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Ready for guillotining? by Richard Mahapatra
How transparent and participatory is Pranab Babu’s budget

For six months it evolves under a veil of secrecy. The Cabinet gets to see it just a few hours before it is tabled in the Lok Sabha. Such is the covert nature of the Union budget that accounts for about 50 per cent of all budgets in the country.

Finance Minister Pranab Mukherjee wants to make the budget what such a public affair ought to be: transparent and participatory. In the past two years he has taken pride in “reforming” the budget-making exercise. He has been speaking to civil society groups to get public inputs into the budget. In January this year, the Open Budget Survey of the International Budget Partnership, a coalition of organisations in 94 countries that surveys national budgets across the globe, rated India’s budget as “significant” in terms of transparency and public participation. The survey comes every second year.

Going by its ratings, India’s openness in making a budget has improved from a score of 53 per cent in 2006 to 67 per cent last year. It is, thus, prudent to understand these “significant” changes in the country’s budget-making exercise.

One tends to raise a few pertinent questions: why does the finance minister meet civil society groups? Do these meetings really influence the budget? Answers challenge both the finance minister’s claim and the survey finding on India’s openness in making a budget. Let us analyse why it is so. A budget cycle involves four stages: formulation, enactment, implementation and audit.

Subrat Das, the executive director of the Centre for Budget and Governance Accountability, a non-profit in Delhi that tracks the Union budget process, says, “There is hardly any scope for public influence in the first two and the last stages. It is only in the implementation stage that there are options for influencing but very few.” The finance minister’s consultation with civil society groups is supposed to get feedback for the most secretive stage—formulation of budget.

The budget cycle starts in September with the finance minister issuing the budget circular. This asks for revenue and expenditure estimates from different departments. This is the stage where one can effectively influence the budget. But no consultation happens at this stage. Usually, the finance minister meets civil society groups in January. By the time, it has already prepared the expenditure estimates.

It just has to work on the revenues, taxation for example. Hence, this is the best time for industry representatives to meet the minister and influence the budget. Their concern, as we know, is tax cut. All other groups trying to influence the ministry for changes in budgets do not get much scope or time because by February the finance ministry and the Planning Commission start allocating money for various schemes suggested. At this stage, even the line ministries are not kept in the loop. So the finance minister’s consultation with civil society groups at this stage yields hardly any input. This is a mere cosmetic exercise.

Cut to India’s “significant” rating in the open budget survey. It is a skewed calculation. Parameters for the survey are: availability and production of budget documents, legislative scrutiny and audit mechanism. India scores very high on the first parameter. This is because the government does prepare and produce budget documents. And a piece of legislation, called the Fiscal Responsibility and Budget Management Act, in implementation since 2004, makes sure that many budget documents and statements are in the public domain. This, though, does not mean people have a say in the budget.

The survey, however, rates India as “moderate” in legislative scrutiny of the budget, putting the country on a par with Rwanda and Afghanistan. This is ironical given our tag of “the largest and thriving democracy”. Remember, Parliament can only approve the budget. It does not get much time or scope to influence the budget.

Ideally, in a democratic setup, legislative scrutiny of budget is considered equal to public scrutiny. But looking at budget sessions, Parliament gets just 30-35 days to discuss the budget with 105 demands for grants. Each of them should have been discussed threadbare. Often the Lok Sabha gets to discuss four to five such demands. The rest are just bundled together for voting in a Parliamentary practice, called guillotined.

In Union Budget 2010-11, the Cabinet discussed demands for grants of three ministries, accounting 16 per cent of total funds to be voted by Parliament. The rest—84 per cent—were guillotined.