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Friday, Mar 08, 2002

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Fact or fiction?

A WAG once quipped that a Budget serves the same purpose as a railway time table: Both are indispensable to separate fiction from fact. We know how late the trains are with the help of the latter. Similarly, Budgets help anyone so disposed to figure out how far apart are the estimates from the actuals, and promise from performance.

The reliability of assumptions and the credibility of the estimates in both the Central and State Budgets have long been a matter of scepticism. Both Mr Nani Palkhivala and the late Malcolm Adiseshaiyah began each of their annual discourses on the Budget with a caveat on the unacceptable degree of deviation between the estimates and actuals, and the mythical nature of many of the promises.

For example, this financial year, the actuals of both tax collections and fiscal deficit bear no relation to what was projected in the Budget. The shortfall of Rs 25,000 crore in tax collections is bound to affect the allocations to various sectors and have a cascading effect on the economy as a whole. Not all of it could be palmed off on the downturn either. There was plenty that could have been done to ensure in time that efficiency of collections made good a greater part of the looming shortfall.

For as long as one remembers, neither the process of, nor the proceeds from, disinvestment had been anywhere near the provisions in the Budget. This year, the last minute dash by the Minister of Disinvestment, Mr Arun Shourie, saved this part of the Budget projections from becoming a mirage again by adding some Rs 6,000 crore (as against double the sum estimated) to the kitty. Of course, the unproductive, non-Plan expenditure has invariably been a rogue entity over which no Finance Minister had any control.

At least, the past Finance Ministers had been defensive and apologetic about it, and used to make appropriate noises about reining it in. Mr Yashwant Sinha seems to have decided in favour of giving up all pretence on this score and throwing in the towel. He must be behind the Economic Survey's rubbishing of "the popular tendency to focus exclusively on expenditure reduction" and owning up flatly that efforts in this direction are proving infructuous in view of the "rigidity in the structure of Government expenditure". Apparently, this change in tactic reflects the Government's admission of lack of political will to mount an attack on the food and fertiliser subsidies and the ballooning expenditure on babudom. But, can Mr Sinha be sure that "revenue enhancement" will be any less of a chimera than expenditure control? Since raising taxes and duties is ruled out as being against the prevailing ethos, enhancing revenues is nowadays a function of effective governance in its totality. And good governance had become a Cheshire Cat long ago.

So, Budgets lumber along bumpy road, and the more things change, the more they remain the same!

B. S. Raghavan

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