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Rediff.com  » Business » Mr Chidambaram's Budget No. Seven

Mr Chidambaram's Budget No. Seven

By A K Bhattacharya
January 30, 2008 10:26 IST
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The Budget season is upon us. It is, therefore, time to talk about Finance Minister P Chidambaram's big show coming up next month and try to place it in a historical context. To begin with, there is something special about the date when Mr Chidambaram's next Budget will be unveiled. The date is February 29.

How many finance ministers before him presented a full Budget on this date, which comes only once in four years? In the last 60 years of annual Budget-making, only on eight occasions has a full Budget (as distinct from an interim Budget) been presented on February 29.

Morarji Desai (who was also born on this very day in 1896) presented two of his Budgets on February 29 - in 1960 and 1968. Others who presented a Budget on this day include C D Deshmukh, T T Krishnamachari, Pranab Mukherjee, N D Tiwari, Manmohan Singh and Yashwant Sinha.

For Mr Chidambaram, this will be his first Budget on February 29. Numerologists might draw several interesting conclusions on the importance this date has for the presentation of the Union Budget.

Indeed, most of the Budgets presented on this date will stand out among the rest for good reasons. For instance, if the Budgets of Dr Singh and Mr Sinha will be remembered for their reformist zeal, then the Budget of Mr Tiwari will always be cited by all as an example of what a Budget ought not to be.

So, who knows, Mr Chidambaram's Budget next month may also stand out for the new fiscal policy directions it might outline! But the real reason why the number of Budgets on February 29 has remained fewer than what it should have been (at least 15 in a period of 60 years) is that, in many leap years in the past, the last day of February has often been a Saturday or a Sunday.

And in years when the last day of February was a working day, elections were held, which forced a postponement of the Budget presentation to some other date after the formation of the new government.

Mr Chidambaram's next Budget should stand out for another reason. This will mark his seventh full Budget - two under the United Front government and the remaining under the United Progressive Alliance government.

That number will take him to just a notch below Morarji Desai - the finance minister who presented the largest number of Budgets - eight in all - in independent India. The last six decades have seen 23 finance ministers presenting full Budgets to Parliament.

Only five of them presented more than five budgets - Morarji Desai, P Chidambaram, CD Deshmukh (six Budgets), Manmohan Singh and Yashwant Sinha (both five Budgets each). So, presenting seven Budgets will be an important occasion for Mr Chidambaram.

The question that may be asked is whether Mr Chidambaram will be able to equal Morarji Desai's record of presenting eight Budgets. That seems unlikely. This will probably be his last full Budget under the UPA government.

In February 2009, Mr Chidambaram may be obliged only to present an interim Budget in view of the general elections that will have to be held by May that year in the normal course. This also has a significant implication for the kind of Budget that he will be able to present next month.

For a pointer to what Mr Chidambaram's Budget Number Seven may offer, please take a look at what Manmohan Singh did in the Budget that he presented in February 1995. The Budget was short on reforms. It carefully avoided taking hard steps, even though several of them were waiting to be implemented. And it announced a slew of social sector schemes, aimed at helping the common man.

Nothing unusual there. The last Budget before the elections always has an overdose of the ruling party's political agenda and it cannot afford to take any step that might hurt its electoral interests.

Mr Chidambaram's seventh Budget - the last before the general elections - cannot be an exception. There might be duty cuts and some adjustments in rates, paving the way for the promised introduction of the goods and services tax by April 2010.

But the likelihood of any proposal that might make the government unpopular will be remote. Instead, helped by buoyant revenue, the government expenditure taps will be opened and more resources will be directed towards several schemes that ostensibly benefit the poor.

Will the Budget contain any big-bang policy announcements that in the past made this annual exercise the most keenly awaited event in the government's economic calendar?

Mr Chidambaram is unlikely to venture into areas where he does not enjoy complete powers to implement decisions announced by him. Unlike a few of his predecessors, he is not expected to announce big reforms-friendly measures only to see how his ministerial colleagues stand in the way of their implementation.

Thus, his seventh Budget will primarily focus on fiscal policy changes and the government's expenditure priorities as influenced by concerns of winning the elections in 2009.

Run-up to the Union Budget 2008-09

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A K Bhattacharya
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