Business

Should the budget be an `event'?

The medium of television has enhanced the hype

THE UNION budget might be the most important economic statement of the Government, but is there any justification for the enormous hype that invariably accompanies it nowadays? It is true that the budget has become much more than a mere annual statement of finances of the Central Government.

An Annual Financial Statement of the Government that is laid before Parliament, as part of the budget papers, is probably the least perused of the budget documents. It is doubtful whether many outside the government fold or those having a direct stake in public finances would have seen one such statement.

There are two main reasons as to why the budget has come to have such popular appeal. Nowadays, thanks to television, it is possible to witness the budget presentation live. Second, the Government too has been packaging the budget with items that are strictly beyond its scope. In recent years these have related to financial sector or infrastructure reform and creation of specialised institutions (for resources to be raised from outside the budget). Even on pure fiscal issues, the domain of the budget, finance ministers of the day have sought to enliven the process by making headline grabbing announcements regarding, say, tax reform. Although relevant to the budget these take time and their announcement could well have been made at any point in time, not necessarily in the budget speech.

Excitement galore

For most people the budget exercise begins and — for all purposes — ends with the Finance Minister's speech. There is of course plenty of excitement generated before and after the budget speech.

Even while the Finance Minister is delivering his talk, the world outside has a chance to react instantaneously. The stock market airs its views on the budget proposals `in real time,' thanks to the live television coverage. It is unlikely that anyone could understand the true ramifications of the fiscal policy by merely listening to the budget speech, but then the stock market behaviour before, during and after the Finance Minister is through is part of the riveting drama that the budget exercise has become.

Industry reactions

No less significant are the reactions from industry captains, chambers of commerce and various industry organisations. These like the share quotations are made available instantaneously by one or the other of the business TV channels.

If in the pre-television era, the delayed receipt of news sustained the budget mystique, TV has rapidly converted the exercise into an event fit for mass consumption. There is no doubt that the medium of television has considerably enhanced the hype that goes with the budget.

Amidst all the excitement, there have always been a few who prefer a more subdued approach to budget making and its presentation. On the eve of this year's budget, the Madras Chamber of Commerce had questioned the wisdom of converting the budget exercise into "an event.'' India is among the few countries where there is so much hype over a fiscal policy statement. The process ought to be demystified.

That line of thinking, though voiced by a minority for now, is neither new nor difficult to practise.

Economic policy

In fact some changes have been taking place. The Finance Minister delivers his speech at 11 in the morning, leaving ample time for analysts and others to assimilate its purport.

Not long ago the budget speech was delivered late in the evening after the markets had closed.

Economic information

By far a bigger impetus to change comes from the fact that the role of the government in economic policy has been shrinking. Naturally, the fiscal policy like any other macro economic policy has become less encompassing than before.

The process of disseminating economic information ought to go on in the interests of decision-making and accountability in a democracy.

The budget papers are full of information for those who care to read and understand the nuances of the fiscal policy.

But unnecessary hype shifts attention from the core issues. Special interest groups have been seen hijacking the debates in the post-budget period. Interestingly, another major economic policy — the RBI's credit and monetary policy now enunciated at quarterly intervals — has become far less of an event than it was made out to be until a few years ago. Through a conscious decision the RBI has sought to desensationalise the monetary policy by reserving to itself the right to signal interest rate changes, for instance, whenever it chooses to.

Given the constitutional framework, it may not be possible for the Finance Minister to make changes in fiscal policy outside the budget. However, beginning this year, there is a welcome move to restrict the scope of the budget to fiscal policy matters only.

In Chidambaram's words, the days of "the big-bang" budget are over. That could well be an important step in demystifying the budget.

C. R. L. NARASIMHAN

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