Forthcoming Budget Does Not Hold Out Much Promise

After last year’s experience of fudged fiscal statements, Union Budget numbers appear suspect. The fear is that falling revenues will again lead to reduced public spending

- CP Chandrasekhar, Jayati Ghosh

It’s that time of year again, when people start talking about what the Union Budget may bring in the shape of fiscal policy changes and what it will show about public finances in the previous year.

But increasingly, such discussion reflects the triumph of hope over experience, since the Budget of the previous year has shown that we would be foolish to take the numbers seriously.

Last year was dramatic because the Finance Minister presented two Budgets that were both divorced from reality: one an “Interim Budget” on February 1 that made extravagantly optimistic guesses about numbers for the last quarter of the fiscal year 201819, and the later July Budget that presented completely false revenue and expenditure numbers for that same fiscal year.

Since those inflated numbers were then used as the basis to arrive at Budget projections for 2019-20, there is little chance that those Budget estimates will be met in the current year.

The question of course, is whether the Finance Minister will once again choose to cover this up and mislead Parliament on the true fiscal numbers for 2019-20. The chances are that she will once again assume a very rosy picture of tax collection in the last quarter of this year, to generate revenues estimates that are unlikely to be met.

Since Budget numbers can no longer be trusted, now we have to rely only on data from the Controller General of Accounts (www.cga.nic.in) to get the real picture.