Should The 2017 Budget Be Delayed Due to Elections?

Pros and Cons of moving up the budget date

January 11, 2017

The Union Government has advanced the annual budget to February 1, 2017 this year. Most of the opposition parties (and even Shiv Sena from the NDA) are demanding from the EC that the budget should be delayed as the election schedule for 5 states including UP has been announced, and the model code of conduct is in force. If the EC doesn’t heed their request, they may even approach the courts.

Let’s see the pros and cons of delaying the budget presentation date:

Why should the Government go ahead with budget on February 1 this year?

It will help the Government departments start spending the money allocated right from the beginning of the fiscal year. Normally, it takes sometime into the new year for spending to start, since the budget has to be passed by the Parliament with amendments; this makes it more difficult for Governments to spend the allotted money fully within the year and implement their programmes effectively. Any delay will delay the budget by 7 weeks from the revised proposed date and by more than a week from even the usual date, thereby delaying the implementation of many of the budget proposals, and even resulting some of the proposals being dropped ultimately due to inability to spend the money in ‘less than 12 months’.
Once the budget is advanced, it will also help in more effective resource mobilization.
Budget is a statutory annual exercise of the Government. Advancing it to February 1 was announced in September 2016 itself, when it was known that the state elections are due in February-March 2017; it was not opposed on this ground by the Opposition or the EC then. If the EC had wanted, it could have scheduled the election dates appropriately. If the Government is forced to delay the budget, it will set a bad precedent. (The only time a Government delayed the budget before the elections in a similar situation was in 2012 when the Government had to present an unpopular budget before state elections and so delayed it happily.) Since India is in election mode once or twice a year, this will make our policy implementation more ineffective than at present, by design.
Budget is for the entire country, not just for the 5 states going to polls. No Government can afford to make huge concessions for the entire country just to win 5 state elections. If they do, they have the onerous task of budget-balancing. At best, the Opposition can say that the Government should not announce any exclusive sops to the election states.
In any case, like with all previous budgets since Independence, post- budget, the Opposition is most likely to claim that the budget is pro-rich, anti-poor, lacks any beneficial measures etc; so the budget should only work to the advantage of the Opposition, as they will get more sticks to beat the Government with during the election campaigns.
There is no proof that people judge a Government’s performance on the basis of just the latest budget proposals, ignoring the performance of the Government thus far.
Since demonetisation-remonetisation period has just ended, the economy needs stimulus to bring it out of the recession, and provide relief to the people. Opposition has been criticising the Government for the trouble it has caused to the entire population during the demonetisation period. So, if they have the good of the people in mind, they should let the Government provide quick relief, not ask the Government to delay it.

Why should the Government postpone it to March 9 or later, this year?

BJP/ NDA will get an undue advantage. (And this claim is questionable; we’re likely to see proof of this from the adverse reactions we’re likely to hear to the budget proposals from the Opposition leaders after the budget.)

And there’s no second reason.

On balance, it appears that there is no strong case for postponing the budget, esp because the nation has just been subjected to demonetisation which has strained the economy like no move of any Government ever before. Delaying any reliefs to the people will be wrong. The Government didn’t decide on the dates of the elections. The EC could have scheduled the elections a month ahead if it had wanted. Hence it will be unfair on the part of the EC or the courts to punish the people and the Government in this situation. At best, the EC can ask the Government not to announce any exclusive sops for any of these 5 states.

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Ganesan Subramanian

An Engineer-entrepreneur and Africa Business Consultant, Ganesan has many suggestions for the Government and sees the need for the Govt to tap the ideas of its people to perform to its potential.

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