As the Finance Minister gets ready to present the budget for next year, the sector which causes him the greatest anxiety must be agriculture. The past year has been relatively good in terms of rain fall and the Rabi yields should be encouraging. But in general, for over a decade now agricultural growth has been sluggish, stuck at about 2%. And there are four good reasons to be concerned about low agricultural growth rates.

align="left">The Union budget for fiscal year 2005-2006 is due in just over two weeks.  This is the period during which a lot of pressure is usually brought to bear on the Finance Minister (FM) to increase budgetary allocations for this or that panacea to transform India and eliminate mass poverty.  With greater continuity and stability in the tax regime the usual excitement about tax rates and the guessing games have been missing in recent years.  Therefore, much of the debate is about allocations, expenditure and fiscal deficits.

By all accounts, Mr Chidambaram presented a credible and creditable budget. He had to achieve balance in a complex situation – between political compulsions and fiscal prudence, quest for economic growth and concern for equity, and infrastructure needs and populist impulses.

The Union budget for fiscal year 2005-2006 is due in just over two weeks.  This is the period during which a lot of pressure is usually brought to bear on the Finance Minister (FM) to increase budgetary allocations for this or that panacea to transform India and eliminate mass poverty.  With greater continuity and stability in the tax regime the usual excitement about tax rates and the guessing games have been missing in recent years.  Therefore, much of the debate is about allocations, expenditure and fiscal deficits.

One of the recurring themes of Indian public expenditure and budget making in the last decade is the fiscal rigidities making it difficult for governments to change policies and priorities. In the Union budget, interest payments, defence expenditure, transfer of resources to States and wages are more or less inflexible, and there is no room for manoeuvering. It is now axiomatic that subsidies cannot be removed without incurring high political and social costs.

Ballooning fiscal deficit is the major problem plaguing the minds of policy makers, economists and thinking citizens.  Shorn of all jargon, fiscal deficit is nothing but the excess of government expenditure over revenues. The finance ministers of the past effortlessly bridged this gap by resorting to two ‘simple’ measures – deficit financing or borrowing.

Once again, the budget season is upon us. For years budget speeches have been romantic exercises with grand gestures and sweeping policy announcements. Sadly, there were no fiscal or monetary incentives to promote desirable goals and pursue worthy policies. And without such incentives, and given the inertia of the political system, most grand gestures remained pious proclamations. The two recurring themes over the past 12 years of budgeting have been reduction of fiscal deficits and the health of capital markets.

A budget is not merely about numbers, receipts and expenditure.  It is about what is to be done with our money, what policies and services are preferred, how resources are spent, and getting good value for our money.

AP  draft   budget for 2002-03  conceals  as  much   as   it   reveals.  An expenditure of Rs. 32,981 crores is proposed for the year.  Of this, wages and pensions of employees account for Rs. 11,090 crores, or 82.7% of the Rs 13,408 crores tax revenues!  This is quite alarming.