Edits & Columns

Look beyond Budget day Fiscal prudence must be a long-term concern   Event managers for the Union Budget? The idea is not as wild or as preposterous as it seems at first. Indeed, if the present state of affairs continues, it may not be long before some future finance minister appoints a 20-something to manage the show, strobe lights and all. The irony is that for all the hype generated about Budgets, they are forgotten soon after the event. Forget lofty promises. Even when it comes to mundane measurable yardsticks, the government’s budgetary exercise has all along been marked by more misses than hits. Fiscal 2003-04, for which the government came out with actual figures, is no exception. The fiscal deficit is lower at Rs 1,23,272 crore as against the RE (revised estimate) of Rs1,32,103 crore. But this is poor consolation, since the primary deficit shows a huge deterioration. Against the primary surplus of Rs 7,548 crore in the RE, the final figure shows a deficit of Rs 816 crore. Revised estimates for 2004-05 reveal a similar story. The primary deficit is up to Rs 13,326 crore, against a BE (budgetary estimate) of Rs 7,907 crore. Poor fiscal marksmanship is what economists call it. Sure, FMs are no Rajyavardhan Rathores. But is it unreasonable to expect more precision? Agreed, there are difficulties in projecting revenue and expenditure with precision. Moreover, large variations in economic growth, as witnessed in 2003-04, with the Gross Domestic Product (GDP) growth rate zooming to 8.5% from 4.2% in the previous year, make the task of estimation more complicated. Acceleration, as well as deceleration, of economic growth can have a significant bearing on revenue realisation. It is no one’s case that the government should always be on the dot and hit bull’s eye every time. But there is no reason why it should be wide off the mark most of the time, either. Canons of democratic responsibility require the members of Parliament to question over-optimistic projections and seek convincing explanations for large variations in Budget estimates. Fiscal prudence must not be kept in cold storage while drawing up the Budget. And Budgets must not be one-night stands!

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