EVALUATING PROPOSALS

SEAMLESS EXCHANGE OF IDEAS

NEW DELHI: With less than 10 days to go before its presentation in Parliament, Finance Minister Arun Jaitley and his team are busy putting together what’s expected to be a landmark Budget. Prime Minister Narendra Modi and key officials in his office are also as closely engaged in the exercise. ET spoke to various officials to piece together how Budget-making under this government is proving to be very different from what it used to be.Indian prime ministers generally set a broad direction for the Budget, leaving finance ministers to work out the details. Modi has shown through his tenure and even before that that he isn’t such a leader, being as focused on the nitty gritty as he is on the big picture. During his three terms as chief minister of Gujarat, he was as closely involved in policy-making. One bureaucrat recalled how the PM sat through a three-hour presentation, reflecting his keen interest in policy-making.Additionally, the world’s attention is focused on India, which has not only taken on the mantle of fastest growing major economy but is also seen as the sole bright spot amid worldwide gloom and uncertainty, according to the latest OECD report that was published on Thursday.Those who know him well aren’t surprised at Modi’s ability to absorb details that others may consider tedious, given the kind of engagement the PM has with secretaries and how hands-on he is-. Besides, there are many significant decisions that require his input, such as the fiscal deficit , for one. Should the government relax its fiscal consolidation targets to keep public expenditure high or stay the course for more long-term gains? Other queries are more political in nature, such as the rationalisation of subsidies or a package to address rural stress. ET had reported on February 15 that the government is working on a twin-pronged Budget that will push structural reform to lift growth and address rural stress through broader social security measures and changes in agricultural policy.With the Budget scheduled to be announced on February 29, Modi and Jaitley are evaluating proposals to pick those that will make a difference.“The PM and FM examine broadsheets and decisions are accordingly taken,” said an official involved in the preparation of the Budget.The term ‘broadsheet’ refers to the list of proposals that are put up for consideration by the finance ministry before the highest decision-makers.After initial filtering by officials in the finance ministry, the broadsheet is vetted by the finance minister and finalised after deliberations with the prime minister. Last month, just when the Budget exercise was picking up pace, the prime minister had set up eight groups of secretaries to conduct brainstorming sessions and come up with ideas. Some of these may find their way into the Budget after being endorsed by the prime minister, said a senior official.There is a close and seamless exchange of ideas between North Block and South Block, said another official.This is a big change from the gulf that seemed to exist during the previous government, suggested some ministry veterans, pointing to the retrospective tax amendment as being the result of such distance.South Block, which houses the Prime Minister’s Office, has been holding regular meetings with North Block officials to thrash out Budget details. As chief minister of Gujarat, Modi was known to have a keen eye for the nuts and bolts of policy that would make the process of execution effective, which was his forte.The Budget interactions have been centred on some of the key issues that the government is grappling with, including its initiative to simplify and rationalise the tax structure, boost the rural economy and kickstart the investment cycle.Proposals such as the creation of a bad bank that will take on the rotten assets of state-run lenders and thereby leave them with a clean balance sheet are understood to have some PMO support and there have been several rounds of discussions on the matter. Reserve Bank of India Governor Raghuram Rajan hasn’t been much in favour of this, suggesting that there didn’t seem to be a need to create another government-backed institution to take on bad loans when the lenders in question were state-owned anyway.The Modi-led Pradhan Mantri Jan Dhan Yojana, which has emerged as the launch pad for a revamped social security programme, is expected to be loaded further with new initiatives as the government looks to make optimum use of the financial inclusion initiative.