The new budget for the next financial year (2015—2016) is around the corner. Without sounding pretentious, let this be said that the government would be, as usual, confronted with perennial problem of low income and high expenditure. The gap, as is customary with the annual ritual, is bridged through grants and aid, bank borrowing and, of course, some fresh taxation. Going for a while with the official claim of noticeable improvement in various economic indicators in recent months, as claimed by the finance minister repeatedly, let us assume that the canvas for the new budget provides room for pro-people measures. The economic gains, as recounted by the government, include a comfortable growth rate, larger inflow of investment, increase in foreign exchange reserves and stability in prices. However, it may also be pointed out that during the year, the government has been helped by regular release of IMF tranches, contributions by bilateral friends and multilateral donors and the surge in foreign investment in certain key areas of economic activity. In addition to that, the steep fall in international oil prices has come as a boon to the country’s economy. The sustained increase in home remittances has also been acting as a big cushion to the economy. The point to note is that the next budget, which would be the third of the present government, will be put together in an environment which will be very helpful and vastly different from the earlier two occasions. When presenting its first budget, the present government complained of inheriting a fractured economy with most of its indicators looking down rather than looking up. Last year it lamented about a worsening law and order situation, high world oil prices and low investment. Though many experts do not take the official economic data hook, line and sinker but the forthcoming budget will itself show that how much the new financial strategy can hold his claim of economic recovery. If the budget is high on incentives and low on taxes, the official claim of economic turn-around would be automatically vindicated. However, the bigger challenge for the budget-makers will be to introduce certain fundamental reforms and hold on to them even under compelling situations. Quite often the target set at the budget time, is usually scaled down in later months. At the cost of being repetitive, let this be said that the practice of overestimating the income ought to be strictly avoided. Expenditure over-runs also have to be avoided. A bold effort to expand the tax base is vitally important to control fiscal deficit and reduce the dependence on borrowings. The argument regarding strict enforcement of expenditure control is usually pooh-poohed saying this is a retrogressive thinking unworthy of even a casual notice. Yet, it is already well established that the public sector units have been incurring an annual loss of Rs500 billion a year which by any account is an astronomical figure. Admittedly such huge losses cannot be wiped out overnight but the new financial year must see a determined effort to lessen this burden. Same holds for the unproductive expenditure incurred year after year. If not for the numbers, the habit of living within means should come as a matter of national obligation. The annual ritual of allocating large amount of funds for a variety of development schemes and then pruning them before the year is out shows over-ambition divorced from reality relating to resources. Let us start fashioning our development programmes in a manner that they are not required to be abridged every now and then. The much referred to sickness of many a public sector units, pitiable condition in which services like railways, road transport, postal facilities and health and education facilities is a sad commentary on our decades of development. It is well known that the government carries the responsibility of looking after the health of macro-economic indicators like growth, budget deficit, balance of payments position and price trends. The investor community wants a business-friendly atmosphere which means fiscal incentives and exemptions. Majority of the people, of course, always wait for relief in taxes and duties. These are, no doubt, competing claims. The test of the budget-makers lies in evolving the new financial policy which boosts the economy, adds to the government’s own revenue and carries on with the development work without burdening the common man. It may sound a tall order but certainly not out of reach.
