This year the pre-budget parleys have a number of “firsts” to offer. I have tried to collect reports from various sources on the number of “firsts” in the pre-budget exercise.
The FM will, for the first time, directly interact with financial advisors of the Central Ministry and departments in the run-up to the Union Budget 2008-09. There have been reports in the media about North Block sources stating that Chidambaram is also holding a discussion with the Economic Advisory Council (EAC) to the Prime Minister headed by Shri. C Rangarajan for the first time.
The FM’s pre-budget consultations kick started on Monday with a meeting with agriculturists, followed by interactions with the representatives of the Indian industry the next day.
Chidambaram will also meet representatives of trade unions and several economists for inputs. It is expected that he will seek political inputs by meeting his Congress colleagues. He is expected to have a meeting with the Opposition leaders a few weeks later.
Chidambaram will directly interact with the financial advisors to focus on better expenditure management. The financial advisors are representatives of the Ministry of Finance’s expenditure department and are responsible for managing the finances of the Ministry or the department they are attached to. This move of FM is believed to help him cut through the red-tapism in central ministry and departments. The financial advisors are also likely to be asked to gear up for the Outcome Budget presentation as Chidambaram has been increasingly focusing on outcomes rather than outlays.
The new expenditure management system which was started last year will impose a better discipline on spending. The annual expenditure being bundled up in the last quarter has been a major concern for the Finance Ministry. For instance, no department or Ministry can spend more than 33 per cent of its annual allocation in the fourth quarter of the financial year.
The consultation with the Prime Minister’s council will come in the backdrop of Rangarajan, who headed the committee on financial inclusion, submitting a report to Chidambaram on enhancing the reach of financial services to cover more Indians.
The committee has conducted several exercises to provide policy inputs for better economic management. With so many first steps in Chidambaram’s pre-budget exercise people will expect some major “first timers” on D-day as well.