Letters: Budget basics

This refers to Abheek Barua's article "The Budget - back to basics" (January 29). There are a few additional points to elaborate that the budgetary exercise should revert to "basics". Budgeting is essentially an annual long-term financial planning exercise for the optimum investment of resources for economic growth. It is prepared after due consultation with various industrialists, bureaucrats and institutions, covering all spheres of economic activity throughout the country. However, today, apart from laying down tax rates, personal savings and investment opportunities for the individual taxpayer, annual budgetary planning has no relevance in a challenging global scenario.

Earlier, socialist economic policies were more favourable to the budgetary exercise with a stagnant economy enjoying maximum government protection, rigid policies and minimum market competition. Economic functioning was more subsistence than profit-oriented, and policies less flexible. This has no relevance in a modern competitive market where exports and imports stress on quality. There are also unforeseen changes in global economic patterns.

Further, the inflow and outflow of foreign investment in the economy are governed by various other factors like political instability. A budgetary policy can neither plan nor control the movement of investment on a long-term basis. So, as the writer correctly stated, given the new national and global economic order, the annual budgetary exercise needs to go "back to basics".

C Gopinath Nair Bengaluru

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