New Delhi: Implicitly signalling a second tenure for itself, the Narendra Modi government proposes to chart its economic thinking in its budget for the year starting 1 April, with focus on an ambitious expenditure programme. The finance ministry plans to present a full budget on 1 February, a senior government official said. Budget 2019, which will be the last by the present government ahead of the 2019 Lok Sabha elections in May, going by established practice should be a vote-on-account, with government seeking Parliament approval for expenditure from the Consolidated Fund of India for the interim period.
Lok Sabha elections are scheduled in the first half of next year as the incumbent government will complete its five-year tenure in May.
If indeed the government goes through with its plans, not only is it signalling its confidence about being re-elected, it is also reworking an established precedent. Earlier, the government had advanced the presentation of the Union budget to 1 February so as to let government departments undertake spending from the beginning of the fiscal. Now it is effecting a similar departure on the grounds that an economy of the size of India cannot afford to lose direction in the intervening period till a new government takes charge.
Signalling policy continuity in the budget is the correct approach, said D.K. Srivastava, chief policy adviser at EY India. “As long as no major policy changes including tax policy are undertaken in the budget and expenditure approval is taken for the relevant period, then it would be an appropriate approach," he added.
After sending an initial letter on 18 October, the finance ministry sent reminders to central government departments and ministries on Tuesday to submit inputs by 30 November for finance minister Arun Jaitley’s budget speech.
“We will signal continuity. We cannot dislocate the economy just because of the elections. Wherever there is gap in expenditure, we will plug it," the government official said on condition of anonymity.
The person said the government would be sticking to routine and publishing an Economic Survey, essentially the economic report card for 2018-19, though normally this task is left to the next government. The government has appointed a panel under former Reserve Bank of India governor Bimal Jalan to select the next chief economic adviser in the finance ministry and so far it has held two meetings to vet 20 applications.
The government also advertised on 23 October for the post of senior economic adviser in the finance ministry for a period of three years, signalling its intention to strengthen the economic research wing in North Block.
The finance ministry is putting North Block in quarantine starting 3 December, restricting the access of journalists to ministry officials as budget preparation gains momentum.
“Letters have already been sent to departments to submit revised estimates for 2018-19 and budget estimates for 2019-20," another government official said requesting anonymity. “We may also hold consultations with industries and various stakeholders to understand their expectation from the budget."