Monday, March 8, 2010

Pranab Mukherjee’s first Budget in 1982 included one provision that set the stage for India Inc’s most celebrated takeover battle. In his Budget for 1982-83, Mukherjee announced the following: “They (non-resident Indians) can now purchase shares of companies quoted on the stock exchanges subjecte to specified limites.” Within weeks of the announcement, corporate India saw Swraj Paul’s Caparo Group buying shares in DCM Limited and Escorts and mounting a takeover bid. Promoters of DCM Limited and Escorts managed to save their companies from Paul’s raid through hectic political lobbying that led to some policy tweaking.

Pranab Mukherjee’s first Budget in 1982 also talked about the SDR 5 billion loan India took from the International Monetary Fund to help it prevent further deterioration in its balance of payments situation. In his third and last Budget in 1984, he announced that India had recovered and had returned the last instalment of the IMF loan. He also pooh-poohed those who had feared that the economy would be in a shambles after India accepted the IMF loan. The acceptance of the IMF loan had become a major political controversy in the 1980s.

In his second budget in 1999, which also happened to be the last budget of the twentieth century, Yashwant Sinha made a historic departure from a practice that had been followed by all his predecessors since Independence. He presented the budget at 12 in the afternoon, instead of 5 p.m. His reason: Discard the long-standing tradition of the British Raj. All finance ministers succeeding him have stuck to the new schedule.

Jaswant Singh presented only one full budget - in 2003. He introduced two changes. One, he stopped printing the budget speech document in two sections and dividing the speech into two parts - A and B. Two, he introduced an index of all the main issues covered in the budget speech. His successor has discarded the index, but has continued to present the speech in a single document, though he has retained the speech in two parts within the single document.

Among all the finance ministers in these 16 years, Yashwant Sinha is responsible for the sharpest spurt in the growth of expenditure on subsidies - 27 per cent in 1998-99, 16 per cent in 2001-02 and 39 per cent in 2002-03. Chidambaram as the finance minister under the United Front government was quite profligate, quite in contrast to what he has done so far in his stint in the UPA government. As FM in the UF government, he allowed subsidies to grow by 22 per cent and 13 per cent in 1996-97 and 1997-98, respectively. In the UPA government, he has maintained a tight control over subsidies so far, actually managing to bring it down in 2004-05.
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