Union budget for the common man, in 216-page manual
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COMMENTS 
Lifting the veil of secrecy surrounding the annual budget, India’s Finance Minister Pranab Mukherjee has put the entire process in the public domain to enable a better understanding of the exercise by everyone
Few processes of governance have greater mystery attached to them than the making of the annual budget. What begins as hectic talks between various arms of the government machinery at the Centre and the states and the finance ministry, towards the latter part of the calendar year, builds into a frenzy as the process gains momentum and finality towards the end of the fiscal.
The budget speech itself is among the most closely followed events of the year. Little, however, is known about how the detailed financials of such a gigantic enterprise are compressed into a single document.
This veil of secrecy has been lifted. In a 216-page document, the finance ministry has demystified both the product and the process. The document traces the history of the budget, explains it in simple language, and outlines its intricate passage through a fiscal year.
Releasing the first-of-its-kind budget manual of the Union government detailing various aspects of the exercise, including its constitutional provisions, structure of government accounts, and budget preparation, Union Finance Minister Pranab Mukherjee said: “The budget is shrouded in mystery. Even in the whole text of (the) Constitution, if you try to find out the word budget, you will not get it. Article 112 of the Constitution, which deals with the budget, uses the phrase ‘annual financial statement’.”
In fact, the budget-making process is not only secretive but many of the functions and activities related to it are not codified or placed in a single document. It is this lack of transparency in the process that this manual seeks to do away with.
Prepared by the budget division of the Department of Economic Affairs (DEA), the manual, the finance minister said, was a comprehensive document explaining in detail the procedures and activities connected with budget-preparation and would serve as a guidance document to officials involved in budget-making in the finance ministry as well as in other ministries and departments. It is also expected to act as a reference document for interested readers and stakeholders.
At the outset, the manual highlights constitutional provisions related to the budget, describes the contents of various documents, and deals with the organisational aspects, roles and responsibilities of Parliament, parliamentary committees and the responsibilities of various wings of the executive in the budget-making process.
Mukherjee pointed out that apart from explaining the Centre’s accounting and classification systems, the manual deals with the working of the Consolidated Fund of India, the Contingency Fund of India and the Public Account of India. Its core sections explain the chain of activities related to budget-preparation, right from the issue of a budget circular in September to budget day in February, including the processes of estimation of receipts and expenditure, their firming-up and finalisation through pre-budget meetings, and their compilation.
A comprehensive calendar of budget-related activities, timelines, details of related duties and responsibilities of officers and staff, together with security and ‘lock-in’ procedures, have also been brought out. In short, an attempt has been made to incorporate all budget-related issues in the manual to make it a self-contained, one-stop guide.
In his foreword to the manual, Finance Secretary Ashok Chawla writes that it is expected to “bring about greater transparency” in budget-making. Indeed, deciphering the budget process has always been a difficult process, though a cursory reading shows that over the years most details have been ferreted out.
The manual explains budget-related terms through a comprehensive glossary and outlines key principles of the budget such as that it is made on a cash basis as opposed to an accrual basis, a principle of accounting followed by companies, and that the rule of lapse says unused funds are not available the next year.
It lays bare the process of the budget and the role of organisations involved. For instance, the RBI is closely involved in debt management aspects of the budget.
The level of detail also makes it an important document for the budget division of the finance ministry and other ministries and departments, laying down clearly the budget’s timelines and duties of various officers.
There is some interesting trivia here too. That India’s first budget was presented by James Wilson on April 7, 1860. At that time, India followed a May 1 to April 30 fiscal. The current system of April to March fiscal began in 1867.
Source: The Hindu, September 29, 2010
The Economic Times, September 29, 2010