Budgeting as perceived to be is technical and involves use of accounting . Yes it does but more weightage is given to political mandates which influence the decisions in budget and more recently even the numbers and facts , they are masked to reach political gains. As Gandhi always stood for right means to achieve right ends in life. In world politics and Indian alike it is not so. Every means are guided by political interests and mandates. Party interest precede public interest and moreover individual interest predate party’s too, as observed in recent Karnataka politics. Budgeting though a public function is guided by such political interests in the backroom. Let us analyse the reasons and benifts of such political dynamics behind budgeting.
POPULIST BUDGETS BY POPULIST LEADERS
The government’s budget will be populist in 2 years , one in the first year of the government and next before the end of the term of 5 years. The first one is to show to the public that they are better than the old government , this is achieved by appeasing middle classes by increasing threshold of income tax and new schemes just same as the old ones but only with new fancy names .
The last budget will be more populist than any of the preceding ones as it will be to win the next elections and it will include big ticket announcements. This will target the mass voters like farmers , and freebie announcements with subsidy schemes will dominate the budget . Expanding the scope of the schemes and programs , for example reservation policy was expanded to include economically weaker from general category but the income limits are 8lakhs , so literally they are including ones earning 60000- 70000 per month. PM KISAN Scheme of providing money every 3 months to farmers is good in intent but it’s timing is near to elections. This explains the voting requirements for the ruling party.
THE STOCK MARKET GAME
The budget of the year has a direct effect on investment , since it includes government policy for the future and also announcement related to infrastructure and funding , this has direct impact on economic variables, it influences the invester sentiment and calls in for more investment . This will push up the stock market , as we have all observed the movement of sensex after every budget. This helps in bringing foreign investment also.
Foreign nation appeasement is also a component of budget which is hidden. Easing FDI norms are to appease foreign developed nations in supporting and favouring the home country in international level. It also influences the trade between the two . Chinese policy and budget will be against America’s interest because of the ongoing trade war and growing competition between the two. This is same in USA , their policy and budgeting will have negative effects on relationship and trade with China . The recent restrictions on huawei is an example of that.
LOBBYING BY VESTED INTERESTS
The backroom politics can be visualised though may not be seen directly. Big corporates and business tycoons influence the budget process and get a favourable budget. This can be through reducing taxes , easing norms for environmental clearances and enabling better licensing facilities.
Industrial workers appeasement and trade union politics also find a place in budgeting and policy making. Their approach towards it stimulates those causes which have direct impact on the stability of their power .