Vote on Account wise way of going about interim budget: Sen

Budget buzz: Finance Minister Nirmala Sitharaman is all set to present interim budget 2024-2025. This is for first time when Sitharaman will be presenting interim budget. While dressing a garing of corporate honchos at one of events of Confederation of Indian Industry (CII), Sitharaman clarified her intention, and said, “ budget this year will be just a vote-on account.”

Pronab Sen, one of India’s renowned economists and former chief statistician of India in an exclusive conversation with Republic Business said, “What FM has said is sensible. You are coming into an election, you do not want to sdle next government, whoever is coming. All you do is just vote on account, which is essentially what went re last year and is being continued for few months of this year before next budget is presented.” 

Sen ded furr that in interim budget speech, “You make promises, saying that we have left enough space, so that if we come back, we present full budget, this is what we will do.”

Edited excerpts: 

On Fiscal Deficit 

We will probably meet fiscal deficit target this year which stands at 5.9 per cent. I don't think that is a tall ask, because fiscal deficit target was not that demanding. Next year, which is going to be real issue because that is when you are having a large deficit correction. From next year, correction of over 0.8 per cent is a tall task. 

On Divestment and Disinvestment

Less receipts from divestment or disinvestment is perhaps not biggest problem. It is a problem, it is way in which budgets are formed.  Budgets are not only about revenue and expenditure intentions of government. y are also meant for political signalling. Also, I accept that market conditions are not favourable which is also derailing divestment process. 

Divestments are relatively easy. All you have to do is to issue more shares, sell m in market and dilute government's stake. Disinvestment is much tougher. Disinvestment has to be done carefully. And that takes time. So y may have announced it, but just preparatory work is going to take time. And that's a good thing, because you don't want to hurry things through just because you need some money. That's a b way to do it.

Not meeting divestment target

Now, think about really big one, Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS). What we do know is that year before, budgeted amount was Rs 60,000 crore and subsequently government allocated Rs 1,20,000 crore. Why? It is not because government did not know that y would have to increase allocation, which y alrey started doing.  

That was essentially a way of bringing fiscal deficit down. You have disinvestment targets, government knew it was not going to meet m. But that also helps to bring fiscal deficit down. 

On sustained tax buoyancy

Now, it's difficult to say wher robust direct tax growth will be sustained in long run as it depends upon many reasons. lazy way of doing it is to say that re is better compliance.