Budget 2019: Why Modi government dragged its feet on a full budget despite poll compulsions

By: |
New Delhi | Updated: January 31, 2019 2:56:35 PM

Budget 2019: Just two days before the presentation of this year's budget, Modi government has clarified that it will not present a full budget as was widely speculated in media.

Union Budget 2019, Interim Budget, Full Budget, Interim Budget, Votes on Account, Finance Minister Piyush Goyal, Arun Jaitley, Budget Proposals, Budget Speech, Prime Minister Narendra Modi.It was rumoured that Modi government will be tempted to present a full budget in the election year to make some big announcements to woo voters. (Reuters)

Budget 2019: The NDA government has laid to rest speculation about a full budget in the election year instead of an interim one as per convention. It was rumoured that Modi government will be tempted to present a full budget in the election year to make some big announcements to woo voters.

Opinion is sharply divided on whether the government could present a full budget in an election year not. Two former finance ministers, P Chidambaram who was in-charge of finance ministry during UPA tenure and Yashwant Sinha who was finance minister in Atal Bihari Vajpayee cabinet, have criticised the government over the reports that it was planning to present a full budget, calling it unconstitutional.

The two former finance ministers had accused the Modi government for planning to exploit the lack of clarity in the Constitution. Indian Constitution does not even contain the term budget to describe the finance bill and government’s annual financial statement. Article 112 says that a statement of estimated receipts and expenditure of the Government of India will be laid in both the houses of Parliament for every financial year and it is called Annual Financial Statement.

Also, article 116 authorizes the Lok Sabha to make any grant in advance in respect of the estimated expenditure for a part of any financial year pending the completion of the procedure for voting and passage of that demand for grants as prescribed in article 113 and 114 of the Constitution.

What is the convention in the election year

Usually, governments have refrained from presenting a full budget just ahead of the national elections as it was considered the right of the next Lok Sabha to make provisions for the remaining period of the financial year.

Though Indian constitution is silent on the issue, a convention has evolved over the years that the government will present an interim budget or a vote on account just ahead of elections, authorising it to withdraw the money from the Consolidated Fund of India till the time the next government takes charge.

This convention has its root in the well established democratic principle that gives exclusive power to the elected representatives to levy taxes. In India, Lok Sabha members have exclusive rights to decide the financial matters of the Union government as members of the Rajya Sabha are not directly elected by the people.

Why the government dragged its feet on a full budget

This interim budget presents one last opportunity to Prime Minister Narendra Modi to make some big ticket announcements that may include sops for farmers, youth and the middle class before he seeks re-election in April-May. However, there is a well established principle in democracies of the world: that the sovereign power to levy and collect taxes is vested in the citizens and they exercise it through their elected representatives.

Also read| 5 budgets that changed India: From Manmohan Singh’s ‘Epochal Budget’ to Chavan’s ‘Black Budget’; here’s list

This principle traces its origin to the 17th century revolt by 13 American colonies of the UK that revolted against British Parliament’s powers to levy taxes. In UK, the Bill of Rights of 1689 had already forbidden imposition of taxes without the consent of Parliament. However, the 13 American colonies did not have any representation in British Parliament that used to levy taxes on them. They revolted against the British power saying ‘No Taxation Without Representation.

Lok Sabha members are elected for five years and the term of the 16th Lok Sabha will end in May this year. The members technically have no right to decide how the money will be spent after a new Lok Sabha gets elected in May.

Perhaps this was why the Modi government decided against presenting a full budget, despite electoral compulsions.

Do you know What is Finance Bill, Short Term Capital Gains Tax, Fiscal Policy in India, Section 80C of Income Tax Act 1961, Expenditure Budget? FE Knowledge Desk explains each of these and more in detail at Financial Express Explained. Also get Live BSE/NSE Stock Prices, latest NAV of Mutual Funds, Best equity funds, Top Gainers, Top Losers on Financial Express. Don’t forget to try our free Income Tax Calculator tool.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1Torrent: Cut to ‘reduce’, revise fair value to Rs 2,350 a share