The upcoming Union Budget is the last full budget of the present government before the 2019 general election. As expected the question doing rounds is, will the finance minister present a &ldquo;populist&rdquo; budget with a view to the elections or &ldquo;stay the course&rdquo; of fiscal consolidation and related reforms.&nbsp;

&nbsp;

The question is made sharper by the likelihood of the central government exceeding its expenditure target for 2017-2018. The prime minister&rsquo;s recent comments that he does not believe the &ldquo;common man&rdquo; wants &ldquo;freebies and sops&rdquo; have been interpreted as indicating a non-populist budget.

&nbsp;

It is very unfortunate that the &ldquo;populist&rdquo; versus &ldquo;reform&rdquo; frame continues to dominate discussions on the budget. Such a framing is useless for any real analysis because both the magnitude and the direction of government spending are equally crucial as are the magnitude and sources of government revenue. There may be good and bad reasons for exceeding the expenditure targets for the year, as well as good and bad reasons for falling short of revenue targets. Hence, creating more fiscal room in the budget by revising the deficit target upwards is not in and of itself either good or bad. If it is done with a clear path to raising future incomes for the vast majority, it is very welcome and will pay for itself in the future.&nbsp;

&nbsp;

Let me illustrate by taking the three main issues that are of widespread concern leading into the budget: rural distress, lack of jobs, and weak private investment.

&nbsp;

First, consider rural distress, an issue that is, sadly, on the agenda nearly every year. The recent Gujarat elections have given a much needed political boost to the issue since it is cited as one of the reasons behind the BJP&rsquo;s reduced majority. The rural sector &ldquo;wish-list&rdquo;, at a minimum would include,

&nbsp;

* Implementation of the Swaminathan Commission recommendation of minimum support prices equal to 50% in excess of the costs of cultivation.

&nbsp;

* Complete rural electrification in substantive terms. That is, not the token delivery of power, but adequate and timely power supply on par with that available in urban areas.

&nbsp;

* Increased overall public investment in agriculture, particularly in irrigation, sustainable practices, and so on. It is noteworthy that investment in agriculture which was around 3.8 percent of GDP in the early 1990s has steadily fallen since then.

&nbsp;

* Strong push for the non-farm sector, which is obviously the future of sustainable employment in the rural economy. This is also where the rural distress issue meets the jobs crisis squarely.

&nbsp;

Second, take the jobs crisis. In his recent interview, the prime minister has, unfortunately, chosen to trivialise the issue by equating low-paying informal livelihoods, such as selling tea and pakoras with secure, well-paying employment. The demand is for the latter, the former already exist in great numbers. He has rightly been criticised for this.

&nbsp;

The prime minister also claimed a large increase in formal employment based on a recent study of data from the Employee Provident Fund Organisation and other similar institutions (such as ESIC and NPF). The study is a novel attempt to use administrative payroll data from such agencies to estimate employment. Its main conclusion is that an estimated 7 million new accounts were added into the system in FY 2017-2018. This is welcome news.&nbsp;

&nbsp;

But it cannot be used straightforwardly to draw conclusions about job creation for two reasons. First, the approach measures new PF, insurance, and pension accounts. Not new jobs. As Jairam Ramesh has pointed out, some of the new accounts may be existing jobs without benefits being converted into jobs with benefits. A welcome development, but not to be confused with an increase in employment. The authors partly correct this problem by excluding those accounts that were created during the PF amnesty period. But this does not address all the problems arising out of demonetisation and GST implementation raised by Ramesh.

&nbsp;

Second, even assuming that new accounts mean new jobs, to say something about the employment situation we need to know how many jobs were lost during the same period. The study does not address this. If recent work based on Labour Bureau annual household surveys is to be believed, the Indian economy has been losing jobs on a net basis. Even if payroll data adds another dimension to our knowledge on employment, taking both this factors into account, the net new jobs created may be far less than 7 million. Using this data uncritically to support job creation claims is jumping the gun.&nbsp;

&nbsp;

&nbsp;

On a more optimistic note, a National Employment Policy has been widely reported to be on the cards for this year&rsquo;s budget. But there are no details on what such a policy would entail. One hopes to see more direct job creation say via public investment in services. There is likely to be some focus on public investments in infrastructure for job creation. But a broader approach to public job creation would be welcome in the policy. Particularly creating jobs to improve the quality and delivery of services the government is already committed to providing, such as health, education, housing, and transport.&nbsp;

&nbsp;

I have also chosen these as examples deliberately because data show that these are the largest part of the household budget (except food). Indeed, there is evidence that poor households are cutting back on food consumption to pay for health, education, housing, and commuting expenses. Recently, NITI Aayog VC Rajiv Kumar has also observed that low-cost or free provisioning of such services would go a long way in raising real incomes.&nbsp;

&nbsp;

There are legitimate concerns here, of course, to do with the quality of public service provisioning. Do we really want the government spending more money on schools and hospitals when the quality is so bad that anyone with sufficient resources chooses to exit the system? In fact, as I mention above, exiting the public system and &ldquo;going private&rdquo; has its costs. The obvious solution is to repair the system, not abandon it.

&nbsp;

Third, take the weak private investment climate. This is not a long-run structural issue like rural distress or the jobs crisis. But nevertheless, it is important in the short-run. Here too the fiscal implications are straightforward. An increase in public investment will most likely &ldquo;crowd-in&rdquo; private investment. That is, when the government spends in such a way that incomes rise, this creates demand that will bring forth private investment. In the face of lack of demand, as is the case right now, no amount of tax or other incentives really work to stimulate investment.

&nbsp;

Obviously making a serious dent in any of these problems requires fiscal resources, both in the sense of increased spending and possibly foregone tax revenue. But if all the above make additional demands on the fiscal, all also have the potential to pay back many times over with increased incomes and increased demand. This brings me to my original point about the nature of government spending and revenue generation.&nbsp;

&nbsp;

Failing to meet the fiscal deficit target due to increased public investment in agriculture or healthcare is not the same as failing to meet it due to foregone tax revenues on highly profitable large corporations or high net-worth individuals, both of which are increasing rapidly in India. Conversely, insisting on meeting the target at the cost of raising incomes and demand is not sound economic policy.

&nbsp;

(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)&nbsp;&nbsp;

Rural distress, lack of jobs, and weak private investment are the three issues requiring immediate fiscal attention from the government.

