Vote-on-account conundrum

Why did the West Bengal government present a vote-on-account last month, instead of a regular Budget for 2004-05? The state government was not going in for an Assembly election this year.

The current five-year tenure of the state Assembly is due to expire only by the end of 2005. Nor did West Bengal Chief Minister Buddhadeb Bhattacharya recommend to the Governor that the state Assembly be dissolved.

Interim Budget 2004-05: Complete Coverage

So, what caused the vote-on-account? In fact, what caused the presentation of votes-on-account in the past few weeks by a large number of other states (including even Delhi, where Sheila Dikshit was returned to power last December), although the tenure of none of these Assemblies was anywhere near completion?

For the uninitiated, a vote-on-account is an instrument available to governments for seeking parliamentary or Assembly approval of expenditure for a limited period in case they are not in a position to present a regular Budget at the start of a new financial year.

Normally, a government opts for a vote-on-account when it has either been freshly-elected and has little time to prepare a regular Budget at the start of the financial year, or if it is seeking a fresh mandate through an election.

Last February, the Union government presented a vote-on-account because it had planned to recommend the dissolution of the Lok Sabha and present a regular Budget for 2004-05 only after the general elections.

But what was the compulsion for West Bengal, Delhi, Punjab or Tamil Nadu to present a vote-on-account instead of a regular Budget?

One reason could be that these state governments did not want to finalise their revenue and expenditure proposals till they had a clear fix on the amount of resources that they might get from the Centre. And that would be clear only when the Centre presented its regular Budget for 2004-05.  But such problems could have been resolved through some careful advance planning.

Another reason could be the advice they received from the Election Commission of India, which suggested that the state governments should complete the regular Budget exercise before the election code of conduct was enforced in the wake of the forthcoming general elections.

But that shouldn't have been a problem. States could have easily advanced the date of presenting the Budget to fulfill the Election Commission's poll conduct guidelines.

The Jammu and Kashmir government, for instance, went ahead with a full Budget, with taxation and expenditure proposals, without falling foul of the Election Commission guidelines.

And many of the states that decided to go for a vote-on-account did so well ahead of the enforcement of the election code of conduct by the Election Commission. With some effort, these states could have presented a full Budget if only they so desired.

The real reason for postponing the presentation of the regular Budget by several states, therefore, seems to be political. The political parties ruling these states did not want to face the adverse consequences of the new taxation proposals these governments might introduce in a regular Budget just before the general elections.

Many state governments had planned to levy new taxes. But such decisions might upset the people in the states and it was feared that the Lok Sabha candidates being fielded by the ruling parties from those states might suffer as a result.

It is the same logic that has influenced the state-owned oil companies to postpone the decision to increase petroleum product prices till the general elections are completed. On paper, the oil companies are free to raise the prices of petrol, diesel and other petroleum products. But they have been "advised" by the government to bear the losses and effect a hike only after May so that the candidates belonging to the ruling parties at the Centre do not face angry voters during their campaigning and hopefully garner their votes as well.

Even the Reserve Bank of India has decided to postpone the presentation of its lean season monetary and credit policy, which is usually scheduled for April. Now it will be presented in May after the general elections are held.

There are official reasons for the postponement, but none that can seriously justify such a decision. Why the central bank should be influenced by when the general elections are getting over or when the new government gets installed is difficult to understand, unless the relationship between the Centre and the central bank has changed.

The trend is disconcerting. In a quasi-federal democracy like India, elections will be held in some part of the country almost every year. Should the economic decision-making process in the country be held hostage to petty political considerations of whether that would benefit or harm the interests of the ruling party candidates?

It is time institutions, public sector undertakings and state government bureaucrats understood this primary issue and challenged the narrow self-serving interests of a few politicians to perpetuate their power by means fair or foul.

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