The Budget speech didn’t convey any sense of the trade-offs and the alternatives considered.
Imagine a different way of presenting a Budget to India’s Parliament. The finance minister arrives at the Parliament complex with both hands free, not carrying any briefcase. He walks into the Parliament hall where a multimedia setup awaits him. With the permission of the Speaker, he stands to present the Budget, pulls out a pen drive from his pocket, loads it on the system and begins to give a slideshow presentation rather than reading out a speech from a printed text.
He not only presents his government’s plan for the next fiscal year but also places the plan in a larger context of the past, present and future. Further, he clearly shows how the next year’s plan fits into the medium-term action plan as well as the longer-term vision of his government. Whenever he announces any new programme, he also gives a peep into how the programme is likely to evolve over time and address the problem it is designed for. His presentation is rich in infographics, bubble charts, and animation using data analytics to bring out sectoral inter-linkages of new programmes and provide the future outlook. All this is done so simply that it is understood by all parliamentarians. His slideshow lasts for half a day, if not longer, with a couple of short bio-breaks.
The audience inside the hall listens to the presentation with rapt attention, absorbing the finer details, often taking notes without creating any disruption or ruckus. However, the Opposition members do raise their voice in unison to signal their approval or disapproval to any new reform or programme that is announced.
All this may sound like utopia and a complete break from convention. But this is something that we urgently need to adopt if we are to raise the bar in making Budget discussions more meaningful, transparent and sophisticated. The starting point for this is to change the way in which the Budget is presented. The practice now of Budget presentations is quite basic, lacks details to convey a fuller picture, and raises a lot of questions for the want of more information. Little wonder then that the current practice invites rudimentary responses from the Opposition members.
To illustrate how crude is the current practice of Budget presentation, here are a couple of examples from the recent Budget laid before the Lok Sabha on February 1. Providing direct income support to small and marginal farmers is one of the big announcements in the recent Budget. Given the problem of farm distress in India, the idea of direct income support to farmers has some merit and has been in discussion for some time now. So, no surprises here. The programme offers income support in the next fiscal year (FY 2019-20) of Rs 6,000 per farmer with a landholding of two hectares or less. The estimated funding liability of the government in the next fiscal year is Rs 75,000 crores and this will benefit around 12 crore small and marginal farmers.
Without getting into the pros and cons of this exercise, the Budget doesn’t offer any sense of the alternatives considered — not necessarily alternatives to direct income support but alternatives to these cut-off limits. For example, it would have been good to know if the government had considered, say, the cut-off of three hectares’ landholding which would have benefited, say, 14 crore small farmers, but would have allowed income support of, say, only Rs 4,000 per farmer. But the government settled for the 2-hectare cut-off as the income of Rs 6,000 per farmer is the minimal support needed to make the scheme worthwhile for a poor farmer within the programme allocations of Rs 75,000 crores.
The Budget speech didn’t convey any sense of the trade-offs and the alternatives considered. The Budget could have given some perspective on why those choices were made. In this hi-tech age, there are technological tools that could have been used to convey a much richer story.
Similar is the case with the other big welfare programme, that is, the mega pension scheme for unorganised sector workers with monthly incomes up to Rs 15,000. The scheme is to provide an assured monthly pension of Rs 3,000 from the age of 60 years on the monthly contribution of a small affordable amount during the working age of such workers The Budget speech doesn’t contain any justification for these cut-offs and provides no sense of trade-offs. By providing information on the alternatives considered — at least on the next (second) best alternative — the quality of discussion gets raised to a higher level.
A little more information to give a perspective on the decisions and choices can enhance the sophistication of the Budget discussion that follows. After all, the Budget’s intention is not to obfuscate issues or present a convoluted picture but to be transparent and informative to educate the audience. But this is not all.
The other issue is that we don’t have standard indicators to capture the political dimensions of a Budget. Again, giving an example from the recent February 1 exercise, some degree of populism was anticipated in this pre-election Budget. However, there is no standard metric to capture the extent of populism contained to learn if a Budget is egregiously populist or if there is a healthy dose of populism. The extent of populism is of course situational. Still, it is possible to develop a few good indicators based on factors like wooing voters, countering perceived aggressiveness of the Opposition parties, optimising available public funding, striking a balance between equity, efficiency and growth, and so on. Perhaps it’s time that our political scientists develop “missing” indicators to better understand the political dimensions of a Budget.
In keeping with the changing times, we need to change the practice of presenting Budgets in Parliament. The current practice lacks sophistication and invites rudimentary responses from the Opposition. Providing a richer account of a plan for the next fiscal year using tech tools and developing “missing” political indicators can be the way forward. This shouldn’t be difficult when Digital India is getting a big push in the country.