Lofty budget aims remain just that

Representational image

Representational image


The Centre and the States every year work out details of their spending plan based on income and expenses, and present it in form of budgets

The Centre and the States every year work out details of their spending plan based on income and expenses, and present it in form of budgets. A budget is an expression of the government's public policy. It is a document that tells the people how the government plans to earn revenue and where and how much it would spend. It is divided into various sectors to ensure all round development.

The government expenditure is funded by a common pool of taxpayers' money and the policies that are formed with this money are further used to fund projects and generate revenue. Hence, it is extremely important for any government to allocate resources wisely. Budget helps in allocating the available resources in a prudent manner and utilise it with utmost responsibility for infrastructure development projects, improving health and education, providing basic amenities like power, water, roads etc., uplifting the underprivileged sections of the society, mitigating regional disparity and facilitating financial inclusion. It is meant to ensure control over expenditure and help maintain stability over public money of which the government is the custodian. Since any political party which forms government at the Centre or in states has certain social, political and economic responsibilities, a well-planned budget is of utmost importance for any government.

The question here is if the budget now has any sanctity or if it has become just a ritual. The budget sessions of Parliament and Assembly used to be held with utmost seriousness and serious discussion on various aspects of the budget used to take place. But now the Budget Session of Parliament is getting derailed as opposition parties stall the proceedings on one issue or the other and this helps the ruling party at the Centre to pass the budget without much discussion or amendments. The Budget session of Parliament used to last for nearly four months. But thanks to the disruptions that are taking place, it is being adjourned sine die much ahead of schedule.

In states, the budget sessions which used to last for about 45 days are being wound up in less than 15 days' time and most of the time the discussions are one sided since opposition parties in most states have been decimated or the miniscule number of members are suspended on frivolous grounds not for a day but for entire session. We swear by democracy but we act otherwise.

Such scenario leads to an excessive spending of public money on policies which evolve anytime during the year because of political considerations and are not part of the original budget. This leads to diversion of funds from originally planned projects and programmes to the newly announced schemes benefitting few sections of the society.

The very concept of budget is to allow the governments to regulate the imposition of taxes, plan investment and expenditure which can contribute to the growth of the state or nation's economy. They ideally should encourage people to lay emphasis more on savings and investments by providing tax rebates and subsidies. It is a different matter that the Centre has not been doing much to encourage investments and the inflation rate has been touching a new high. It's decision to introduce GST and going in for demonetisation has also caused lots of problems for the common man. With so many slabs, the GST has proved to be a burden on the taxpayer. Compliance of any laws can be enforced if they are simple. But in the case of GST, it is not so.

The budget also helps the industry know the resources that are allocated to different sectors and based on that they can plan and revise their policies which in turn would help in the economic growth of the state and the country. Budget is also intended to mitigate economic divide as the government can address such issues.

But unfortunately, the annual budget, which is essentially an annual estimate of the country's income and expenditure, has lost its significance and relevance, much like the Five Year Plan that India once used to draw up. In the name of dynamism, decisions are being taken as and when required sometimes with the concurrence of the cabinet and most of the times they are ratified by the cabinet without any discussion as the ruling party ministers – both of national and regional parties – feel that their leader can do no wrong. This leads to a situation where the provisions and recommendations of the Budget remain just that and never ... Budget is no more a yardstick which could give a direction to the actions of the government.

The ruling parties that come to power on the back of promises find it easy to fulfil them by raising loans, without bothering about the impact of such acts on the state economy. The thirst for retaining power pushes a state or the country into debt trap but then we have experts who coin new words like inclusive growth and what not to explain such acts and they claim that one has to make use of opportunities when one sees them instead of waiting for a year.

When Budget used to have greater importance in governance the constitution had provided an institution called Comptroller and Auditor General of India (CAG) with independent status and authority to work against these financial misconducts in public office. It is estimated that about 30% of GDP is spent on public procurement and the quantum of corruption associated with it is also high. Leakages in government revenues worsens financial picture. The CAG is expected to identify and take necessary corrective measures. However, CAG is seen to be functioning more as a routine auditor.

There is a feeling that CAG, over the years, has failed to proactively expand its role to meet the emerging challenges. Though CAG reports are discussed by the public accounts committees of the respective legislatures and the state government officials send some replies and after that, no one evaluates and no one knows what happens. It only helps the opposition parties to use it as stick to beat the government though it hardly creates any impact on the thinking of the people. With the growing culture of 'note for vote' and the increase in the distribution of freebies, budget and CAGs have lost their importance.

Experts are not wrong when they say that the functioning of CAG is largely confined to itself and is not known to meet with experts, professionals or institutions. This is one of those institutions which are most unapproachable. It has independent status. The CAG reports point out shortcomings in government spending, but they do not issue any guidelines or suggest best practices that can help in reducing corruption or malpractices.

Though CAG had exposed some scams, they have been occurring with increasing frequency. Similarly, they point out cost overruns by the governments but there is no mechanism to make the government take corrective measures. A new trend now is that the officials prefer to avoid taking decisions as there has been growing intervention of agencies like CAG, CBI and CVC. The opposition parties allege that these agencies act as agents of the ruling party at Centre and when they come to power, they prove no different.

It is time for a relook and reassessment of the role and responsibilities of the agencies like CAG so that India can achieve its target of three trillion economy much faster. This cannot be done by making simple statements. A serious exercise needs to be taken up by the Centre in consultation with states.

Indeed, we should strengthen economic expertise in CAG, assign a comptroller function and make CAG answerable to parliament. In the past, the PM has himself criticised CAG. "We live in a world of uncertainty and ex-post whether it is the Comptroller and Auditor-General, whether it is a parliamentary committee then they analyse post facto. They have a lot more facts which were not available to those who took the decision."

Reforms and changes in the functioning and powers of CAG and such agencies are necessary to ensure that the funds reach where they are required most. Only then one can expect efficient governance and economic stability in the country.

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