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Budget 2013: Why FM would be better off without a speech

One of the lessons politicians who intend to deliver results must learn is the futility of making budget speeches.

Thanks to the huge media interest, especially commercial interest, in making a song and dance over the budget, budget presenters tend to play to the gallery. In the process, they take their eyes off the ball, and fail to run their empires well.

So whether you are a railway minister or a finance minister, shutting up is a better way to get your job done. Jaw-jaw is not better than work-work.

Take the case of the last two railway budgets. In March, Dinesh Trivedi increased freight rates by 20-25 percent before the budget, and there was not a murmur from the media or even much unbearable political criticism. No speech, no problems.

Chidambaram better off without a speech? AFP

Chidambaram better off without a speech? AFP

On the other hand, it was his budget speech, in which he chose to make comments about raising passenger fares, that got Didi’s goat. It cost him his job. Mamata Banerjee had a political posture to maintain, and Trivedi’s budget speech ruined the image she wanted her constituents to have of her aam aurat credentials. He had to go.

Or even consider the case of Pawan Kumar Bansal, who spoke a lot about running the railways on a “financially sustainable” basis, but then shrank from doing the right thing. All his actions before the budget, including the huge hikes in railway fares in January, went off without a hitch; it was his speech that got him the brickbats.

Why? Because a speech raises huge political expectations, both inside your own party and in your rivals.

What you do for your party’s constituency raises hackles among your rivals. What you do for your rivals is quietly swallowed without so much as a thank you.

Bansal’s budget speech yesterday has got written off as a ‘Rae Bareli Budget’ even though the minister said, not unreasonably, that when you have a wagon plant in Rae Bareli, it does not make commercial sense to make the wheels elsewhere. As for the number of trains that will pass through Rae Bareli and Amethi, which also drew negative comments, the point is once some stations are on the map, many trains can pass through.

Bansal would have been better off not making his speech. What applies to rail budgets applies even more to the Union budget, which is coming up tomorrow.

We need a Union budget in order to get an annual statement of accounts and a rough indication of changes in taxes, if any.  But look at what the very existence of a budget speech does to the finance minister.

First, he knows he is being scrutinised in minute detail. So the tendency will be to go into minute details of every single proposal.

Second, he knows the speech is being made in front of the whole political class; so he will have to load the statement with political content.

Third, the best financial system is one that does not need year-to-year tinkering. But give an FM his budget speech, and he feels the need to fill the dead air with a lot of prose and poetry, including quotes from the Tamil Saint Tiruvalluvar in the case of the current finance minister.

Fourth, by fixing a specific date for the budget speech, effectively we are saying that all changes must be saved up for that big event. Now, if your economy is collapsing in October, does it make sense to wait till February-end to correct it?

Fifth, the budget speech takes the focus away from implementation to announcements. The current finance minister talked about focusing on “outcomes” rather than “outlays” seven or eight years ago, but we have little about anything beyond outlays so far.

Indians prefer law-making to law implementation, and the budget speech panders to our general weakness in this regard: make a pretense of action, and then forget about it.

If we are to abandon this negative Indian trait, we need to abandon budget speeches. Let the speeches be made after the budget, in public fora, where you need to sell your ideas to the public. After all, if a civil aviation budget can be delivered without a big speech in Parliament, if the pre-budget Economic Survey, due today, can be just laid on the table of house without much fanfare, why do budgets need a loquacious FM?

It is time to scrap speeches and replace them with action. A less extreme alternative would be to cut the budget speech down to a one-tenth of their current size and focus only on key changes. Talk detracts from action.

PS: The longer the speech the worse the outcome. P Chidambaram's 2008 budget speech was 12,874 words long. It tipped us headlong into a fiscal crisis. Pranab Mukherjee's speech last year was a dreary 14,157 words. He compounded our economic mess. Pawan Bansal's rail budget speech yesterday was 9,900-and-odd words long even without the annexures. And, I am mortified to say, my own attempt at writing a budget speech ended up at a still verbose 4,136 words. Mea culpa. But I have inadvertently proved my own point.