The upcoming Union Budget is the last full budget of the present government before the 2019 general election. As expected the question doing rounds is, will the finance minister present a “populist” budget with a view to the elections or “stay the course” of fiscal consolidation and related reforms. The question is made sharper by the likelihood of the central government exceeding its expenditure target for 2017-2018. The prime minister’s recent comments that he does not believe the “common man” wants “freebies and sops” have been interpreted as indicating a non-populist budget. It is very unfortunate that the “populist” versus “reform” frame continues to dominate discussions on the budget. Such a framing is useless for any real analysis because both the magnitude and the direction of government spending are equally crucial as are the magnitude and sources of government revenue. There may be good and bad reasons for exceeding the expenditure targets for the year, as well as good and bad reasons for falling short of revenue targets. Hence, creating more fiscal room in the budget by revising the deficit target upwards is not in and of itself either good or bad. If it is done with a clear path to raising future incomes for the vast majority, it is very welcome and will pay for itself in the future. Let me illustrate by taking the three main issues that are of widespread concern leading into the budget: rural distress, lack of jobs, and weak private investment. First, consider rural distress, an issue that is, sadly, on the agenda nearly every year. The recent Gujarat elections have given a much needed political boost to the issue since it is cited as one of the reasons behind the BJP’s reduced majority. The rural sector “wish-list”, at a minimum would include, * Implementation of the Swaminathan Commission recommendation of minimum support prices equal to 50% in excess of the costs of cultivation. * Complete rural electrification in substantive terms. That is, not the token delivery of power, but adequate and timely power supply on par with that available in urban areas. * Increased overall public investment in agriculture, particularly in irrigation, sustainable practices, and so on. It is noteworthy that investment in agriculture which was around 3.8 percent of GDP in the early 1990s has steadily fallen since then. * Strong push for the non-farm sector, which is obviously the future of sustainable employment in the rural economy. This is also where the rural distress issue meets the jobs crisis squarely. Second, take the jobs crisis. In his recent interview, the prime minister has, unfortunately, chosen to trivialise the issue by equating low-paying informal livelihoods, such as selling tea and pakoras with secure, well-paying employment. The demand is for the latter, the former already exist in great numbers. He has rightly been criticised for this. The prime minister also claimed a large increase in formal employment based on a recent study of data from the Employee Provident Fund Organisation and other similar institutions (such as ESIC and NPF). The study is a novel attempt to use administrative payroll data from such agencies to estimate employment. Its main conclusion is that an estimated 7 million new accounts were added into the system in FY 2017-2018. This is welcome news. But it cannot be used straightforwardly to draw conclusions about job creation for two reasons. First, the approach measures new PF, insurance, and pension accounts. Not new jobs. As Jairam Ramesh has pointed out, some of the new accounts may be existing jobs without benefits being converted into jobs with benefits. A welcome development, but not to be confused with an increase in employment. The authors partly correct this problem by excluding those accounts that were created during the PF amnesty period. But this does not address all the problems arising out of demonetisation and GST implementation raised by Ramesh. Second, even assuming that new accounts mean new jobs, to say something about the employment situation we need to know how many jobs were lost during the same period. The study does not address this. If recent work based on Labour Bureau annual household surveys is to be believed, the Indian economy has been losing jobs on a net basis. Even if payroll data adds another dimension to our knowledge on employment, taking both this factors into account, the net new jobs created may be far less than 7 million. Using this data uncritically to support job creation claims is jumping the gun. On a more optimistic note, a National Employment Policy has been widely reported to be on the cards for this year’s budget. But there are no details on what such a policy would entail. One hopes to see more direct job creation say via public investment in services. There is likely to be some focus on public investments in infrastructure for job creation. But a broader approach to public job creation would be welcome in the policy. Particularly creating jobs to improve the quality and delivery of services the government is already committed to providing, such as health, education, housing, and transport. I have also chosen these as examples deliberately because data show that these are the largest part of the household budget (except food). Indeed, there is evidence that poor households are cutting back on food consumption to pay for health, education, housing, and commuting expenses. Recently, NITI Aayog VC Rajiv Kumar has also observed that low-cost or free provisioning of such services would go a long way in raising real incomes. There are legitimate concerns here, of course, to do with the quality of public service provisioning. Do we really want the government spending more money on schools and hospitals when the quality is so bad that anyone with sufficient resources chooses to exit the system? In fact, as I mention above, exiting the public system and “going private” has its costs. The obvious solution is to repair the system, not abandon it. Third, take the weak private investment climate. This is not a long-run structural issue like rural distress or the jobs crisis. But nevertheless, it is important in the short-run. Here too the fiscal implications are straightforward. An increase in public investment will most likely “crowd-in” private investment. That is, when the government spends in such a way that incomes rise, this creates demand that will bring forth private investment. In the face of lack of demand, as is the case right now, no amount of tax or other incentives really work to stimulate investment. Obviously making a serious dent in any of these problems requires fiscal resources, both in the sense of increased spending and possibly foregone tax revenue. But if all the above make additional demands on the fiscal, all also have the potential to pay back many times over with increased incomes and increased demand. This brings me to my original point about the nature of government spending and revenue generation. Failing to meet the fiscal deficit target due to increased public investment in agriculture or healthcare is not the same as failing to meet it due to foregone tax revenues on highly profitable large corporations or high net-worth individuals, both of which are increasing rapidly in India. Conversely, insisting on meeting the target at the cost of raising incomes and demand is not sound economic policy. (Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

Opinion: Few jobs, rural hardship, weak investment weak spots of Union Budget

Union Budget, also known as the annual financial statement, is a comprehensive display of the Government&#39;s financial outlays and planning -- an event of great economic significance.

Every year the Union Budget is presented by the Finance Minister of the country and is required to be passed by both the Houses to come into effect.

As this year&rsquo;s Budget presentation nears, we take a look at some of the top facts associated with the event.&nbsp;

Change in time of presenting budget

During the colonial era, the finance minister would present the budget on the last working day of February at noon and India would follow the same at 11:00 pm. The practice continued until it was scrapped by former Finance Minister Yashwant Sinha in the year 2001. That year the budget was tabled at 11:00 am.

Even the date of presenting the budget was moved to February 1 by Finance Minister Arun Jaitley in 2016 with an aim to bring the new budget into effect by the start of the financial year.

The coming together of rail and union budget

The year 2016 was a landmark one in a sense that another practice was modified to merge the presentation of the union budget with the rail budget. Previously, the railway budget was tabled separately, a practice that followed right from the colonial era.

Leaving another colonial-era practice behind in September 2016, the cabinet decided to merge the rail budget with the union budget, as suggested by then Railway Minister Suresh Prabhu.

The post-independence budget

The first budget of an independent India was presented by India&rsquo;s first finance minister RK Shanmukham Chetty on November 26, 1947. It is believed that RK Shanmukham was chosen as the finance minister by Mahatma Gandhi because of his expertise in the finance.

The first colonial budget

The first budget of colonial India was presented by James Wilson on February 18, 1869.

Wilson was designated as the Finance Member of the India Council that advised the Indian Viceroy.

Maximum number of budget presentations by a finance minister

Morarji Desai, the 4th Prime Minister of India, is known to have tabled the budget 10 times -- the most by any Indian finance minister.

Desai was the only finance minister to have presented the budget on his birthday, February 29.

The first woman finance minister

After Morarji Desai&rsquo;s resignation as the finance minister, Indira Gandhi took over on July 19, 1969 to become the first and the only woman to hold office&nbsp;as finance minister till date.

Halwa ceremony

The printing of the budget starts roughly a week ahead of its presentation in the parliament. The &quot;Halwa ceremony&quot; is a tradition that marks the beginning of the exercises associated with the presentation of the budget.

In the customary tradition, Halwa is made in large quantity and offered to the officers and staff involved in the budget presentation.

The ceremony symbolises the age-old Indian tradition of consuming something sweet right before commencing a new venture or project.

The change in financial year

The government is also considering changing the term of the financial year to bring it in sync with the calendar year. This would enable aligning India with most countries besides institutions like the World Bank and the International Monetary Fund.

The change would bring about significant changes in the union budget presentation as well.

However, the government is yet to take a final call on the same.

This year&rsquo;s budget is slated to be presented by the Union Finance Minister Arun Jaitley on February 1. PM Modi has already hinted at the possibility that this year&rsquo;s budget will be non-populist in nature.

