ministry long before dawn to work on the first set of press releases that would be made available to the media before the embargo on the Budget is lifted.

The next major headache is the distribution of the papers to the press gallery of Parliament, along with a set of floppies to be made available with the entire set of the Budget speech.

Former Finance Minister Jaswant Singh broke many conventions during his stint in North Block. Apart from doing away with the routine pre-Budget meetings, Singh did not present the Budget in the conventional Part A and Part B format. He combined the two and announced tax proposals while elaborating on sectoral policy issues.

The administrative department of the finance ministry was particularly grateful to Singh for sparing them the trouble of presenting a variety of leather bags to carry the Budget papers to Parliament. Unlike his predecessors, Singh chose to carry the papers in a folder.

LEXICON

Appropriation Bills: After the Demands for Grants are voted by the Lok Sabha, Parliament's approval to the withdrawal from the Consolidated Funds of the amounts so voted and of the amount required to meet the expenditure charged on the Consolidated Fund is sought through the Appropriation Bill.

Under Article 114(3) of the Constitution, no amount can be withdrawn from the consolidated fund without the enactment of such a law by Parliament.

The whole process beginning with the presentation of the Budget and ending with discussions and voting on the Demands for Grants requires sufficiently long time.

The Lok Sabha is, therefore, empowered by the Constitution to make any grant in advance in respect of the estimated expenditure for a part of the financial year pending completion of procedure for the voting of the Demands.

The purpose of the 'vote on account' is to keep the government functioning pending voting of 'final supply'. The vote on account is obtained from Parliament through the Appropriation (Vote on Account) Bill.

BULL DOSE

A market stabilisation fund should be introduced

Pashupati K Advani,

Director,

Advani Share Brokers Pvt Ltd

Budget 2004 should ideally allow tax exemptions on capital gains in the cash market to continue. The voluntary disclosure of income scheme, mentioned in the common minimum programme, must include a suitable incentive alternative for the capital markets.

I also feel a market stabilisation fund should be introduced, on the lines of the one in Hong Kong. There should also be a substitution of income and capital gains tax on trade, along with a very small flat transaction tax. Corporate dividends in the hands of investors should continue to be tax-free.

Also the government should clarify the tax treatment of gains/losses arising out of trade in the futures and options segment of the capital market. Lastly, the T+2 settlement system must continue till online funds transfer in the banking system is in place and RTGS is fully operational for a year.

STATES MEN

The debt burden of Orissa is over Rs 33,000 cr

Prafulla Chandra Ghadei

Orissa Finance Minister

The Budget should focus on rural sector development and removal of regional imbalances. It should particularly accord special priority to the problems of backward and poor states, which have slipped into a debt trap and do not have much scope to augment internal resource generation.

For example, the debt burden of Orissa has shot up to over Rs 33,000 crore (Rs 330 billion) and a major chunk of its income is spent on servicing the debt, leaving little to undertake any welfare measures.

In this context, the Budget should earmark certain funds for fiscal restructuring of heavily burdened states so that state resources are released for development work.

The pre-Budget announcement of Finance Minister P Chidambaram to raise the annual agricultural credit by 30 per cent, is a welcome step.

But there is need to activate the credit delivery channel in states like Orissa where the commercial banks, vested with the maximum responsibility of credit disbursement, have been lukewarm in responding to the credit needs of the small and marginal farmers.

The objectivity of higher credit target for farm sector can only be achieved through prescription of strict adherence rules for banks, particularly with respect to poor and backward states, in the Budget.

Similarly, the finance minister should raise the income-tax slabs and ensure higher return on small savings and PF for the benefit of the common man.

On the indirect tax front, the excise and customs duties should be restructured to give an impetus to the growth of core and infrastructure sectors like steel, aluminium, chrome and power. The relief to the small and village industries should be further extended.

The Budget should also address the demands of the mineral-rich states like Orissa for higher income from royalty and cess on minerals, to bolster the states' economy.

Moreover, there should be an attempt in the Budget for higher devolution of funds from the central tax pool in the true spirit of the federal nature of the government.