India’s union budget: changing scope and the evolving content

On the Indian economic policy canvas, the Union Budget, in general, and the Finance Minister’s budget speech, in particular, has a unique relevance. As a policy event, the attention it receives stands out in comparison to other domestic policy announcements and the routine presentation of government budgets in the developed world or even in the emerging economies. In part, this is due to the nature of the Indian economy, where development process until well into 1990s has been largely state-dependent, driven predominantly by the public sector and where discretion in respect of tax and expenditure policies enjoyed by the government of the day have been amenable to influences exerted by different interest groups.

The Union Budget and its attendant process has not only reckoned with these realities of public policy making in India, but over the last two decades has become an important instrument of policy change and implementation of economic reforms in the country.

The paper reflects on the changing scope of the Union Budget and the Finance Minister’s speech and assesses the evolving content of these instruments. It makes a case for speeding up progress in this regard and advocates for an early implementation of some of the pending reforms in fiscal policy and the underlying budget processes.

The paper argues that the Union Budget and the Finance Minister’s budget speech is not merely a fiscal policy tool, but it also serves other interrelated objectives. These include the use of the budget as an accountability tool, as a planning tool to operationalise a multi-year plan perspective and as an anchorage for policy coherence and coordination. Based on the analysis, the paper identifies several fiscal policy measures and improvements in the underlying budget processes with a view to improve coherence and effectiveness of public policies.