Every year the Union Budget is presented by the Finance Minister of the country and is required to be passed by both the Houses to come into effect

Union Budget, also known as the annual financial statement, is a comprehensive display of the Government's financial outlays and planning -- an event of great economic significance. Every year the Union Budget is presented by the Finance Minister of the country and is required to be passed by both the Houses to come into effect. As this year’s Budget presentation nears, we take a look at some of the top facts associated with the event. Change in time of presenting budget During the colonial era, the finance minister would present the budget on the last working day of February at noon and India would follow the same at 11:00 pm. The practice continued until it was scrapped by former Finance Minister Yashwant Sinha in the year 2001. That year the budget was tabled at 11:00 am. Even the date of presenting the budget was moved to February 1 by Finance Minister Arun Jaitley in 2016 with an aim to bring the new budget into effect by the start of the financial year. The coming together of rail and union budget The year 2016 was a landmark one in a sense that another practice was modified to merge the presentation of the union budget with the rail budget. Previously, the railway budget was tabled separately, a practice that followed right from the colonial era. Leaving another colonial-era practice behind in September 2016, the cabinet decided to merge the rail budget with the union budget, as suggested by then Railway Minister Suresh Prabhu. The post-independence budget The first budget of an independent India was presented by India’s first finance minister RK Shanmukham Chetty on November 26, 1947. It is believed that RK Shanmukham was chosen as the finance minister by Mahatma Gandhi because of his expertise in the finance. The first colonial budget The first budget of colonial India was presented by James Wilson on February 18, 1869. Wilson was designated as the Finance Member of the India Council that advised the Indian Viceroy. Maximum number of budget presentations by a finance minister Morarji Desai, the 4th Prime Minister of India, is known to have tabled the budget 10 times -- the most by any Indian finance minister. Desai was the only finance minister to have presented the budget on his birthday, February 29. The first woman finance minister After Morarji Desai’s resignation as the finance minister, Indira Gandhi took over on July 19, 1969 to become the first and the only woman to hold office as finance minister till date. Halwa ceremony The printing of the budget starts roughly a week ahead of its presentation in the parliament. The "Halwa ceremony" is a tradition that marks the beginning of the exercises associated with the presentation of the budget. In the customary tradition, Halwa is made in large quantity and offered to the officers and staff involved in the budget presentation. The ceremony symbolises the age-old Indian tradition of consuming something sweet right before commencing a new venture or project. The change in financial year The government is also considering changing the term of the financial year to bring it in sync with the calendar year. This would enable aligning India with most countries besides institutions like the World Bank and the International Monetary Fund. The change would bring about significant changes in the union budget presentation as well. However, the government is yet to take a final call on the same. This year’s budget is slated to be presented by the Union Finance Minister Arun Jaitley on February 1. PM Modi has already hinted at the possibility that this year’s budget will be non-populist in nature.

Interesting facts about the Union budget

Last August, the finance minister laid before the Parliament the Medium Term Expenditure Framework Statement, envisaging an increase of approximately 10 per cent in the defence budget for the FY 2018-19. This makes it pointless to second-guess whether this time around the government would push the envelope to boost defence manufacturing by making a substantially higher allocation for capital expenditure. The burgeoning revenue expenditure makes it virtually impossible to do so anyway.

&nbsp;

Every year, a lot of energy is spent by defence analysts before the presentation of the Union Budget in underscoring the need for a substantial increase in the outlay for defence. The rationale put forth is that it will beef up the combat capability of the armed forces. There has been a persistent demand to increase the defence budget to 3 per cent of the gross domestic product.&nbsp;

&nbsp;

While the security concerns are legitimate, unrealistic expectations concerning substantially higher allocations invariably result in disappointment after the presentation of the budget. The heartbreak spawns narratives of politico-bureaucratic apathy towards the imperatives of defence preparedness. This familiar scenario seems to be playing out this time also.

&nbsp;

While we can rarely argue that there is no need for a higher allocation, it has to be realised that it is possible only if the government&rsquo;s revenue goes up steeply. The finance minister&rsquo;s options for raising the government&rsquo;s revenue in any substantial measure are limited, especially after the onset of the GST regime. He can now tinker only with the direct taxes or raise revenue through other means, such as disinvestment.&nbsp;

&nbsp;

With a very limited tax base in India, there is nothing much that the finance minister could do to boost the revenue receipts through changes in the direct taxes. The coming budget being the last regular budget to be presented by this government before the 2019 general elections, there is no way he can raise the taxes or levy a defence surcharge.

&nbsp;

This electoral compulsion, however, does not apply to disinvestment. Going by the experience of the sale of 5 per cent stake sale in the Bharat Electronics Limited (BEL) last year, which was oversubscribed 3.6 times by the retail investors, there is a wide scope for tapping this source for revenue generation.

&nbsp;

But BEL remains a solitary shining example. More than five years ago, a similar attempt was made in respect of the Hindustan Aeronautics Limited (HAL) - another flagship defence public sector undertaking. But it has not produced any result. It will not be unreasonable to expect that the finance minister will lay down a more definitive roadmap for disinvestment in HAL and other undertakings and announce other policy changes necessary to ensure that the targets are achieved.

&nbsp;

The defence sector must benefit from the disinvestment in the undertakings that are under the administrative control of the ministry of defence. For that to happen, at least a portion of the revenue raised through disinvestment, and credited to the Consolidated Fund of India will have to be transferred to a sector-specific fund for the modernisation of the manufacturing infrastructure, technology development and innovation in the defence sector.&nbsp;

&nbsp;

This fund could subsume the Defence Technology Fund which is presently struggling to take off. Appropriation from this fund should be related to specific outcomes and, it goes without saying, that the fund will have to be professionally managed. An announcement by the finance minister, looking at the modality of creating such a fund could go a long way in energising the largely dormant &lsquo;Make in India&rsquo; initiative. The private sector companies could borrow from this fund for technology development under &lsquo;Make II&rsquo; category wherein the cost of prototype development is to be funded by the industry itself.&nbsp;

&nbsp;

This could well turn out to be wishful thinking at this juncture but a more realistic expectation from the budget would be announcement of policy initiatives that make the cost of capital more affordable for the private sector in India, especially for the micro, small and medium enterprises. There is apparently an issue regarding eligibility of the defence industry under the priority sector lending scheme of the Reserve Bank of India. It remains to be seen if this problem gets addressed in the budget.

&nbsp;

The budget speech is not meant to expatiate on the defence policy but over the past four years, the finance minister has been mentioning several issues, ranging from the one-rank-one-pension to development of a centralised defence travel system to facilitate the online booking of travel tickets by the armed forces personnel in his speech. These issues are important in their own right but do not holistically address the most critical issue of acquisition of defence capabilities.

&nbsp;

One of the fundamental causes of this unsatisfactory state of affairs is tardy decision making in the ministry of defence which either stymies the procurement and infrastructure development projects or results in time and cost overruns.&nbsp;

&nbsp;

Last year, a committee set up by the ministry had recommended setting up of a dedicated defence acquisition organisation, free from the bureaucratic stranglehold of the ministry. It will steer the entire process from formulating qualitative requirements, identified by the armed forces and based on the operational needs, till the delivery of the requisite capability. The scheme, however, requires the approval of the government.

&nbsp;

It would make the upcoming budget stand out if the finance minister announces the government&rsquo;s resolve to go ahead with the setting up of this organisation.&nbsp; Moreover, the government needs to make it responsible for the optimum utilisation of the capital outlay, a portion of which remains underutilised, every year, under the present scheme of things.

&nbsp;

(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)&nbsp; &nbsp; &nbsp; &nbsp;

The burgeoning revenue expenditure makes it virtually impossible to make a substantially higher allocation to boost defence manufacturing.

