New Delhi, Jan. 1: The Bharatiya Janata Party-led coalition government does not favour coming out with a full budget before an early general elections as such a budget has to be necessarily loaded with soft options.
Top sources today said a final decision on early polls was to be taken by the BJP’s high command on January 11 when it meets in Hyderabad.
The party will, in all probability, go in for polls in April and “in that case we would not like to come out with a budget ... because a budget before elections has to be a soft one. The government should not be chained to such an agenda when we come back to power”.
Instead, it would prefer to come back to power and present a “more pragmatic” budget, an euphemism for a harder budget, which would try to earn more revenue and cut down on subsidies and other populist expenditure.
The minister said that the election decision would be independent of the Saarc summit at Islamabad and was governed by a host of other factors.
The top leadership was already in favour of early polls as were the opposition parties, the senior minister said. When a final decision is taken, it would be communicated to the finance ministry and it would work accordingly by preparing for an interim vote-on-account.
However, other officials added that in the event of a vote-on-account being worked out it “would actually be a mini budget as the government would still be interested in bringing in some soft people-friendly measures.”
There would also be an attempt to announce the party’s and the coalition’s economic manifesto through the statement of objectives for the mini-budget or enlarged vote-on-accounts.
Officials said they would like to spend between 25 to 33 per cent of the total annual expenditure of the government, on development schemes or plan expenses.
Economists have traditionally argued that the higher the plan spend, the higher the GDP growth and lower the poverty figures.
However, the demands of subsidy expenditure, wages and salaries of a huge bureaucracy and interest payouts often mean cut-backs in plan spend to 15-20 per cent of the total expenditure. A full budget before the elections would mean a repeat of this story.
Instead, this year, the government favours listening to the economists. Ministry officials have already pointed out that besides hitting central schemes, any cut-backs would see state governments “already under (financial) strain” sinking further in the red.
Money for plan schemes are passed on to central ministries and state governments who are supposed to fund development work from it.
Especially, as lower funding will give state chief ministers a handle to blame the Centre for lack of development and the BJP for being against the state in question. A factor, which could go against the party in the elections.
The government’s logic is simple: private sector investment is not forthcoming, especially in the key infrastructure sector.
Hence, more government spending was required to lift the growth rate, create fresh jobs and make the reforms a political success.