Interim finance minister Piyush Goyal is likely to present the sixth and the last budget, which is an interim one, of the Narendra Modi government on Friday ahead of general elections due by May. Expectations are the government will make major interventions for the farm and MSME (micro, small and medium enterprises) sectors — with talk about a direct income support scheme for the farmers. Mint scans through the interim budgets since the 1990s to find out what the finance minister can and cannot do.
Finance minister Yashwant Sinha presented the interim budget in a crisis year for the Chandrashekhar government when India was facing a balance of payments crisis due to rising oil prices fuelled by the Gulf War. Though it is not truly a post-liberalisation budget — that one was presented a few months later by Manmohan Singh after the Congress returned to power — Sinha often is credited with having prepared the blueprint for economic reforms.
Faced with a crisis, Sinha urged the Lok Sabha to wait till the full budget to be presented in May for a comprehensive strategy for restoring the health of the economy. "In formulating the budget, we want to ensure that such a macro-economic adjustment does not disrupt the rhythm of the growth process and does not place a burden on the poor. What is more, the process of fiscal correction needs to be situated in a medium-term perspective. We are engaged in the formulation of a comprehensive approach which would provide a satisfactory and sustainable solution to these problems," he added.
However, Sinha made one major policy announcement: starting the process of disinvestment of public sector enterprises. "lt has been decided that the government will disinvest up to 20 per cent of its equity in select public sector undertakings, in favour of mutual funds and financial or investment institutions in the public sector. The modalities and details of implementing this decision, which are being worked out, will be announced separately," he said.
Sinha proposed no changes either in direct taxes or in indirect taxes.
Again finance minister Sinha presented another interim budget seeking funds for four months, this time for the National Democratic Alliance, which won the elections under Atal Bihari Vajpayee in 1998. Sinha’s was the shortest interim budget speech -- rather a vote on account -- without any policy measures, since he had to present the full budget a few months later.
Finance minister Jaswant Singh presented the last budget of the Vajpayee government. He announced a host of measures under indirect taxes, including the service tax. He also did something no finance minister has done so far in an interim budget; without seeking to amend the Finance Bill, Singh proposed a host of measures under direct taxes such as extending fiscal benefits to new power projects, extending long-term capital gains tax by another three years, and a new tonnage tax scheme for the Indian shipping industry. Singh also called for revisiting the standard deduction for income tax purposes for the salaried class and exemption of capital gains tax on acquisition of agricultural land by the government from farmers.
Finance minister Pranab Mukherjee proposed no new policy measures and presented a vote on account. He devoted as many as 40 paragraphs out of a total 69 paragraphs of his speech to elaborate on the performance and policy measures of the UPA.
Presenting the interim budget -- after crafting a package to boost the economy during the global financial crisis that included a farm loan waiver in 2008 -- Mukherjee promised to bring the country back on the path of fiscal consolidation.
Presenting the interim budget, finance minister P Chidambaram called upon all political parties to stick to the path of fiscal consolidation.
Chidambaram made a last-ditch effort to boost the electoral chances of the Congress by announcing the One Rank One Pension for the armed forces. However, as former chief statistician of India Pronab Sen recently told Mint in an interview, the OROP was not a new scheme as it fell under the pension head for defence forces. Chidambaram was later criticized by his successor Arun Jaitley for under-allocation of funds for the OROP as the burden of fulfilling the promise fell on the Narendra Modi government.