Last August, the finance minister laid before the Parliament the Medium Term Expenditure Framework Statement, envisaging an increase of approximately 10 per cent in the defence budget for the FY 2018-19. This makes it pointless to second-guess whether this time around the government would push the envelope to boost defence manufacturing by making a substantially higher allocation for capital expenditure. The burgeoning revenue expenditure makes it virtually impossible to do so anyway. Every year, a lot of energy is spent by defence analysts before the presentation of the Union Budget in underscoring the need for a substantial increase in the outlay for defence. The rationale put forth is that it will beef up the combat capability of the armed forces. There has been a persistent demand to increase the defence budget to 3 per cent of the gross domestic product. While the security concerns are legitimate, unrealistic expectations concerning substantially higher allocations invariably result in disappointment after the presentation of the budget. The heartbreak spawns narratives of politico-bureaucratic apathy towards the imperatives of defence preparedness. This familiar scenario seems to be playing out this time also. While we can rarely argue that there is no need for a higher allocation, it has to be realised that it is possible only if the government’s revenue goes up steeply. The finance minister’s options for raising the government’s revenue in any substantial measure are limited, especially after the onset of the GST regime. He can now tinker only with the direct taxes or raise revenue through other means, such as disinvestment. With a very limited tax base in India, there is nothing much that the finance minister could do to boost the revenue receipts through changes in the direct taxes. The coming budget being the last regular budget to be presented by this government before the 2019 general elections, there is no way he can raise the taxes or levy a defence surcharge. This electoral compulsion, however, does not apply to disinvestment. Going by the experience of the sale of 5 per cent stake sale in the Bharat Electronics Limited (BEL) last year, which was oversubscribed 3.6 times by the retail investors, there is a wide scope for tapping this source for revenue generation. But BEL remains a solitary shining example. More than five years ago, a similar attempt was made in respect of the Hindustan Aeronautics Limited (HAL) - another flagship defence public sector undertaking. But it has not produced any result. It will not be unreasonable to expect that the finance minister will lay down a more definitive roadmap for disinvestment in HAL and other undertakings and announce other policy changes necessary to ensure that the targets are achieved. The defence sector must benefit from the disinvestment in the undertakings that are under the administrative control of the ministry of defence. For that to happen, at least a portion of the revenue raised through disinvestment, and credited to the Consolidated Fund of India will have to be transferred to a sector-specific fund for the modernisation of the manufacturing infrastructure, technology development and innovation in the defence sector. This fund could subsume the Defence Technology Fund which is presently struggling to take off. Appropriation from this fund should be related to specific outcomes and, it goes without saying, that the fund will have to be professionally managed. An announcement by the finance minister, looking at the modality of creating such a fund could go a long way in energising the largely dormant ‘Make in India’ initiative. The private sector companies could borrow from this fund for technology development under ‘Make II’ category wherein the cost of prototype development is to be funded by the industry itself. This could well turn out to be wishful thinking at this juncture but a more realistic expectation from the budget would be announcement of policy initiatives that make the cost of capital more affordable for the private sector in India, especially for the micro, small and medium enterprises. There is apparently an issue regarding eligibility of the defence industry under the priority sector lending scheme of the Reserve Bank of India. It remains to be seen if this problem gets addressed in the budget. The budget speech is not meant to expatiate on the defence policy but over the past four years, the finance minister has been mentioning several issues, ranging from the one-rank-one-pension to development of a centralised defence travel system to facilitate the online booking of travel tickets by the armed forces personnel in his speech. These issues are important in their own right but do not holistically address the most critical issue of acquisition of defence capabilities. One of the fundamental causes of this unsatisfactory state of affairs is tardy decision making in the ministry of defence which either stymies the procurement and infrastructure development projects or results in time and cost overruns. Last year, a committee set up by the ministry had recommended setting up of a dedicated defence acquisition organisation, free from the bureaucratic stranglehold of the ministry. It will steer the entire process from formulating qualitative requirements, identified by the armed forces and based on the operational needs, till the delivery of the requisite capability. The scheme, however, requires the approval of the government. It would make the upcoming budget stand out if the finance minister announces the government’s resolve to go ahead with the setting up of this organisation. Moreover, the government needs to make it responsible for the optimum utilisation of the capital outlay, a portion of which remains underutilised, every year, under the present scheme of things. (Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

Opinion: Why Defence Sector has no high expectation from Union Budget

Ahead of the budget <a href="http://www.wionews.com/india-news/budget-exclusive-tourism-ministry-expects-rs-3000-crore-allocation-28661">presentation on February 1, Prime Minister Modi </a>will be meeting top economists to seek their views on the macroeconomic situation in the country at a closed-door meeting held by the Niti Aayog.

During the day-long brainstorming session, the economists are expected to outline areas holding back India&#39;s growth prospect and sectors in the Indian economy which need immediate government intervention.

The meeting is set to be attended by finance minister Jaitley including Niti Aayog officials. The economists who will be at the meeting include Niti Aayog member Bibek Debroy including economists Rathim Roy and Ashima Goyal.

The pre-budget exercise involves meetings with the select group of economists who will advise the prime minister on manufacturing, government&#39;s &quot;Make in India&quot;&nbsp;initiative, exports, doubling agricultural income and job creation which is the government&#39;s key objective.

The economists are also likely to give their views on taxation, tariff, education, digital technology, housing, tourism, banking and data-driven policies.

The government is also seeking ideas on PM&#39;s policy vision on &quot;New India 2022&quot; with short-term and long-term measures which may find special mention in the budget in February.

During the day-long brainstorming session, the economists are expected to outline areas holding back India's growth prospect

Ahead of the budget presentation on February 1, Prime Minister Modi will be meeting top economists to seek their views on the macroeconomic situation in the country at a closed-door meeting held by the Niti Aayog. During the day-long brainstorming session, the economists are expected to outline areas holding back India's growth prospect and sectors in the Indian economy which need immediate government intervention. The meeting is set to be attended by finance minister Jaitley including Niti Aayog officials. The economists who will be at the meeting include Niti Aayog member Bibek Debroy including economists Rathim Roy and Ashima Goyal. The pre-budget exercise involves meetings with the select group of economists who will advise the prime minister on manufacturing, government's "Make in India" initiative, exports, doubling agricultural income and job creation which is the government's key objective. The economists are also likely to give their views on taxation, tariff, education, digital technology, housing, tourism, banking and data-driven policies. The government is also seeking ideas on PM's policy vision on "New India 2022" with short-term and long-term measures which may find special mention in the budget in February.

Pre-Budget: Modi to meet economists in closed-door meeting

The Union Budget <a href="http://www.wionews.com/india-news/union-budget-to-be-presented-on-february-1-28623">set to be announced on February 1</a> is set to include special measures to strengthen women&#39;s safety.

The Railway Ministry is likely to announce 2018 as &quot;Railway Women&#39;s Safety Year&quot;.

The Railways intends to strengthen women&#39;s safety during train journey with a number of steps, sources said.

The budget is likely to have a detailed plan on women&#39;s safety, steps include installation of CCTV cameras in ladies coach especially in suburban rail service.

The budget is also likely to announce increasing the number of washrooms to at least two at each platform for women.

Finance minister Jaitley may also announce deployment of RPF women constables in ladies coach and in long routes

The budget is also likely to allocate&nbsp;of funds for women safety in Railways from Nirbhaya Women Safety Fund which is of Rs 1,000 crore.

The Budget Session of Parliament will commence from January 29th.&nbsp;President Ramnath Kovind will address the joint sitting of the two Houses on January 29 and the Economic Survey will be tabled on the same day.

The first phase of the session will be from January 29 to February 9.&nbsp;

The budget is likely to have a detailed plan on women's safety, steps include installation of CCTV cameras in ladies coach especially in suburban rail service.

