Budget secrecy is too archaic now to be continued

The finance ministry’s insistence on holding on to the archaic tradition of budget secrecy is laying it low. A number of senior officials are down with covid because secrecy has forced them to share physical files during a pandemic.

The minister herself has remained safe so far, but for how long? Given how extremely infectious the omicron variant is, she has been very lucky so far. What if she catches the bug between now and February 1?

Since there is a clear choice between remaining healthy enough to present the Budget and holding onto a now unnecessary notion of secrecy, the FM should unequivocally choose the former.

The pandemic should be the final nail in the coffin of budget secrecy. It used to serve a purpose because otherwise those in the know could make unfair gains through stock market decisions or business deals.

But now, with the bulk of indirect tax subsumed under GST, that’s no longer the case. GST rate decisions are taken by the GST Council, and so find no mention in the Budget.

What remains are the few items on which excise duty is still applicable, such as alcohol and fuel, and a few items on which customs duty still applies.

Is this ragbag worth all the secrecy precautions and the risks being taken?

True, direct taxes are still a matter for the Budget. But given that any new income tax rates are going to apply from the start of the new financial year, two months after they are announced, there again seems little point in trying to keep these decisions secret.

In any case, these are now set in stone at current rates. Tinkering with slabs for personal income tax and some exemptions for the companies is too trivial to warrant such draconian secrecy.

Meanwhile Part A, which deals with expenditure surely does not need to be secret. In fact, it would benefit hugely from being made public a few months before the Budget, allowing experts to provide their comments so that what is finally announced on Budget day is an improved version. This is the international practice.

The point is this: Budget reform is not something the Modi government has shied away from.

In 2016, for example, the Cabinet had decided to merge the railway budget with the Union Budget. So in 2017, for the first time after 92 years, a unified Budget was presented.

This was a much-needed reform because there was no need for a separate budget for the railways, given that other aspects of the Union Budget now overshadow the railways in terms of outlay.

The reform has thus been a success, both economically and politically because the rail minister is now just another minister. The old clout is gone. 

Again, in 2016, there was another major reform. The government decided that its Budget would be presented on February 1, rather than on the last day of February. This was another necessary change, albeit one that has led to other problems such as the Economic Survey having data for three quarters only.

Be that as it may, the thought behind bringing the Budget presentation forward by a month was that government expenditure on various schemes and projects could begin on April 1, and not a month after.

In the old days, given how much time it took for the money to reach the spending departments, nearly four months of the financial year were wasted with no expenditure taking place.

True, it is too late to make any change now but I think the government seriously considers sending budget secrecy where it belongs now — the National Archives.