UPA’s dilemma: to be or not to be populist

UPA’s dilemma: to be or not to be populist
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First Published: Wed, Feb 11 2009. 01 24 AM IST

Geared up: External affairs minister Pranab Mukherjee, also holding the finance portfolio for now, is to present the interim budget on Monday. Manish Swarup / AP
Geared up: External affairs minister Pranab Mukherjee, also holding the finance portfolio for now, is to present the interim budget on Monday. Manish Swarup / AP
Updated: Wed, Feb 11 2009. 10 44 AM IST
New Delhi: To take the populist route or not—that would seem to be the dilemma facing the Congress-led United Progressive Alliance (UPA) as it mulls its strategy for the interim budget due next week.
Geared up: External affairs minister Pranab Mukherjee, also holding the finance portfolio for now, is to present the interim budget on Monday. Manish Swarup / AP
While two senior ministers, who did not want to be identified given the sensitivity of the issue, independently said the government would make use of the opportunity to announce some populist measures, another senior minister, who also did not want to be identified, said the government would just present its basic accounts during the interim budget.
While there is no constitutional barrier to a government presenting an interim budget to use the occasion to announce far-reaching policy measures and populist incentives and sops, most governments that have presented such budgets have preferred to stay away from these—and restricted their budgets to so-called votes on account, where basic accounts required to keep the machinery of the government running till the next government takes over are presented and voted on. The UPA government is presenting an interim budget because its term ends this year and elections to the Lok Sabha are scheduled to be held before May.
India has seen 11 interim budgets thus far.
Some populist announcements would help the UPA’s cause during the elections and some experts say that given the current economic downturn, such measures are needed.
The Congress’ political rivals, however, say that doing this would be unprecedented.
If the Congress chooses to make significant changes in tax laws, for instance, rival parties could force a vote. If the Congress loses the vote, it would have to resign and that would result in a significant loss of face for the party before the elections.
The UPA has a slender majority in the 506-member Lok Sabha.
Can do, but will it?
“There is no constitutional barrier for introducing tax cuts. But it is usually not done by custom,” said Kerala’s finance minister Thomas Isaac.
The passage of a money Bill in Parliament requires only a voice vote, provided none of the members of Parliament asks for a division or an exact count, said a constitutional expert who did not want to be identified.
In the circumstances, however, it is likely that someone will ask for a division, and the government may wish to avoid this.
Pratap Bhanu Mehta, president, Centre for Policy Research, a Delhi-based think tank, said the government had a responsibility to create a feel-good factor in the interim budget. “In this budget, the government has to send out a message that it is doing something to deal with the global economic crisis in India. Other than sending out this signal, there is not much more that it can do. All social schemes are already in place, NREGA (National Rural Employment Guarantee Act), farm loan waiver, Mid-day Meal Scheme, etc. The fiscal deficit has anyway gone through the roof.”
A former finance minister who is part of the Bharatiya Janata Party, the Congress’ main rival, said he wouldn’t be surprised if the government went ahead and broke conventions because it has been “unmindful of them in the last five years”.
“I have the experience of presenting an interim budget for both an outgoing and incoming government. It is a completely mathematical exercise and you are not allowed to make any policy announcements, interfere with the tax structure or add a new charge under the expenditure head. If this government indulges in any of these, it would be violating strong conventions of our Constitution,” said Yashwant Sinha.
Some experts, however, said the government’s dilemma wasn’t really significant because its budgetary announcements, even if it chooses to make any, will not be relevant.
An irrelevant budget?
“The interim budget is almost a synonym for a vote on account. But the government will obviously announce funds for ongoing programmes. Even if it announces pro-poor popular measures, they have no meaning as it will see the light of the day only after the new government comes in. Because the code of conduct will come into effect immediately after the elections are announced,” explained a state finance secretary, who requested anonymity.
India’s Election Commission, the independent body that conducts the elections, is expected to announce Lok Sabha polls to elect 543 members to the Lower House of Parliament soon after the budget session that begins on 12 February and concludes on 26 February.
The interim budget is scheduled to be presented in the Lok Sabha on 16 February. The announcement of the elections will bring into force a so-called model code of conduct put in place by the Election Commission that regulates the behaviour of governments and political parties.
The government’s budget strategy, as outlined by a senior official of the country’s apex planning agency, who has been part of deliberations on the budget, present a middle-of-the-road option.
This person from the Planning Commission said that while allocations for most programmes would be routine and largely to cover interim expenses, there would be a substantial increase in allocations for the existing eight flagship programmes including Bharat Nirman, National Rural Employment Guarantee Schemes, Jawaharlal Nehru National Urban Renewal Mission and Sarva Shiksha Abhiyan.
The guessing game is likely to go on till Monday,
Ruhi Tewari, Sanjiv Shankaran and Sangeeta Singh contributed to this story.
liz.m@livemint.com
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First Published: Wed, Feb 11 2009. 01 24 AM IST