The Union Budget set to be announced on February 1 is set to include special measures to strengthen women's safety. The Railway Ministry is likely to announce 2018 as "Railway Women's Safety Year". The Railways intends to strengthen women's safety during train journey with a number of steps, sources said. The budget is likely to have a detailed plan on women's safety, steps include installation of CCTV cameras in ladies coach especially in suburban rail service. The budget is also likely to announce increasing the number of washrooms to at least two at each platform for women. Finance minister Jaitley may also announce deployment of RPF women constables in ladies coach and in long routes The budget is also likely to allocate of funds for women safety in Railways from Nirbhaya Women Safety Fund which is of Rs 1,000 crore. The Budget Session of Parliament will commence from January 29th. President Ramnath Kovind will address the joint sitting of the two Houses on January 29 and the Economic Survey will be tabled on the same day. The first phase of the session will be from January 29 to February 9.

Budget likely to announce several features to strengthen women's safety in Railways

The Budget Session of Parliament will commence from January 29 and the Union Budget will be presented on February one, the Cabinet Committee on Parliamentary Affairs recommended on Friday.

President Ramnath Kovind will address the joint sitting of the two Houses on January 29 and the Economic Survey will be tabled on the same day, Parliamentary Affairs minister Ananth Kumar said.

The first phase of the session will be from January 29 to February 9. After a recess, Parliament will meet again from March 5 to April 6, Kumar said.

The recommendation of the session dates were made by the CCPA which met in New Delhi.

The <a href="http://www.wionews.com/india-news/lok-sabha-adjourned-sine-die-12-bills-passed-in-winter-session-28617">Winter Session of Parliament</a> ended today.

President Ramnath Kovind will address the joint sitting of the two Houses on January 29 and the Economic Survey will be tabled on the same day, Parliamentary Affairs minister Ananth Kumar said.

The Budget Session of Parliament will commence from January 29 and the Union Budget will be presented on February one, the Cabinet Committee on Parliamentary Affairs recommended on Friday. President Ramnath Kovind will address the joint sitting of the two Houses on January 29 and the Economic Survey will be tabled on the same day, Parliamentary Affairs minister Ananth Kumar said. The first phase of the session will be from January 29 to February 9. After a recess, Parliament will meet again from March 5 to April 6, Kumar said. The recommendation of the session dates were made by the CCPA which met in New Delhi. The Winter Session of Parliament ended today.

Union Budget to be presented on February 1

The tourism industry has appealed t<a href="http://www.wionews.com/business-economy/budget-likely-to-announce-several-features-to-strengthen-womens-safety-in-railways-28627">o the Indian government to ensure</a> safety and corruption-free environment including improvement in facilities.

Sources say that at a recent meet with the tourism minister Alphons and other government officials, the tourism industry has demanded improvement and addition of basic amenities like proper washroom at popular tourist destinations.

The tourism industry has also demanded&nbsp;better guidance in help desk and information counters including multiple language guides.

According to the World Travel and Tourism Council(WTTC), India&#39;s travel and tourism sector ranks seventh in the world in terms of contribution to the country&#39;s GDP.

Government sources said the tourism ministry has demanded the budgetary allocation be doubled. The ministry expects finance minister Jaitley to increase budgetary allocation to Rs 3,000 crore.

Interestingly, this time tourism Industry is keen for domestic tourism and specifically railway-connected tourism.

Tour operators have presented few ideas like opening gates for domestic tourists by providing reasonable fares for popular luxury tourist trains like Maharaja and Palace on Wheels.

In 2016, the tourism industry created over 40 million jobs in India accounting for 9.3 per cent of country&#39;s total jobs.

In its report, the WTTC said India&#39;s figures were predominantly generated by domestic travel, which accounts for 88% of the sector&#39;s contribution to GDP in 2016.

The tourism industry has also demanded?better guidance in help desk and information counters including multiple language guides.

The tourism industry has appealed to the Indian government to ensure safety and corruption-free environment including improvement in facilities. Sources say that at a recent meet with the tourism minister Alphons and other government officials, the tourism industry has demanded improvement and addition of basic amenities like proper washroom at popular tourist destinations. The tourism industry has also demanded better guidance in help desk and information counters including multiple language guides. According to the World Travel and Tourism Council(WTTC), India's travel and tourism sector ranks seventh in the world in terms of contribution to the country's GDP. Government sources said the tourism ministry has demanded the budgetary allocation be doubled. The ministry expects finance minister Jaitley to increase budgetary allocation to Rs 3,000 crore. Interestingly, this time tourism Industry is keen for domestic tourism and specifically railway-connected tourism. Tour operators have presented few ideas like opening gates for domestic tourists by providing reasonable fares for popular luxury tourist trains like Maharaja and Palace on Wheels. In 2016, the tourism industry created over 40 million jobs in India accounting for 9.3 per cent of country's total jobs. In its report, the WTTC said India's figures were predominantly generated by domestic travel, which accounts for 88% of the sector's contribution to GDP in 2016.

Budget exclusive: Tourism ministry expects Rs 3,000 crore allocation

<a href="http://www.wionews.com/business-economy/indias-gdp-growth-to-slow-to-four-year-low-of-65-in-2017-18-28649" target="_blank">India&#39;s GDP growth to slow to four-year low of 6.5% in 2017-18</a>

The economic growth is expected to slow to a four-year low of 6.5 per cent in 2017-18, the lowest under the Modi-led government, mainly due to poor performance of agriculture and manufacturing sectors.

<a href="http://www.wionews.com/india-news/all-you-need-to-know-about-new-rs-10-note-introduced-by-rbi-28641" target="_blank">All you need to know about new Rs 10 note introduced by RBI</a>

The Reserve Bank of India on Friday introduced a new Rs 10 banknote in a new series and chocolate brown colour.

<a href="http://www.wionews.com/world/entertainment-hbo-confirms-for-first-time-game-of-thrones-to-return-in-2019-28632" target="_blank">HBO confirms for first time, &#39;Game of Thrones&#39; to return in 2019</a>

Putting speculations to rest, HBO now confirms that fan rumours were true -- the final season of &quot;Game of Thrones&quot;&nbsp;won&#39;t be back until 2019.&nbsp;

<a href="http://www.wionews.com/business-economy/disinvestment-on-cards-tata-group-and-singapore-airlines-ready-to-bid-for-air-india-28637" target="_blank">Disinvestment on cards, Tata group and Singapore Airlines ready to bid for Air India</a>

Just days after aviation minister Raju said the government does not want Air India to &quot;go the Kingfisher way&quot;, Vistara&#39;s CEO Leslie Thng said today that Tata Group and Singapore Airlines are &quot;open to bid&quot; for Air India.

<a href="http://www.wionews.com/business-economy/budget-likely-to-announce-several-features-to-strengthen-womens-safety-in-railways-28627" target="_blank">Budget likely to announce several features to strengthen women&#39;s safety in Railways</a>

The Union Budget&nbsp;<a href="http://www.wionews.com/india-news/union-budget-to-be-presented-on-february-1-28623">set to be announced on February 1</a>&nbsp;is set to include special measures to strengthen women&#39;s safety. The Railway Ministry is likely to announce 2018 as &quot;Railway Women&#39;s Safety Year&quot;.

