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Finance ministry in a Web of dilemma

A K Bhattacharya

The finance ministry seems to be suffering from a strange dilemma. Having entrusted the finance minister's advisor, Vijay L Kelkar, with the responsibility of preparing a report on tax reforms, the ministry is now wondering if it should distance itself from the recommendations made in these reports. Why is this dilemma?

A senior finance ministry official believes that the recommendations made by the Kelkar report should not be equated with what the ministry thinks and would do in the budget. "These are recommendations made by the finance minister's advisor and would be the starting point of a discussion for the forthcoming budget," he explained.

But that is not the impression one got when finance minister Jaswant Singh said a few weeks ago that he believed in the transparency of the budget-making process and he would like his proposals to be posted on the website for a wider debate among different stakeholders in the economy.

The big hope then was that Jaswant Singh would achieve at the Centre what Chandrababu Naidu had already done in Andhra Pradesh. That hope has now been belied.

Indeed, what one now sees in the finance ministry website (http://www.finmin.nic.in/index.html) is nothing but a series of recommendations on how the indirect tax rates should be changed in line with the oft-stated agenda of taxation reforms. The report on the direct taxes is no different either.

Raja Chelliah also undertook a similar exercise in 1992-93 and presented two reports to Manmohan Singh, the then finance minister. Those were the days when the Internet had not become that popular in India.

So Manmohan Singh did not think of posting the Chelliah committee's reports on indirect taxes on the Web. But, instead, the hard copies of those reports were distributed to the media and experts in large numbers to ensure that there was a full-scale debate on the path of taxation reforms the government ought to follow.

So what is so novel about the Kelkar committee report? But the more important question is, why should the finance ministry officials think of distancing themselves from the committee's report?

The finance ministry's fears are that the hype created by Jaswant Singh's announcement of making his budget proposals available on the Net is likely to create an impression that the Kelkar committee's recommendations, now available on the finance ministry's website, are no different from the finance ministry's thinking on the issue.

The fact is that the dyed-in-the-wool bureaucrats in North Block are yet to accept Kelkar as part of the finance ministry. They point out that Dr Kelkar's brief is to look at issues and policies referred to him by the finance minister's office.

That is why they are at pains to explain that the Kelkar committee's recommendations are not to be confused with the finance ministry's budget numbers and revenue proposals presented at the end of the year.

There is another reason that the North Block bureaucrats are so wary about the Kelkar committee's recommendations being confused with the ministry's budget proposals. This is the convenient excuse of Parliament's first right to be informed about the budget proposals.

But Chandrababu Naidu managed to avoid any crisis in the Andhra legislative assembly. He set out his provisional budget proposals on the Net a few weeks before actually presenting them after suitable modifications in the Assembly.

There was no furore or no accusation of breach of privilege. But finance ministry bureaucrats are worried that if the distinction between the Kelkar committee's recommendations and the budget proposals are not made clear now, opposition political leaders could raise Parliamentary privilege issues later.

Going by the nature of the current dilemma and debate in North Block, it does appear that Jaswant Singh's grand plan to have an open budget-making exercise has been nipped in the bud.

Which bureaucrat would want an open debate on the budget proposals before they are finally presented in Parliament? Similarly, which politician would like such transparency? Neither of these powerful stakeholders in the Indian polity would like to lose out on the advantages of influencing decisions through privileged access to information.

But in spite of such roadblocks to introducing transparency in the budget-making process, Jaswant Singh should not give up his plans to present a provisional budget through the Net for a wider public debate.

The forthcoming winter session of Parliament is a grand opportunity for him. He should prepare a provisional set of budget proposals and present them to Parliament and immediately follow this up with those being posted on the Net.

Let there be a public debate and discussion over those proposals for about eight weeks. He could then modify them on the basis of the feedback and present the full budget on February 28.

The concerns of bureaucrats and the politicians cannot take precedence over the people's right to be heard about the policies that would eventually govern them.

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