Mains 2016: Advancing the Budget Date

Context:

The union government had decided to advance the budget presentation date by a month from the previous norm of end-February.

The aim is that all spending authorities within the system, and those financially dependent on the Centre, be in a position to work out their activities with assured resources in the beginning of the year itself.

Advantages:

1. It will bring in “more efficiency” as public expenditure will start from first day of the fiscal.
2. A January Budget will allow the process to be aligned with financial year.
3. Government departments, agencies and state-owned companies would know their allocations right from April 1^st, the beginning of financial year.
4. Currently, as the full Budget gets passed by May, most of the expenditures happen in the third or fourth quarter. If the Budget happens in January, expenditure can be streamlined.
5. This will allow taxpayers to know the tax rules before the start of the financial year.
6. It would also help the private sector to anticipate government procurement trends and evolve their business plans.
7. The State governments will get more time to actually utilize the funds.
8. It will eliminate the need for the executive to obtain a vote-on-account budget approval to incur expenditure during the first two months.

Concerns/Challenges:

1. It may curb time for parliamentary scrutiny. Parliamentary standing committee would not get enough time to scrutinize the Budget.
2. One big disadvantage of advancing the Budget preparations is lack of comprehensive revenue and expenditure data.
3. To read the Budget in January, the centre will have to start preparing it by early October. To go by less than six months of data and making projections for the full year and the next year will be a difficult task.
4. Effective Budget planning also depends on the monsoon forecasts for the coming year, making the advancing the whole exercise even more difficult.
5. For nearly 10 days in the latter part of January, ministers and their officers are distracted from parliamentary work owing to their involvement with Republic Day celebrations and follow-up events.

Conclusion:

With annual financial resources approved and bestowed on April 1, a more planned and regulated expenditure profile during the year is expected. However, It is likely the date of presentation of the budget may see another revision after the Shankar Acharya committee submits its report.

Reference:

1. Advancing the budget, editorial, The Hindu
2. Pros and Cons of advancing budget date, Gautam Sen, The Hindu businessline
3. Union budget in January end? Pros and Cons, Business standerd
4. Government hits fast forward on budget process, Policy, Livemint
   

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This Article is a part of ForumIAS Mains 2016 Initiative. For a list of all articles that will be published on ForumIAS Portal for Mains visit https://forumias.com/portal/mains2016