When Figures speak better than Words


(01.02.2017) : Union Budget speeches are analysed live on channels and scores of experts offer comments even before the documents, which accompany the budget speech are put online. In fact, a lot of truth lies hidden in these documents which are commonly called "Fine Print". Tax proposals and expenditure details are often dry reading than listening to an electric speech with metaphors and quotations.

Union budget 2017-18, comes after demonetisation of 86 percent of the currency that was in circulation and Prime Ministers New Year eve speech. Economic Survey of this year has confirmed that demonetisation. Is a shock which would have adverse impact on economic growth. But like any government document including the budget speech, it supports demonetisation. The Union budget 2017, was not short on Words. In other words, it did not suffer from a Narration Deficit. But, to rate a budget on speech alone is the last thing one can do.What do the figures tell and what is the gap between the words and figures are the pertinent aspects to be seen. Let us see a few illustrations before requesting the readers to rate the budget.

1. Speech says we are a tax non - compliant community and coming from Finance Minister on the floor of the Lok Sabha, it is a rare admission. Official version was that demonetisation should unearth at least Rs  4 lakh crore of unaccounted cash. Had this been done, the Revised Estimates of direct taxes should have been much more than the Budget Estimate made in February 2016. But the Receipt Budget figures reveal that Revised Estimates  are the same as that of Budget Estimates. Is this not a palpable indicator that demonetisation has not unearthed any worthwhile amount of unaccounted money, all least till now ?

2. Speech says we are on a path of digitalisation and this would increase tax compliance and capacity of the government to spend on welfare. When one peruses the Medium Term Fiscal Policy Framework statement, the tax - GDP ratio projected till 2018-19 is only 11.9 percent of GDP against 11.3 per cent at present. Does this figure not belie the hopes the words seek to spread ?

3. The provisions of Income Tax Act, 1961, which mandate disallowance of cash payments have been there for long. Only amounts have been lowered in this budget. The effect can be seen only after a time lag. To do this simple thing, did we need a tectonic step ( in Ministers own words) like demonetisation ?

4. Farmers income is proposed to be doubled by 2022. But allocation. For Pradhan Mantri Sinchai Yoiana, Green Revolution and Per Drop More Crop scheme have declined in nominal terms. MNREGA has got a meagre 1.05 percent increase from 2016-17 Revised Estimates. Here also figures belie the words.

5. The same is the case with allocation for Umbrella Schemes for Minorities, SCs and STs. Social inclusion in words is not backed by arithmetic.

One can go on. But when figures in budget documents do not match the words in the budget speech, how does one rate the budget which is the Annual Financial Statement as per the Constitution ? In a financial instrument, when words no figures do it match, it is not honoured. What about the Budget ? This the question to be answered while rating any budget.