Who is making the Budget 2015-16?

Published: February 12, 2015 - 18:30 Updated: February 12, 2015 - 18:31

If something in the budget leaks then heads will simply roll, most likely that of the Finance Minister and the Revenue Secretary
MR Sivaraman Delhi
Going by the media reports, it is not clear as to exactly who is making the Union Budget for the year 2015-16. Newspapers report that the PMO held a meeting with experts, wherein the PM consulted on the budget. By convention and practice, the budget in this country- be it the state government or the central government- is prepared by the Finance department in the states and by the Finance Ministry at the central government. The author, who has been responsible for preparing budgets both at the level of state and central governments for over a decade (as Finance Secretary and as Revenue secretary respectively), has never known either the Chief Minister or the Prime Minister trying to interfere with the process at any time, excepting when the proposals are formally presented to them just a few days before the budget is delivered to the legislature or the Parliament, as the case may be. Even the cabinet gets to know of the Finance Minister’s speech only a few minutes before he delivers it. 

As far as memory goes, there has never been a leakage of the budget at the center or even in the states. The expenditure budget numbers may be known to a very large number of people involved in the various ministries but they make no sense to a non-expert. The budget speech of the Finance Minister is the main instrument through which the government conveys its policy measures either on taxation or on priming the economy. The economic policy measures are usually the preserve of the Finance Ministry and they are incorporated in the speech only after careful thought. In case there are major initiatives bringing about some paradigm change then the Finance Minister would have consulted the PM and the concerned cabinet ministers before finalizing them. As regards taxation under the current regime, any leakage more particularly relating to central excise and customs duties may give undue advantage to those who get the information before hand.

That is why the Revenue Secretary orders the installation of access control system into the portion of North Block that has the offices of the Central Board of Excise and Customs (CBEC) and Central Board of Direct Taxes (CBDT). This was stated during the author’s tenure as Revenue Secretary even though the members of both the boards were not particularly happy at this curb on their movements. When the budget is sent to the press inside the North Block, the officers who ensure correct printing are incarcerated for the duration of several days.

These may sound ridiculous to many but if something in the budget leaks then heads will simply roll, most likely that of the Finance Minister and the Revenue Secretary, if it pertains to taxation. Those who laugh now on the secrecy part of the budget will be the first to bay for blood when there is a leak.

That is why for decades now the Chief Minister in the States and the PM at the center are never actively brought into the process of budget-making, although there may be any number of informal consultations with either of them. They stand insulated in the event of any leakage of the budget or even a major error. They rescue the Finance minister or a bureaucrat where it is desired in the event of such a predicament.

Hopefully such secrecy requirements will become irrelevant once the Goods and Service Tax (GST) comes into force, as then the rates would not be required to be changed for a few years.

It is hoped that the long standing tradition and practices are being followed in the Finance Ministry, and the news reports of the PM getting involved in the nitty-gritty of budget-making are exaggerated. The PM is very experienced as a Chief Minister of a large state, and surely he knows the procedures of budget-making more than anybody else. He must be careful that the opposition is waiting for a mistake to take him on.