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India's GDP growth to slow to four-year low of 6.5% in 2017-18 The economic growth is expected to slow to a four-year low of 6.5 per cent in 2017-18, the lowest under the Modi-led government, mainly due to poor performance of agriculture and manufacturing sectors. All you need to know about new Rs 10 note introduced by RBI The Reserve Bank of India on Friday introduced a new Rs 10 banknote in a new series and chocolate brown colour. HBO confirms for first time, 'Game of Thrones' to return in 2019 Putting speculations to rest, HBO now confirms that fan rumours were true -- the final season of "Game of Thrones" won't be back until 2019. Disinvestment on cards, Tata group and Singapore Airlines ready to bid for Air India Just days after aviation minister Raju said the government does not want Air India to "go the Kingfisher way", Vistara's CEO Leslie Thng said today that Tata Group and Singapore Airlines are "open to bid" for Air India. Budget likely to announce several features to strengthen women's safety in Railways The Union Budget set to be announced on February 1 is set to include special measures to strengthen women's safety. The Railway Ministry is likely to announce 2018 as "Railway Women's Safety Year".

WION Evening News brief, 5 January 2018

Indian Finance Minister Arun Jaitley today said the focus of his Budget for 2017-18 will be on 10 important sectors, including farmers, infrastructure, digital economy and tax administration to transform, energise and clean India.

The other areas of focus include rural India, the youth, poor and under-privileged, the financial sector, public service and prudent fiscal management.

&quot;The government will continue with the reforms to boost economic activity,&quot; he said in his speech in the Lok Sabha while setting three main agenda of the Budget -- Transform, Energise, Clean India (TECIndia).

He also announced substantial increase in farm credit to Rs 10 lakh crore and &quot;highest ever&quot; allocation for MNREGA at Rs 48,000 crore.

Also, a long-term irrigation fund has been proposed to be set up in Nabard with an additional corpus of Rs 20,000 crore.

The Budget for 2017-18 is itself a reform as it merges rail budget with General Budget and replaces Plan/non-Plan expenditure classification with capital and revenue model to give a holistic picture of government spending.

&nbsp;

(PTI)

Jaitley announced a substantial increase in farm credit to Rs 10 lakh crore and 'highest ever' allocation for MNREGA at Rs 48,000 crores

Indian Finance Minister Arun Jaitley today said the focus of his Budget for 2017-18 will be on 10 important sectors, including farmers, infrastructure, digital economy and tax administration to transform, energise and clean India. The other areas of focus include rural India, the youth, poor and under-privileged, the financial sector, public service and prudent fiscal management. "The government will continue with the reforms to boost economic activity," he said in his speech in the Lok Sabha while setting three main agenda of the Budget -- Transform, Energise, Clean India (TECIndia). He also announced substantial increase in farm credit to Rs 10 lakh crore and "highest ever" allocation for MNREGA at Rs 48,000 crore. Also, a long-term irrigation fund has been proposed to be set up in Nabard with an additional corpus of Rs 20,000 crore. The Budget for 2017-18 is itself a reform as it merges rail budget with General Budget and replaces Plan/non-Plan expenditure classification with capital and revenue model to give a holistic picture of government spending. (PTI)

Focus on farmers, infrastructure, digital economy: Indian finance minister

Indian&nbsp;finance minister Arun Jaitley&nbsp;is expected to present the annual union budget on schedule later on Wednesday despite the death of a sitting member of parliament, a spokesman for the prime minister&#39;s office said, Reuters reported.

Doubts were being raised over the presentation of the budget, after the death of former union minister and sitting Member of Parliament E Ahamed.

The parliament typically adjourns for a day after the death of a member, although Indian TV channels cited an earlier incident where the budget presentation had gone ahead in a previous year.

A final decision on the timing of the budget will be taken when political parties and the speaker of the house meet early on Wednesday, officials said, Reuters reported.&nbsp;

Jaitley is expected to ease&nbsp;back on cutting the deficit and boost spending after growth was hit by the government&#39;s demonetisation move.&nbsp;

(WION with inputs from Reuters)

A final decision on the timing of the budget will be taken when political parties and the speaker of the house meet

Indian finance minister Arun Jaitley is expected to present the annual union budget on schedule later on Wednesday despite the death of a sitting member of parliament, a spokesman for the prime minister's office said, Reuters reported. Doubts were being raised over the presentation of the budget, after the death of former union minister and sitting Member of Parliament E Ahamed. The parliament typically adjourns for a day after the death of a member, although Indian TV channels cited an earlier incident where the budget presentation had gone ahead in a previous year. A final decision on the timing of the budget will be taken when political parties and the speaker of the house meet early on Wednesday, officials said, Reuters reported. Jaitley is expected to ease back on cutting the deficit and boost spending after growth was hit by the government's demonetisation move. (WION with inputs from Reuters)

Indian budget on schedule today despite death of sitting MP: Prime Minister's Office

India&#39;s Election Commission, the authority that presides over poll processes in the country, has allowed the federal government to present the annual Budget ahead of key votes in five states, but laid down two caveats.

Firstly, the federal government cannot announce schemes in poll-bound states. Secondly, the government cannot talk about its achievements in the states which are going to polls next month.

Local elections will be held in five states of the country -- Uttar Pradesh, Uttarakhand, Punjab, Manipur and Goa -- just days after the Budget is presented by the government on February 1.

The federal government was also told that they cannot not announce a full-blown Budget, and instead opt for a vote-on-account.

Vote-on-account is taken by a government during an election year. That is because the government receives the budgetary allocation only by mid-May after its details are forensically studied by a parliamnetary committee. So in case of an election year, during which time governments can change, the Election Commission allows the incumbent dispensation to only pass a vote-by-account.

Earlier in the day, the Supreme Court dismissed a plea seeking postponement of the Budget to deter the federal government from lavishing extra attention on states that are slated to vote.

The current government under Indian Prime Minister Narendra Modi has maintained that advancing Budget presentation was necessary as it would ensure that all budgetary provisions are allocated to different sectors from April 1, the beginning of the new fiscal.

The Budget is usually presented around last week of February and, as a result, the approval of the budget spills over to the next financial year, delaying the start of new programmes.

Opposition parties, however, said the government could use the Budget presentation as a key&nbsp;tool&nbsp;to influence voters.

(WION with inputs from PTI)

But the Election Commission has told the government to not announce any schemes for poll-bound states

India's Election Commission, the authority that presides over poll processes in the country, has allowed the federal government to present the annual Budget ahead of key votes in five states, but laid down two caveats. Firstly, the federal government cannot announce schemes in poll-bound states. Secondly, the government cannot talk about its achievements in the states which are going to polls next month. Local elections will be held in five states of the country -- Uttar Pradesh, Uttarakhand, Punjab, Manipur and Goa -- just days after the Budget is presented by the government on February 1. The federal government was also told that they cannot not announce a full-blown Budget, and instead opt for a vote-on-account. Vote-on-account is taken by a government during an election year. That is because the government receives the budgetary allocation only by mid-May after its details are forensically studied by a parliamnetary committee. So in case of an election year, during which time governments can change, the Election Commission allows the incumbent dispensation to only pass a vote-by-account. Earlier in the day, the Supreme Court dismissed a plea seeking postponement of the Budget to deter the federal government from lavishing extra attention on states that are slated to vote. The current government under Indian Prime Minister Narendra Modi has maintained that advancing Budget presentation was necessary as it would ensure that all budgetary provisions are allocated to different sectors from April 1, the beginning of the new fiscal. The Budget is usually presented around last week of February and, as a result, the approval of the budget spills over to the next financial year, delaying the start of new programmes. Opposition parties, however, said the government could use the Budget presentation as a key tool to influence voters. (WION with inputs from PTI)

Indian govt allowed to present Budget ahead of state elections

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Take this WION Wallet quiz as you prepare for the Indian union budget this year

#OneWithTheWorld: How well do you know the budget?

