Indian Budget

is not a secret now

Once considered as a top secret affair, the

budget related matters has initiated

an open approach with domestic

audience and has now gone global

Finance minister pledges the fiscal deficit to reduce it

5.3% of GDP and cut it further

to 4.8% in 2013-14

Open Budget approach has succeeded

Credit rating agencies is no longer threat

With right action plan Chidambaram restored India’s global credibility

Investment analysts have upgraded their expectations for

India

Billions of dollars have flowed in, strengthening the rupee and thus helping tame inflation

This has enabled the RBI to cut interest rates, further improving

the investment climate. 

Earlier Budgets constantly tinkered with tax rates on this or that item

People with advance knowledge could make money buying or selling items before the tax rate changed, so secrecy was deemed

paramount. 

In the bad old days, the budget speech would first specify

proposed government

spending, notably the increase in

annual Plan spending

It would then specify expected revenue, and say this left too large a gap to be filled entirely by

deficit financing (which meant printing money).

So, the Finance Minister would say, I am raising taxes on the following items — and a long list

would follow, often hundreds of items.

He sometimes cut tax rates, typically before an election. Such tinkering made it possible to profit

from budget leaks, so there was total budget secrecy

The US has always had

an open budgeting

system

First the President announces his budget proposals, then the House of Representatives

produces its own version, and the Senate produces a third version.

These three sets of budget proposals are then debated, with the public joining in, and finally a

compromise budget is hammered out

Such openness is a virtue in any democracy. It also means that the budget debate is not on endless tinkering, but on

broad tax and spending philosophies

US budgets look at spending and revenue over years, even

decades

 In the Indian earlier days of blind self-sufficiency, there was no

sense of India’s place in the world

But after the reforms of 1991, India has become

much more globalised, with the ratio of imports and

exports to GDP rising from 15 per cent to 45 per cent

As India is far more prosperous, also means that the budget calls to

address a global audience, not just

an Indian one

Thank You