BackUPA may go for interim budget as election nears
UPA may go for interim budget as election nears
Premium
New Delhi: To give itself political room to announce more popular measures ahead of the general election that is due before May, the government is considering presenting an interim budget instead of the customary vote-on-account in the Parliament session that begins on 12 February.
Finance ministry officials have been asked to prepare the ground for both options, an interim budget and a vote-on-account, as the political leadership is yet to take a final decision. This was confirmed by two finance ministry officials independently and a senior minister in the government, all of whom did not want to be identified, given the sensitivity of the disclosure.
Meanwhile, there has been a clampdown on media access to the finance ministry beginning this month, even though a conventional vote-on-account does not have any new tax proposals. According to an official who did not want to be identified, the home ministry has issued a communication instructing the staff to restrict contacts with the media.
The cabinet committee on parliamentary affairs on Thursday decided to convene the Parliament session from 12 February to 26 February.
“The government wants to announce its intentions for introducing some more welfare measures. A vote-on-account does not have the scope for such announcements. So we are contemplating an interim budget," a minister said on condition of anonymity.
The Congress-led United Progressive Alliance (UPA) government is expected to recommend dissolution of the present Lok Sabha after the February session. The general election for the 15th Lok Sabha is due before May.
Currently, Prime Minister Manmohan Singh holds charge of the finance ministry, since former finance minister P. Chidambaram was moved to the home ministry in the wake of the 26 November Mumbai terror attacks.
According to legal experts, there was no constitutional barrier on an outgoing government to present a budget before the elections are announced. “It (vote-on-account) is not a constitutional necessity. It is more of a convention," said Prashant Bhushan, a Supreme Court lawyer.
Presentation of the budget documents will, for the first time, provide a clear perspective on the fiscal health of the Union government, especially since the Centre has said it will ramp up spending to bolster effective demand in a slowing economy.
The government’s fiscal deficit was projected at 2.5% of the gross domestic product (GDP) in 2008-09 by former finance minister Chidambaram during his budget speech last year. Since then, additional spending by the government has resulted in it seeking Parliament’s nod to spend about Rs1.6 trillion beyond what was budgeted.
In addition to the Union government’s extra spending, the state governments have also been given permission to borrow an additional Rs30,000 crore to fund the stimulus package to combat the slowdown.
According to economists, the combined deficits of the Union and state governments could range between 9% and 12% of GDP this year. The average combined deficit in the five years leading to the economic crisis of 1991 was 8.9%.
liz.m@livemint.com
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!
