Budget not a propaganda vehicle, restore its real purpose

The presentation of the Union Budget to Parliament is fast changing from the Constitutional requirement which speaks only of an annual statement about the receipts and expenditures of the government. One can understand the presentation going beyond this and dealing with the macroeconomic situation and offering proposals that fall within the remit of the finance minister. However, over the years, governments, eager to use the wide media and public attention that the Budget presentation attracts, are making it a propaganda vehicle for sketchy sectoral initiatives that can capture media attention.

This year’s Budget is a prime example of this. Out of the 168 paragraphs of the Budget speech, the preliminaries, the discussion of fiscal management, and the tax announcements constitute just about 40 paragraphs. The remaining 128 paragraphs deal with sectoral issues. Of these, the paragraphs that deal with the financial sector and the railway Budget take up about 40 paragraphs. The rest of the paragraphs, which is about half the Budget speech, speak of achievements and sectoral proposals that fall squarely within the remit of other ministries.

The language used to present these sectoral proposals is quite extraordinary. Phrases like ‘I propose’, are used by the finance minister to present proposals which are not within his remit. If the sectoral ministries concerned were in the loop, then this sort of phrasing is disrespectful to his Cabinet colleagues. And if they were not, it is an even graver violation of joint Cabinet responsibility.


Take the Budget announcement of the ambitious scheme to provide Rs 5,00,000 health insurance cover for 100 million households, which takes the big step of converting the role of the public sector to that of financier rather than service provider, at least in the case of hospitalisation. After the Budget presentation, public explanations for this came from a NITI Aayog functionary, thus suggesting that the health ministry was not fully in the loop. 

The truth is that many of the new sectoral initiatives presented in the Budget are ideas under discussion but have not yet been worked out or discussed in Cabinet. In all probability they would have been pushed by the Prime Minister’s Office, which is why the finance ministry can step into other minister’s territory. But should Parliamentary approval be sought for semi-coherent schemes with an open-ended spending commitment?

Take the health insurance scheme. There is much confusion about its cost which will depend on how well the primary care system works to reduce the burden of disease and hence on the adequacy of the total health sector expenditure. A coherent health strategy would start from the burden of disease and work out how it can be reduced through preventive measures, (including through related sectors like water supply and sanitation), where and how each illness is best treated and how these facilities can be provided in a manner that is affordable for households and for governmental Budgets. It would recognise the differences in the requirements of states like Kerala and Bihar. None of this is apparent in the publicly available material at the moment. This type of far-reaching intervention should have been worked out in the health and related ministries and announced after organised consultations with all stakeholders, particularly the private sector which will have to be incentivised and regulated to provide large scale of service required, at places where it will be required and within the cost limits that the public system can afford.

An ad hoc announcement with no proper planning or budgeting smacks of a tendency for ‘targeting without planning’. We have seen this in recent years in the hasty announcement of ambitious goals like 175 Gw of renewable power without working out what sort of grid development and distribution system is necessary to handle decentralised power or promising a pucca house with 24-hour running water and electricity for everyone by 2022, without working out the resource requirement or finances needed.

Using a secrecy-surrounded Budget process for announcing sketchily planned sectoral targets and policies is dangerous. It will lead to a proliferation of schemes with neat acronyms, incoherence in sectoral strategy, not enough regard for inter-state variations needed, difficulties in implementation, and lead, sooner or later, to yet another scheme to make up for these deficiencies. We see this already in the poor performance of the Pradhan Mantri Kaushal Vikas Yojana where very few of the trainees have managed to get jobs or the smart cities initiative where of the approved outlay of Rs 2 trillion only 10 per cent is under implementation and just 1 per cent completed, two-and-a-half years after the scheme was announced. Has anyone worked out how and on what the Rs 1 trillion promised for the Higher Education Funding Authority will be spent?

The announcement of schemes in the Budget is not even restricted to a few game changers. All sorts of stuff litters Part A of the Budget speech. This year for instance, along with major proposals like the one on health insurance or the minimum support price (MSP) guarantee, the Budget includes announcements about small schemes for organic agriculture and cultivation of medicinal and perfumery plants. Is the Union Budget the right place for this?

All governments, not just this one, seek political mileage from sectoral programme and policy announcements. Ministerial pronouncements and sectoral jamborees in Vigyan Bhavan are not enough. Perhaps the answer lies in a major annual statement by the Prime Minister, as chairman of the NITI Aayog, on the development agenda for the year.

The finance minister’s Budget speech can then eschew all sectoral announcements other than those directly related to the financial sector. He can deal in greater depth with macroeconomic and fiscal issues, financial market trends and prospects, debt management, and Centre-state fiscal relations instead of relegating them to the seldom read Statements on Macroeconomic Framework, the Medium-Term Fiscal Policy, and the Fiscal Policy Strategy. This will focus the 
attention of the media on the state of the economy and the fisc and restore the original constitutional purpose of the Budget.

nitin-desai@hotmail.com

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