The Hindu Business Line : Will it be a ‘please-all’ Budget ?

When the President, Ms Pratibha Patil, delivered her maiden address yesterday at the joint sitting of both Houses of Parliament to signal the start of the Budget session, she could well have done so for the last time for the Congress-led UPA government, whose term ends in May 2009.

While the Prime Minister Dr Manmohan Singh’s government will be presenting its fifth full-fledged Budget on February 29, it can only take a vote-on-account next year. It will be the prerogative of the new government to present a full-fledged Budget after the next Lok Sabha is elected. The current Lok Sabha’s term also ends next May.

The Railway Minister, Mr Lalu Prasad, and the Finance Minister, Mr P. Chidambaram, have thrown enough hints about a passenger-friendly Rail Budget and a “please-all” Union Budget. Ms Patil’s address gave enough indications about the possibility of an early Lok Sabha election — much ahead of April-May 2009, its normal schedule. Understandably, the focus of her speech was on the common man, the rural poor, the depressed classes and the minorities — the constituencies of any government aspiring to retain power.

Early polls?

That an election is in the air is quite unmistakable. The poll flavour is there for all to savour. The dominant view is that the nation could well go to the polls this October-November, some six months ahead of schedule.

Lending credence to this view is not only the growing strain between the Government and its Left supporters, particularly over the nuclear deal with the US, but also the effect of the presidential notification of the delimitation of constituencies across the country.

Close to 10 Assembly elections are due between May and the end of the year, and all these have to be held according to the delimitation. The Election Commission has said that it will take at least till August end to prepare fresh electoral rolls.

Add a couple of months for readying the logistics, and the Commission will be in a position to hold Assembly polls in October-November.

Since, in that case, the Lok Sabha election would be less than six months away, it would be prudent to club it together with the Assembly elections.

In any case, the Congress and the BJP, the two dominant political parties, are already in poll mode. Hence, it is likely again be ‘a stormy session’.

Populist pressure

With prospects of early elections, it will be tempting for the Government to present a populist Budget that seeks to please every section — with cuts in income-tax, both personal and corporate, across-the-board reduction of duties to make consumer durables cheaper and socio-economic schemes to placate the poor.

Fiscal prudence may cause the red light to flicker. But the Finance Minister is not likely to notice it on Friday (February 29).

While presenting the Budget, Mr Chidambaram will be pleased with the fact that the Government has finally raised the prices of petrol and diesel, resisting the temptation to cut duties on oil products which would have hit revenue collections. He knows the importance of revenue to meet populist schemes in what is seen as “the election year”.

The Congress appears to be in a mood to go all out to please the voters. Its president, Ms Sonia Gandhi, has given a broad hint of the party’s thinking by demanding that the Budget should be “pro-poor and pro-women”.

It has presented a pre-Budget wish-list that would force the Finance Minister to forget the timetable for fiscal discipline laid down by the Fiscal Responsibility and Budget Management (FRBM) Act.

FRBM targets

Experts say that meeting FRBM targets may mean minimising expenditure and using revenue collections to reduce the fiscal deficit. Some delay in meeting the FRBM targets would not make much of a difference, says a section of the Congress, a view also shared by the Left which fears that it will hamper the Government’s plans to spend more on social sectors.

Focus areas

With an eye on the election, the Budget could throw considerable light on the likely features of the Sixth Pay Commission and its implementation date.

The Commission, headed by Justice B. N. Srikrishna, is understood to have conveyed the relevant information to the Finance Ministry. Government employees may well expect a good salary hike and possibly retirement at 62.

In line with its pro-poor stance, the Government is likely to introduce a Bill to make available more credit to members of rural self-help groups.

An assurance in this regard came recently from the Rural Development Minister, Mr Raghuvansh Prasad Singh, who also said that a Land Acquisition (Amendment) Bill and a Rehabilitation and Settlement Bill may also be moved for easier takeover of farmland for industry and to provide better rehabilitation of those who lose land.

The Government also proposes to table and pass the Limited Liability Partnership Bill. According to the draft Bill, existing corporate bodies or partnership firms will also be eligible to convert to the limited liability structure.

The draft of the new Company Law Bill is being given final touches for introduction during the session. The new law seeks to promote shareholders democracy, replace the approval-based system with a system of responsible disclosures, and promote good corporate governance and effective protection of investors.

The Bill on HIV/AIDS, pending for almost two years, is also likely to be introduced. The legislation seeks to protect the rights of HIV-positive people.

On the political side, the Women’s Reservation Bill despite the noises being made by all parties, is again unlikely to see the light of the day this session too.

(The author, a former deputy editor with PTI, is a New Delhi-based freelance journalist. Feedback can be sent to rajamanirc@gmail.com)