See: Why a non-event budget should become the main event in India’s budget history

Love me or hate me, but you can’t ignore me. This pretty much sums up the relationship between millions of Indians with their Union budget announced on the first day of February every year.

Budget time is when economists get license to pontificate. Business leaders are summoned to Delhi for advice. Lobbyists are having a field day. The media is chasing their Black Friday moment. And senior North Block officials are sequestered in a basement for weeks. But does the average Indian care?

Apparently not. According to Google Trends, the number of searches using the word “budget” has been in secular decline since 2004. The peak of interest was in the case of the announcement of the 2009-10 budget, which coincides with the global financial crisis. Interim budgets seem less popular than full budgets. Current interest in the budget is almost a third of what it was 15 years ago.

Is this growing indifference worrying? It depends. If it is because the budget is increasingly devoid of policies, we would be concerned. If it is because the budget figures are becoming less credible, that would be just as sad. But none of these reasons seem to hold much water. On the contrary, budgets have become more transparent, accessible and the underlying figures more reliable in recent years.

The lack of interest in the budget is a positive development. Many important policies are announced throughout the year, making political statements a perennial exercise. For example, many saw the 2020 budget as a continuation of 4-5 mini-budgets into the year. A good policy announced on time is better than a perfect policy that is significantly delayed. Year-round policymaking, therefore, is a welcome break from consolidating all key policy announcements into a single day of the year.

While the monetary authorities worked hard not to surprise investors, the fiscal authorities kept their option of periodically shocking taxpayers. Central bankers publish their monetary goals and rules, involve non-state actors in interest rate setting, provide forward-looking guidance, and publish minutes of their discussions. The tax authorities do none of this. Why?

Part of that may be a hangover from our colonial past. As the British administrators did not trust the Indians, they announced the budget in the evening to give producers and tax collectors the night to work out the changes and minimize tax evasion. Fortunately, this practice ended in 1999, when the time for the budget speech was moved from 5 p.m. to 11 a.m. The element of trust and, therefore, the temptation to surprise taxpayers, however, remained unaddressed.

A mixed bag of magic tricks

The trust component has two parts. First, the unusual practice of confining Finance Ministry mandarins to the Northern Block. Some say the sequestration is done to ensure that these officials are working around the clock to prepare the budget on time. Others believe it is to reduce the risk of key policy announcements leaking before the budget. Either way, such a practice reflects an imperial mindset of not trusting senior officials to handle sensitive issues or complete their assignments in a timely manner. Its existence can only be justified by the inertia of the system.

Second, surprise taxpayers every year with new rules and new tax rates. Such a practice seems to bring out the worst behavior in everyone. Corporate lobbyists are working hard to exploit the opportunity to change tax rates and tariffs in their favor. Politicians use tax breaks to please special interest groups or to flatter their voting banks. Who can forget ND Tiwari’s 1988-89 pre-election budget, courting women by cutting taxes on kaajal and kum-kum! And, taxpayers, who are declared untrustworthy until innocent, reciprocate in kind, dodging taxes wherever they can.

Fortunately, budgets are becoming more predictable. The Goods and Services Tax (GST) has reduced the ability to change tax rates at will. There are fewer instances of blatant patronage in fiscal policies as happened during the Tiwari era. Media glare and microscopic scrutiny by experts of every political announcement has made it more difficult to announce policies without valid justification.

The success of a budget should not be measured by the extent of its surprises for taxpayers, but by its little effect. In fact, the budget should involve all taxpayers and investors in the preparation process, not just the one with deep pockets or connections in high places.

The budget should be about empowering people, not controlling them. The internet has opened up new avenues to make the budget more participatory and, therefore, empowering. Governments are moving beyond user feedback to engage citizens in collaborative policy-making, as evidenced by Iceland’s participatory constitution, Reykjavik’s digital participatory budgeting and Estonia’s e-law portal.

Brazil has been a pioneer in electronic participatory budgeting – often at the provincial and municipal level – offering citizens the opportunity to vote for projects via the Internet. Participatory budgeting initiatives including online voting are available in Paris, New York, Lisbon, Madrid and Mexico City.

There are also useful developments in this area in India. Nirmala Sitharaman launched the Union Budget mobile app in January 2020, ensuring quick, easy and hassle-free access to official budget documents for the general public. As a leader in e-government, India has the technological prowess to engage its citizens in the budget preparation process. It is time to widely adopt electronic participatory budgeting in all forms of government.

Blink and miss it

In the past, Indians had shown keen interest in the budget, but for the wrong reasons. They had to be careful because of the fear of missing something (Fomo). The budget was the mother of all political statements. Major tax rates and duties were constantly changed and voters did not know what to expect. One could ignore the budget at one’s peril.

Fortunately, as policy changes have become more sustainable, predictable and inclusive, Indians are overcoming their Fomo. This is a welcome development. An eventless budget is set to become the biggest event in India’s fiscal history.


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