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What will not change in the Budget
February, 11th 2008

In a few days the papers will be full of the guesswork and forecasts in the run-up to the Union Budget 2008. Much advice will be aimed at the Finance Minister on what he should or should not do with the tax regime. Refraining from adding to the din of voices, let us ask what will not happen in the budget, and not change, despite all protestations to the contrary? We are supposed to be moving towards a more sensible management of the economy, reducing the deficits of the St ate and Central Governments.

Management jargon

There are targets for a steady progress towards fiscal responsibility. The FM has already told us he had hit the pause button on them. There will be little attempt at catching up and the pause could continue. Next, something called an Outcome Budget was mentioned in the last years Budget session. In other words, the government resolved not just to throw money at various problems but measure, by looking at the outcomes, whether and how well they had been spent. It is doubtful if the Finance Minister will go so far as to actually table anything like a statement of targets and actuals. In other words, a basic performance score-card, which every manager around the country expects to face in the first week of every month, would remain an exotic management jargon for the government.

Bizarre mindset

I have always found the distinction between physical and the financial targets deeply disturbing and amusing. If, for example, you allocated Rs 5000 crore for a poverty alleviation scheme or anything else indeed, spending the money is one dimension and the actual results achieved are, if you go by the governmental language, another issue. In other words, if you had to spend a hundred crore for a large construction project and managed to disburse all of it before March, you qualify for one round of applause even if the roads are not fully ready and the bridge is only half complete; or in the case of a social upliftment programme, the beneficiaries received only a fraction of the money spent due to various kinds of wastages and leakages. This bizarre mindset informs much of the bureaucratic thinking for whom, to this day, non-disbursal is a greater failure to worry about and explain, than not reaching the goals. Just wait and listen to the various charges and counter-charges that will soon be on air, on the much-publicised national road network, the scholarship programme, and the guaranteed 100 days of work (and wages) a year and so on. Much the same, no doubt, will apply to health and education areas as well. A number of new schemes with new acronyms will indeed be announced this year too. However, little will be said about what happened to the past years flagship projects and what one learned from their flaws.

No basic change

The bureaucracy is used to behaving as if it were above natural laws, and is immune to any new learning in the matter of administration. Insulated by the civil service which has a tradition and mindset deep in the past, far removed from the competitive world of markets, they will continue to make projections and revised estimates with no feedback loop to learn from past mistakes much less admit them publicly to the people of India. This is why if I were to be honest, I should foresee no basic change in the character of this years Budget.


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