India&#39;s Election Commission has sought the cabinet secretary&#39;s reply on the opposition&#39;s plea to postpone budget presentation date, as per normal procedure, ECI sources told ANI.

On Thursday, a united opposition had lodged a complaint with the Election Commission on the date for the annual budget being too close to the assembly polls.

The budget session of the Parliament, which will begin from February 1, is being advanced as the government wants early allocation of funds for various schemes from April 1, the beginning of the next financial year.

On Friday, the Supreme Court refused an urgent hearing on a plea seeking postponement of presentation of Union Budget due to assembly elections in five states. &quot;There is no urgency in it. We will lay down the law when this petition comes up,&quot; a bench headed by Chief Justice JS Khehar said.

Advocate ML Sharma, who filed the Public Interest Litigation (PIL) on the issue, mentioned it and sought an urgent hearing. The PIL has also sought a direction to strip the ruling Bharatiya Janata Party&nbsp;of its lotus election symbol for alleged violation of the model code of conduct which came into effect after the&nbsp;declaration of assembly polls in five states.

The Election Commission on Wednesday announced seven-phase polling for 403 assembly constituencies in the politically crucial state of Uttar Pradesh, two-phase polling in Manipur and one-phase polling each in the states of Punjab, Uttarakhand and Goa respectively. Chief Election Commissioner Nasim Zaidi said that the counting of votes in all the five states will take place on March 11.

(This report first appeared in DNA)

The Supreme Court has refused an urgent hearing on a plea seeking postponement of the budget presentation due to?five-state polls

India's Election Commission has sought the cabinet secretary's reply on the opposition's plea to postpone budget presentation date, as per normal procedure, ECI sources told ANI. On Thursday, a united opposition had lodged a complaint with the Election Commission on the date for the annual budget being too close to the assembly polls. The budget session of the Parliament, which will begin from February 1, is being advanced as the government wants early allocation of funds for various schemes from April 1, the beginning of the next financial year. On Friday, the Supreme Court refused an urgent hearing on a plea seeking postponement of presentation of Union Budget due to assembly elections in five states. "There is no urgency in it. We will lay down the law when this petition comes up," a bench headed by Chief Justice JS Khehar said. Advocate ML Sharma, who filed the Public Interest Litigation (PIL) on the issue, mentioned it and sought an urgent hearing. The PIL has also sought a direction to strip the ruling Bharatiya Janata Party of its lotus election symbol for alleged violation of the model code of conduct which came into effect after the declaration of assembly polls in five states. The Election Commission on Wednesday announced seven-phase polling for 403 assembly constituencies in the politically crucial state of Uttar Pradesh, two-phase polling in Manipur and one-phase polling each in the states of Punjab, Uttarakhand and Goa respectively. Chief Election Commissioner Nasim Zaidi said that the counting of votes in all the five states will take place on March 11. (This report first appeared in DNA)

Indian budget dates too close to polls? Election Commission wants government reply

Uttar Pradesh chief minister Akhilesh Yadav has shot off a letter to Prime Minister Narendra Modi requesting him to defer presentation of the Union Budget till the completion of the poll process in five states.

The letter sent to the prime minister earlier this week cited the Election Commission directive on January 23 asking the Central government not to announce any specific scheme for the five states going to polls in keeping with the model code of conduct.

The chief minister said that this may deprive Uttar Pradesh, having the maximum population in the country, of special schemes in the Union Budget which would have a direct impact on state&#39;s development and interest of 20 crore people.

Yadav recalled that in February-March 2012, the then government had taken a decision to defer the budget on its own till the completion of the poll process at that time.

&quot;In my capacity as the representative of the people of the state I request you think about deferring the Budget till after the elections so that the development of the state and schemes in the interests of the people could be announced,&quot; he added.

The Supreme Court had ruled recently that the government does not need to move the budget from February 1 to a date after elections are held in five states.

Assembly elections in Uttar Pradesh, Punjab, Uttarakhand, Goa and Manipur will be held between February 4 and March 8.

(PTI)

The chief minister said doing so may deprive UP of special schemes in the Union Budget, which would have a direct impact on state's interest

Uttar Pradesh chief minister Akhilesh Yadav has shot off a letter to Prime Minister Narendra Modi requesting him to defer presentation of the Union Budget till the completion of the poll process in five states. The letter sent to the prime minister earlier this week cited the Election Commission directive on January 23 asking the Central government not to announce any specific scheme for the five states going to polls in keeping with the model code of conduct. The chief minister said that this may deprive Uttar Pradesh, having the maximum population in the country, of special schemes in the Union Budget which would have a direct impact on state's development and interest of 20 crore people. Yadav recalled that in February-March 2012, the then government had taken a decision to defer the budget on its own till the completion of the poll process at that time. "In my capacity as the representative of the people of the state I request you think about deferring the Budget till after the elections so that the development of the state and schemes in the interests of the people could be announced," he added. The Supreme Court had ruled recently that the government does not need to move the budget from February 1 to a date after elections are held in five states. Assembly elections in Uttar Pradesh, Punjab, Uttarakhand, Goa and Manipur will be held between February 4 and March 8. (PTI)

India: Akhilesh writes to PM Modi, wants Budget presentation after polls

Many budgetary practices in India date back to British India. Presentation of a separate Railway Budget a couple days before the main Budget has been in practice for 92 years. Similarly, till 1999, the Indian Budget was presented at 5 p.m. on the last day of the month of February, to synchronise with the passage of the Budget in the British Parliament at 12 noon.

The departures

The Indian government proposes to make two significant departures this year - first, merging the railway Budget with the main Budget and second, advancing the date of Budget presentation to 1st February. Both the changes seem to be guided by a sound rationale.&nbsp;

&nbsp;

Railway Budget became a hostage to populism, particularly in the time of coalition governments where the charge of Railway Ministry was invariably held by a member of coalition partners. What is needed, though, is to corporatise the railways so that it can be managed as a commercial enterprise, as it should be.

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The Budget presentation date has been advanced to ensure that the Budget is approved before the start of the new financial year, and government work can start from the first day of the new financial year.&nbsp;

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Before the current year, considerable time was lost between the presentation of the Budget and its approval.&nbsp; Traditionally, the Indian Budget was presented on the last day of the month of February, and the Departmentally Related Standing Committees scrutinised the demands for financial grants for the next two months as the Parliament went into recess until late April. For the Appropriation Act to be finally passed one had to wait until the end of May.&nbsp; Thus, two months were lost for want of an approved Budget, and the Parliament had to pass a Vote on Account to allow a government to draw funds in the interim.

Constitution and the Budget

The Indian Constitution contains the main provisions related to budget-making&nbsp;by the national and state governments. No money can be withdrawn from the government except under appropriation made by law passed in accordance to the Constitution; similarly, no tax shall be levied or collected except by authority of law.&nbsp;

&nbsp;

The Constitution lays down the fiscal architecture of the nation. It demarcates the jurisdiction of the national and state governments in the matter of levying and collection of taxes.&nbsp; More, importantly, it provides a mechanism for redistribution of tax proceeds between the federal and the state governments through Finance Commission (FC) appointed every five years.&nbsp;

&nbsp;

As the federal government receives most of the productive taxes, such as those placed on income, service, excise and customs, there is often a vertical imbalance in resources between the center and the state governments.&nbsp; The Constitution redresses it by transferring of funds from the former to the latter.&nbsp;

&nbsp;

According to the fourteenth Finance Commission recommendation, 42 per cent of divisible tax proceeds are required to be transferred to the states. The commission also addresses the horizontal imbalance between states, owing to their varying stages of development by adopting a formula by which the poorer states get their due.

