Did You Know This About The Budget?
Age Quod agis, one might want to tell the Finance Minister, as he prepares to present the budget.
‘Whatever you do, do well’.
As the government focuses on judicious spending, and tries to give the economy a boost, and will aim to please consumers, investors and taxpayers alike, we got a little curious. Without dwelling much on the numbers, here’s a slightly unconventional look at things around the event.
The language of it
The word ‘budget’ has its roots in Latin. Back in ancient Rome, a bulga was a leather satchel. This in turn became bougette in French, and later entered English in its present form. Over time the word came to refer to the contents of the satchel.
The Chancellor of the Exchequer of the British government, the equivalent of our finance minister, was said to ‘open the budget’ when he took out his papers to present the country’s accounts in parliament.
So, why is a picky person a ‘fussbudget’? Visualise someone who is always rummaging around, trying to locate something in a bag jangling with keys, coins, and what not. You get the idea.
The ritual of it
The present practice of tabling the statement of accounts in parliament goes back to the 1730s. In 1764, the Whig George Grenville’s budget gift of a Stamp Act—a tax asked of the colonies in America—received widespread protest.
Grenville is known to have grumbled then that every ignoramus in the nation felt the need to comment on public policy, and it was impossible to carry out government business. He even called the annoyance ‘licentious’. Some things have not altered much in the 250 years since.
Fortifications
All that laborious talk in parliament is sure to parch one’s throat. Manmohan Singh and Jaswant Singh have both been recorded speaking for two hours, and in the latter case a little more! In the British House of Commons, the only member allowed to lay hands on some alcohol on Budget Day is the Chancellor.
“If you are cold, tea will warm you; if you are too heated, it will cool you; if you are depressed, it will cheer you; if you are excited, it will calm you.” –William Gladstone
While some preferred whisky, and others brandy, in contrast to his advice quoted here, William Gladstone treated himself to a weird cocktail of sherry and eggs.
The timing
The British followed an April to March financial cycle, from when they adopted the Gregorian calendar. This was continued in India because it fell in line with the agrarian economy and the harvest season. It also coincided nicely with the festival of Baisakhi and the Hindi New Year.
Chop chop
After all the general discussions on the budget conclude, parliament goes on to put things to a vote. The ‘grants’ sought by the government will need to be approved, sometimes reduced. This process is known as a ‘guillotine’.
Guillotine: noun — a machine with a heavy blade sliding vertically in grooves, used for beheading people.
The allusion to the deadly French device is presumably because some of the votes are a smooth pass, without any arguments.
Vote on Account
In an election year (such as in 2014), the government is allowed to take out money only till March 31, to cover expenses. Additional funds need to be approved by Parliament. This is where a ‘vote on account’ comes in. It involves a request for permission to use enough money to tide over the time till a new government takes over power.
Even a regular budget takes 8–10 weeks to approve, so a vote on account is used to provision funds for the intervening period.
Foreign Aid
Disaster relief, improvement of security, and aid to boost growth are some of the areas where India funds foreign countries. While the amount is not huge in the larger scheme of things, it is substantial enough not to be ignored. The amount budgeted for in 2013–14 was 7018 crores. The three main beneficiaries of this sum were Afghanistan, Bhutan and Myanmar, with the Himalayan kingdom getting the biggest chunk.
The man from Coimbatore
The man who presented independent India’s first budget in November 1947, was R.K. Shanmukham Chetty. A mill-owner’s son from the Tamil Nadu city of Coimbatore, Chetty has also served as the Diwan of the princely state of Cochin. He had his share of admirers and opponents. Embroiled in a row over tax investigations, Chetty was removed from the cabinet.
“It has also been agreed that till the end of September 1948 the two Dominions will remain under a common currency system managed by the Reserve Bank, although from the 1st April next Pakistan will have its own overprinted notes and coin.” – Speech of Shri R.K. Shanmukham Chetty, minister of finance introducing the budget for the year 1947-1948
Overprinting on paper currency is done to mask design elements pertaining to an earlier regime, and to obliterate unwanted historical references, until freshly designed notes can be deployed.
For example, when the Shah of Iran was overthrown, elaborate efforts were undertaken to cover his picture with a new design.
Another South Indian Economist
After Shanmukham Chetty, the mantle passed to John Mathai, an economist who was also India’s first Railways Minister. Mathai’s first budget speech was well received because he kept it short and simple, preferring to make available a printed booklet with all the details. He actually made it too simple. His speech ended up being a small reflection on economic policy.
Mathai was also the first chairman of the State Bank of India. While presenting the budget for 1950-51, Mathai alluded to the formation of a new policy group to be setup—the Planning Commission. He resigned a few months later however, as he felt smothered by the Commission, which according to him was morphing into a super cabinet.
Finance Minister to President
Two of India’s finance ministers have gone on to assume the highest position in the country. The first finance minister to become president was R Venkataraman. He became the 8th President of India.
Pranab Mukherjee, the incumbent president, assumed office as Finance Minister of India for the first time in 1982.
So, bona fortuna, Mr. Jaitley as you follow some illustrious footsteps.