Tuesday, February 7, 2023

Will preponing Union Budget help?

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After deciding that the Railway Budget will be merged along with the Union Budget from the next fiscal, the government is mulling over the idea of preponing the presentation of the Union budget in parliament to January-end, every year. The Union Budget is presented by the finance minister on the last day of February.

The step will put an end to the decades-old British legacy of presenting the budget in February.

The government feels that the move would ensure that the entire Budget exercise is over by March-end and all ministries, government-owned entities, and others concerned will get their sanctioned budgetary amount before April 1 to start work. As of now, they have to wait till parliament approves the budget by May-end to get the full amount, giving only 10 months to fulfil the proposals made in the Budget.     

In the current scheme of things, the government after presenting the budget in parliament seeks a Vote on Account in March for “non-avoidable” expenditure (generally around 17 per cent of their allocated money for that fiscal) of various departments (April-June) till the budget exercise is complete after its approval in mid-May.

Experts opine that this process may no longer be required if the Budget itself is presented by January-end.

Government sources believe that advancing the Union Budget will also enable taxpayers to know the tax structure before the beginning of the financial year. Secondly, the move would entail the scrapping of plan and non-plan expenditure, they feel.

Those in favour of the Modi government’s plans argue that the one-year period that the new budget presentation will offer will go in favour of the new GST Bill and offer it a window of opportunity to prove its efficacy.

This is not the first time that the BJP-ruled government is considering putting to rest a British-era legacy as far as the Union Budget is concerned. The Vajpayee government in 2001 had changed the budget timing from 5 pm to 11 am. The then finance minister Yashwant Sinha had presented the Budget at 11 am.

 If the government implements the idea, India would join the league of developed nations which follow the same practice. For instance, in the United States, the President puts forward the budget to the Congress eight months before the financial year begins. This helps the Congressional Budget Office to predict the implications thus measuring the net profit or loss.

In other developed countries, such as Germany, Denmark and Norway, the law demands that the budget should be presented no less than four months before the beginning of the fiscal year. The constitution of South Korea, Spain and France also mandates that the budget be presented at least three months before financial year begins.

By Punit Mishra


Lead Picture: Arun Jaitley leaving North Block for Parliament to present the Union Budget 2016-17. Photo: UNI

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