In a short while from now, Arun Jaitley will present the first budget of the NDA government headed by Narendra Modi. Will it make a break with the past, or will it be more of a continuity with budgets in the recent past, presented by the UPA?
We will know the answers to that shortly, but there are several reasons why Union Budget 2014-15 will be - has to be - different from the ones presented in the recent past, and especially the ones presented by the UPA.
First, and most obvious, this budget will set the tone and tenor of the new NDA government's approach to the economy.
Though there has been one NDA government before led by Atal Behari Vajpayee, this is the first one to be presented by a government with a clear majority of its own since 1989. It has been called a right-wing government - one that is expected to be business-friendly even without abandoning the poor.
Second, the 2014-15 budget will be presented by someone who has never done it before.
Finance Minister Arun Jaitley's area of expertise is law - though he has led debates in the Rajya Sabha on the economy. His predecessor P Chidambaram had tonnes of experience working in economic ministries - finance and commerce - and dished out nine budgets in three stints - including two during the United Front government of the 1990s and the recent two under UPA-2. But the NDA has a precedent to Arun Jaitley in having a fresh hand presenting the budget: Jaswant Singh, a former army man, presented the last two Vajpayee budgets without ever having a financial background. And he did quite well.
Third, this budget has huge public expectations built into it, thanks to the clear mandate given to Narendra Modi.
So no matter what Jaitley does, there will be someone who will think his concerns have not been addressed. We saw that happen with the railway budget last Tuesday. It is guaranteed to happen today (10 July) after Jaitley presents his first one. The markets, which rose nearly 50 percent over the last one year in the expectations of a Modi win, are now shuffling nervously.
Fourth, this budget is being unveiled in the context of negative economic signals in many directions - slowing growth and high inflation, the possibility of a weak monsoon, and a potential adverse change in oil prices due to the Syria-Iraq civil wars and the rise of another al-Qaeda in ISIS. In contrast, the UPA inherited an economy and global economy about to take off vertically. Jaitley inherits Chidambaram's bad karma.
Fifth, this year is like 1991 but without the spectre of external bankruptcy forcing changes. In short, this situation is more dangerous politically than 1991 because there is no sense of crisis - except among economists. This is why a Rahul Gandhi, despite his government running the economy into the ground, can still crib about the railway budget not being "pro-poor."
Sixth, this will be the first budget in recent years being produced without the finance ministry having a Chief Economic Advisor (CEA).
Even the Economic Survey presented yesterday (9 July) was created without a CEA.
Seventh, this budget is coming up in a context where the global economic recovery is far from certain.
Unlike 1991, the external environment is not conducive for a sharp rebound no matter what the government does in this budget. The US, Europe and China are still recovering from the Lehman crisis and the global meltdown.
Eighth, in common with budgets presented by an incoming government in mid-year, this budget will have only a half-year run, with another one due in February.
Work on the next budget will have to begin as soon as the current one is passed by August. This budget will find its full form only in February 2015. It will be a work-in-progress all the way to February.
Ninth, despite the fact that people invest undue importance in the budget, the real game-changers lie outside it.
Most of the structural changes India needs - whether it is changes in land and labour markets, or easing of business and regulatory rules - have to be done either administratively or by legislation. This budget is not the last word of the Modi government's approach.
Tenth, there is a good chance that this budget will be criticised in the Rajya Sabha and tinkered with there since the NDA is nowhere near a majority.
This can happen if the political conflict between BJP and Congress worsens in the coming days over issues such as giving Congress leader of Opposition status - which it is not entitled to. But budgets can't held hostage in the Rajya Sabha. The Lok Sabha can pass it again and that will be that.
Updated Date: Jan 20, 2015 18:25 PM