Is it time that the people of the country got actively involved in the Budget-making process?
The Finance Bill, 2006 has been passed by both Houses of Parliament. And it appears that the Bill may get the President's assent before March 31. If so, this could probably be the first time for a Finance Bill to become law before the ensuing financial year. No one can complain about the quick passing of the Bill, but the fact is Parliamentarians have been given little time to debate the proposals. Though the Budget-making process has stood the test of time, it needs to be reviewed in the light of current developments?
Discussions on Budget
In the first two weeks of March there is a virtual explosion of Budget seminars across the country. These seminars, in general, discuss the Budget in three parts the overall economy, direct taxes and indirect taxes. Chambers compete with each other to hold the seminars as quickly as possible and, at times, on the Budget day itself. Needless to say, in the rush to organise the meetings, quality suffers.
This year, most of the comments in these meetings centred on the various service tax changes and the importance and impact of the tax in the years to come. Thankfully, the direct tax proposals took a back seat simply because there were not many changes. Surprisingly, in one major seminar organised by a leading chamber of commerce, the focus was more on the Budget-making process than the contents themselves.
Should the established process of conferring the right of Budget preparation to the Finance Ministry be revisited? There is a strong feeling that the time has come for the people of the country to be actively involved in the Budget-making process. Admittedly, in a country with a population of over one billion it is impossible for the majority of the masses to keep track of what is happening in the economy. They are at best passive spectators of this once-a-year event which gets over in two hours.
Chambers of commerce have still not got rid of the mindset of seeking concessions.
With all the expertise and the necessary facts in their command, it is strange that leading chambers of commerce, or for that matter even economists, have not embarked on the mission of preparing a model Budget and presenting it to the Government. Why should this task be left to a few officials in the Finance Ministry? Post-Budget memorandum also has become a ritual. This is an exceptional year though, as the Bill got passed in a matter of few days. Usually, the time lag is 2-3 months and industry usually uses this period to press for minor changes in the Bill.
It is interesting to note that countries such as Germany and New Zealand involve the public to a large extent in Budget-making. Admittedly, these are small countries and the people are better informed. But that should not preclude us from debating the best practices in other countries.
(The author is a Chennai-based chartered accountant.)