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The Constitution&nbsp;provides for supplementary grants in case the voted funds are found to be inadequate, and creates a Contingency Fund to meet unforeseen expenditure without legislative sanction which is, however, subsequently obtained when the legislature is convened.

Limitations of Indian budgeting

Although India has tried to factor in performance into Budget preparation, the Budget remains largely detailed line item incremental budget. The first experiment on performance budgeting was introduced in the early-1970s on the basis of the recommendation of the First Administrative Reforms Commission.&nbsp;

&nbsp;

Through performance budgeting, the Indian government expected to shift focus from monitoring inputs (whether money has been spent) to focusing on whether the money voted has been spent to produce intended outputs, economically and efficiently.&nbsp;

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Subsequently, in 2005, the government introduced outcome budgeting. However, these exercises did not bring about the desired shift in focus but remained a ritual. First, neither the performance budget nor the outcome budget was the Budget that the Finance Minister presented that was discussed and voted by the legislature. Performance and, later, outcome budgets were routinely laid in the Houses after the presentation of the general Budget, as and when they were prepared by individual departments.&nbsp;

&nbsp;

Secondly, performance (measured by output or outcome) was not factored into resource allocation. More importantly, there was no monitoring or discussions regarding achievement (or otherwise) of outputs and outcomes against targets. So, on both the counts, performance did not matter.

&nbsp;

Instead of being post-facto exercise by individual departments of attributing &lsquo;outcomes&rsquo;, outcome budgeting should facilitate resource allocation and expenditure prioritisation. It should be based on clarity and conviction about expected outcomes. Outcome budgeting should help eliminate funding of activities and interventions with doubtful claims and instead, increase outlays that have a clear prospect of desirable outcome. It should improve accountability by holding departments responsible for producing identifiable outputs and outcomes.

&nbsp;

There are at least three important and necessary conditions for successful implementation of performance-based budgeting. Firstly, there is urgent need to aggregate or group expenditures into programmes on the basis of the common objectives they serve. Thus, each programme should have a clear outcome and objective statement, which captures the essence of what result is being sought to be achieved. Secondly, outcome and output indicators must be carefully identified. This may seem simple but one has only to look at some of the outcome budgets to understand the prevailing confusion. Lastly, the Budget and accounting classification used in India is quite dated and needs to be urgently upgraded. There are many issues with the chart of accounts. It is just not amenable for a modern program budgeting.&nbsp;

&nbsp;

Lots have changed since the first Indian Budget was presented by the then finance minister, Shri Shanmukham Chetty but there are still significant other aspects, as discussed in this articles, that need to be introduced to make India&#39;s budgeting experience more efficient and productive. &nbsp;

In 2017, Indian government seeks to free the Budget from populism and sync it better with the financial year

Many budgetary practices in India date back to British India. Presentation of a separate Railway Budget a couple days before the main Budget has been in practice for 92 years. Similarly, till 1999, the Indian Budget was presented at 5 p.m. on the last day of the month of February, to synchronise with the passage of the Budget in the British Parliament at 12 noon. The departures The Indian government proposes to make two significant departures this year - first, merging the railway Budget with the main Budget and second, advancing the date of Budget presentation to 1st February. Both the changes seem to be guided by a sound rationale. Railway Budget became a hostage to populism, particularly in the time of coalition governments where the charge of Railway Ministry was invariably held by a member of coalition partners. What is needed, though, is to corporatise the railways so that it can be managed as a commercial enterprise, as it should be. What is needed, though, is to corporatise the railways so that it can be managed as a commercial enterprise, as it should be. × The Budget presentation date has been advanced to ensure that the Budget is approved before the start of the new financial year, and government work can start from the first day of the new financial year. Before the current year, considerable time was lost between the presentation of the Budget and its approval. Traditionally, the Indian Budget was presented on the last day of the month of February, and the Departmentally Related Standing Committees scrutinised the demands for financial grants for the next two months as the Parliament went into recess until late April. For the Appropriation Act to be finally passed one had to wait until the end of May. Thus, two months were lost for want of an approved Budget, and the Parliament had to pass a Vote on Account to allow a government to draw funds in the interim. Constitution and the Budget The Indian Constitution contains the main provisions related to budget-making by the national and state governments. No money can be withdrawn from the government except under appropriation made by law passed in accordance to the Constitution; similarly, no tax shall be levied or collected except by authority of law. The Constitution lays down the fiscal architecture of the nation. It demarcates the jurisdiction of the national and state governments in the matter of levying and collection of taxes. More, importantly, it provides a mechanism for redistribution of tax proceeds between the federal and the state governments through Finance Commission (FC) appointed every five years. As the federal government receives most of the productive taxes, such as those placed on income, service, excise and customs, there is often a vertical imbalance in resources between the center and the state governments. The Constitution redresses it by transferring of funds from the former to the latter. According to the fourteenth Finance Commission recommendation, 42 per cent of divisible tax proceeds are required to be transferred to the states. The commission also addresses the horizontal imbalance between states, owing to their varying stages of development by adopting a formula by which the poorer states get their due. The Constitution provides for supplementary grants in case the voted funds are found to be inadequate, and creates a Contingency Fund to meet unforeseen expenditure without legislative sanction which is, however, subsequently obtained when the legislature is convened. Limitations of Indian budgeting Although India has tried to factor in performance into Budget preparation, the Budget remains largely detailed line item incremental budget. The first experiment on performance budgeting was introduced in the early-1970s on the basis of the recommendation of the First Administrative Reforms Commission. Through performance budgeting, the Indian government expected to shift focus from monitoring inputs (whether money has been spent) to focusing on whether the money voted has been spent to produce intended outputs, economically and efficiently. Outcome budgeting should help eliminate funding of activities and interventions with doubtful claims and instead, increase outlays that have a clear prospect of desirable outcome × Subsequently, in 2005, the government introduced outcome budgeting. However, these exercises did not bring about the desired shift in focus but remained a ritual. First, neither the performance budget nor the outcome budget was the Budget that the Finance Minister presented that was discussed and voted by the legislature. Performance and, later, outcome budgets were routinely laid in the Houses after the presentation of the general Budget, as and when they were prepared by individual departments. Secondly, performance (measured by output or outcome) was not factored into resource allocation. More importantly, there was no monitoring or discussions regarding achievement (or otherwise) of outputs and outcomes against targets. So, on both the counts, performance did not matter. Instead of being post-facto exercise by individual departments of attributing ‘outcomes’, outcome budgeting should facilitate resource allocation and expenditure prioritisation. It should be based on clarity and conviction about expected outcomes. Outcome budgeting should help eliminate funding of activities and interventions with doubtful claims and instead, increase outlays that have a clear prospect of desirable outcome. It should improve accountability by holding departments responsible for producing identifiable outputs and outcomes. There are at least three important and necessary conditions for successful implementation of performance-based budgeting. Firstly, there is urgent need to aggregate or group expenditures into programmes on the basis of the common objectives they serve. Thus, each programme should have a clear outcome and objective statement, which captures the essence of what result is being sought to be achieved. Secondly, outcome and output indicators must be carefully identified. This may seem simple but one has only to look at some of the outcome budgets to understand the prevailing confusion. Lastly, the Budget and accounting classification used in India is quite dated and needs to be urgently upgraded. There are many issues with the chart of accounts. It is just not amenable for a modern program budgeting. Lots have changed since the first Indian Budget was presented by the then finance minister, Shri Shanmukham Chetty but there are still significant other aspects, as discussed in this articles, that need to be introduced to make India's budgeting experience more efficient and productive.

A brief introduction to Budget-making in India

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