‘Don’t be so critical…. actually it’s a good budget if you don’t view it from the economic angle!’ read the caption of a June 1980 ‘You Said It’ cartoon by RK Laxman. That, too, was a Lok Sabha election year, and finance minister R Venkataraman proposed new tax and some relief measures.
He disclosed that there would be no ‘significantly adverse impact’ on the economy as a result of leaving a huge deficit unattended to. The budget increased the I-T exemption level and made items like TV, controlled cloth, toothpaste, and soap cheaper, giving the common man – and Laxman’s Mrs Common Man – reason to rejoice without looking at the ‘economic angle’.
Those ‘thrilling days’ are long gone. Undoubtedly, GST has had the biggest impact on the budget. Since most commodities are under GST, the budget’s greatest quick thrill has disappeared. However, the structure and exemptions of I-T are relevant to the common man and remain within the budgetary domain. There are several pre-budget speculations every year regarding potential tax cuts, most of which don’t materialise.
But are a few thousand rupees more in additional tax exemptions worth the hullabaloo? Well, such relief induces more of a feel-good factor than any meaningful economic assistance for individuals. GoI presents suggested goals, proposed financial objectives, and policy updates for that year. Why on earth should that be of such interest? Why so much buzz, Kolaveri Di? Is there still much mystery hidden inside the red briefcase – now, a red pouch – that the FM opens in Parliament as if to say, ‘And the Best Picture Oscar goes to…’? Indeed, there are times when a budget’s gross impact might be extraordinary due to some landmark decisions and policy announcements. The nation has had its share of revolutionary budgets. 1986 VP Singh’s CSB (Carrot’n’Stick Budget) marked the beginning of the end of licence raj and established MODVAT, the precursor of GST.
1991 Manmohan Singh‘s EB (Epochal Budget) marking the official start of liberalisation. It reduced excise and customs duties and was the last blow for licence raj.
1997 P Chidambaram’s DB (Dream Budget), where, to recover black money, GoI announced a voluntary disclosure of income scheme. The maximum marginal income rate was also slashed.
2000 Yashwant Sinha’s MB (Millennium Budget) laid out a roadmap for the growth of the IT sector.
While Nirmala Sitharaman‘s 2021 budget is widely referred to as the O-in-a-C (Once-in-a-Century) budget due to its enhanced focus on privatisation, robust tax collections, and investment in infra and healthcare, her 2022 budget had the real opportunity to go down in history. Although we’ll have to wait a few more years to evaluate its effectiveness, that ‘crypto budget’ had the potential to usher in a new era in the digital economy, whose seed was sown by Arun Jaitley in his 2018 budget.
Only some budgets have the potential to be revolutionary. None of the five Manmohan Singh budgets or eight Chidambaram budgets that followed their 1991 and 1997 ones matched in their impact.
Overall, an FM has a unique opportunity to spread the password to ‘dream’ via the country’s economy and lifestyle through a budget exercise. Rarely does an FM succeed in utilising that opportunity. A budget outlining a policy for AI or semiconductor manufacturing later this month could be considered ‘historic’.
So, yes, a budget goes well beyond your and my personal I-T calculations, or the sudden increase in price of umbrellas or diamond rings (still outside GST’s purview). A budget may well become society’s ‘open sesame’ mantra. However, all the buzz around it is almost always about inconsequential things made to look very consequential. In our age of hype, the budget exercise is the big daddy of them all.