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Thursday, Jul 15, 2004

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CARELESS FORMULATIONS

THE FINEPRINT of the Union budget for 2004-05 reveals an insufficient application of mind in preparing and settling the details of the revenue and expenditure priorities of the Central Government. While the broad thrust of Budget 2004, in terms of reorienting government policy to the agenda of the National Common Minimum Programme (NCMP), is on the right lines, the inadequate attention that has been paid to the nuts and bolts of the annual financial exercise could result in weakening its very foundations. It is inexplicable that the United Progressive Alliance Government's allocations, as detailed in Volume II of the Expenditure Budget 2004-05, for almost all Ministries and Departments, are exactly the same as in the interim budget of the National Democratic Alliance Government. Outlays have been left untouched in vital social sectors such as elementary education, health, and rural development, as well as important economic sectors such as power and petroleum. The three major exceptions are in funding defence purchases, the food subsidy, and the Planning Commission. The only explanation for leaving the earlier allocations (with the implicit priorities) largely untouched can be that the Finance Ministry did not consider it important to re-examine the earlier exercise and revise outlays to reflect new priorities.

The Planning Commission has, of course, been provided an additional Rs.10,000 crores, which, as Union Finance Minister P. Chidambaram stated in his budget speech, will be used for funding new or restructured schemes that will further the objectives of the NCMP. Time pressure is the reason proffered for adoption of this strategy. There is, however, a problem with placing the entire burden of reorientation on the Plannning Commission's review. Yojana Bhavan will have to make suggestions for an overhaul of ongoing schemes, persuade the Government at all levels to accept the changes, introduce new programmes, and finally make allocations. All this will have to be done within the next couple of months, if the Rs.10,000-crore fund is to have any impact in the second half of the fiscal year. This is a tall order for the Planning Commission. The more likely outcome is that the Central and State Plans for 2004-05 will be implemented on much the same lines as before and the UPA Government will find at the end of the year that it has not addressed any of the priorities detailed in the NCMP. It could have been quite different had the Finance Ministry revised allocations made by the previous Government while waiting for the Planning Commission to complete its assignment.

During the course of the budget presentation, the Finance Minister said the education cess would fetch Rs.4,000 crores to Rs.5,000 crores in a full year. This means collections in the remaining eight months of 2004-05 will be correspondingly less. Yet the amounts expected from the cess on each tax, as listed in Volume I of the Receipts Budget 2004-05, add up to Rs.4,910 crores. Clearly, more has been budgeted for than will be collected. Besides, even the funds actually mobilised may not be spent this year since the Department of Elementary Education has not been provided proportionately larger resources. There is yet another defect that emerges from a close reading of the budget documents. Three months after the end of the fiscal year 2003-04, on offer are the revised estimates of receipts as published last February in the interim exercise. This is in spite of the fact that more up-to-date information is available with the Comptroller General of Accounts, who, in May, published the provisional accounts for all of 2003-04. This will not have an impact on policy implementation but it is yet another indication of the carelessness that has marked the preparation of Budget 2004.

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CARELESS FORMULATIONS

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