Swarup: Running against time

New Delhi, May 21: North Block will take between six and eight weeks to prepare a budget after a new government is sworn in.

Expenditure secretary D. Swarup, who is also in charge of the budget-making exercise, told The Telegraph, “It all depends on the kind of changes the new government wants to bring in. If they are wholesale in nature, it will take some time to be chalked out, if the changes are fewer it can be done quickly.”

The new government will be racing against time to prepare a budget. The last government had presented a vote-on-account till July 31 and the new government should be ready with its budget by that time.

Swarup, however, says there are ways to stretch the time table. Asking for more time and a second vote-on-account from Parliament is one way, but is unlikely to be favoured as this could send wrong signals to the global markets.

“The government could present the appropriations budget before July 31 and the Finance Bill, which takes far more detailing, afterwards,” Swarup said. While the appropriation budget details expenditure, the Finance Bill details taxation and revenue-raising proposals.

The new budget will have to take into account the common minimum programme, which is right now being thrashed out by the Congress and its allies.

“Our reading of the manifestos of the coalition parties does not show any great deviation from goals set earlier by Manmohan Singh about bringing down fiscal deficit and cutting red tape to usher in faster growth,” said Swarup. “Which means there will be a continuation.”

The “continuation” may, however, be tempered by some amount of tight-rope-walking to balance various demands by coalition partners.

The Congress-Left-regional parties combine wants the CMP to focus on a policy of divestment as against privatisation, a second green revolution, massive doses of investment in social and physical infrastructure, employment generation schemes, fiscal consolidation for the Union and states, a social security net and strengthening of the public distribution system.

The policy on public sector undertakings is expected to ban sale of profit-making units while mooting a restructuring plan for sick ones. However, the policy will not ban market offerings and outright sale of sick state- run enterprises.

State investment in agriculture and a policy to carry forward a second phase of green revolution are also on the cards, sources said.

Investment in social and physical infrastructure is also likely to be a major priority, with targeted spending on medicare at up to 2 per cent of GDP and on education at 6 per cent of GDP.

Similarly employment generation policies, including separate policies to revive the small scale sector, generate self-employment, rural industries, are said to be in the works.

Fiscal consolidation to bring down the combined fiscal deficit of the states and the Centre from a current high of 11 per cent will also be a priority. Therefore, the combine will not be averse to fine-tuning subsidies or other expenses of the government.

A debt-swap scheme for the states, which is unpopular because of a large number of strings attached, is also likely to be recast under pressure from the Left parties.

Creating a social security net for unorganised sector workers and reforming the public distribution system are the other key issues.