Budgeting for the whole year

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When Miftah Ismail rose to present the 2018-19 Budget to the National Assembly, it was as a Finance Minister in search of a seat in either House. His personal controversy did not eliminate, but accentuate the controversy over whether he should present a Budget for the whole of next year, or just for the first four months of the financial year. Then there was the date: the end of April, just over two months before the beginning of the coming financial year on July 1. Not just will this begin the new financial year for which the budget has been presented, but will also mark the expiry of the tenure of the present National Assembly.

It is because of this expiry that the objection arose, that the National Assembly had no right to make a budget for a financial year in which it would not exist. This National Assembly thus would be privileged to pass six Budgets in its tenure, for it should not be forgotten that when it first met in 2013, its very first act was to pass a budget, and that too in a hurry to beat the July 31 deadline. It must be remembered that, under the Constitution, if the Budget is not passed, no payments can be made by the government: salaries cannot be disbursed, contractors cannot be paid, fuel bills cannot be met and paper clips cannot be paid for. Payments made on June 30 are covered by the Budget passed a year earlier, but no further payments can be made.

It should be remembered that the passage of the Budget means passing the Demands for Grants of individual departments. The Assembly passes a sum, beyond which a department cannot go. It can remain within that sum, but it cannot exceed it. There is a catch: it actually can exceed it, or it can re-allocate (save money by eschewing common pins, but splurging the sum saved on paper clips); in which case it will ask for a supplementary grant to be made, in the supplementary Budget. That record of a government’s acts of deviation from the grants passed, has also been presented.

An Assembly could well pass a four-month budget, just as it passes supplementary grants, but the constitutional provision is for the executive to promulgate a limited budget for four months, which more than adequately covers the three-month time period when an assembly may not be in existence, and while elections are to be held to get a new Assembly.

One of the problems of the parliamentary system is that an Assembly might end up tying up a successor by a dissolution. Nothing illustrates the continuity of democracy more than the fact that a government has to wait out the remainder of the financial year administering its predecessor’s Budget proposals until it gets its own turn.

The last time this provision was invoked was in 1988, when the then President, Ziaul Haq, dissolved the National Assembly on May 6, about a month before the Budget was due. The four-month time limit was not observed, as elections were held on November 16 and 19. The governments formed proceeded first to present budgets for the rest of the year, and then get them passed. Such was the haste with which this was done that in Punjab, Chief Minister Mian Nawaz Sharif presented the Budget, even before forming a Cabinet. The budget debate was wound up by the newly appointed Finance Minister, Sirdar Zulfiqar Khosa.

The demands for grants have to be passed along with the Finance Bill, which contains any new taxation measures that may have been made. It is the passage of the Finance Bill that is considered the passage of the Budget, which is otherwise merely a statement of expected revenues and how they are to be spent. The timing of the Budget is relevant to this, because the taxation measures are implemented as soon as the Budget speech is made, and do not wait until July 1. The purpose is supposed to be avoiding economic imbalances, but the effect is usually a windfall for the tax collection departments. In previous years, the Budget had been presented in the beginning of June, though the desire to enjoy a little extra revenue had led to the Budget being presented in the latter half of May. This year, it seems, the self-imposed deadline for the government was not really the end of the financial year, as the beginning of Ramazan.

This seems to have emerged after the government realised that it could have the general budget debate, the debates on cut motions, and the passage of the demands for grants all wrapped up by the beginning of Ramazan provided the process was started early enough. Hence the early start. The next Parliament might see a repetition, though not for long. As Ramazan will begin 10 days earlier every year, it will be more feasible by 2020 or 2021, to present the Budget after Eidul Fitr, which will be moving back to May, and still be well in time for the June 30 deadline of the new financial year.

Miftah Ismail’s induction into the Cabinet as Finance Minister so that he could make the Budget speech marks the first occasion the Finance Minister has not been a member of one House or another. Even when Benazir Bhutto thought Finance was such a technical portfolio that it could not be assigned to an elected member, and she had V.A. Jafery as PM’s Finance Adviser, she had Makhdum Shahabuddin as Minister of State, and it was he that read out the Budget Speech which marked the presentation of the Budget in 1989 and 1990. When Miftah, who was PM’s Adviser on Privatisation, replaced Ishaq Dar, it was thought that he was an expert like Jafery, who was a civil servant who ended up as State Bank Governor, especially when MNA Rana Afzal was inducted as Minister of State, presumably to handle such parliamentary work as presenting the Budget, winding up the debate, answering during Question Hour and appearing in front of parliamentary committees. However, someone realised that Miftah could join the Cabinet for six months till he found a seat. Long before he found a seat, the government’s term would be up.

So he might as well give the speech. It is no ordinary speech. It is supposed to be a statement of the government’s intentions for the coming year. In this instance, it was supposed to be an election-year budget. However, while there were certain taxation measures which favoured the ruling PML(N)’s core constituency, it did not provide the sort of relief that would be expected in an election year. One check was the Election Commission of Pakistan, which had already placed a check on development spending and recruitments. Another check was the bureaucracy, which made the government produce a Budget largely like those past. It could be argued that the bureaucracy does more than the ECP in this.

The real test of this Budget will come from the new government. If the PML(N) is re-elected, there will be silence, but if either the PTI or the PPP takes office, it may want to change some of the taxation proposals. It can. It can present a revised statement of revenues and expenditures, and pass revised demands for grants. But hopefully it will be better advised, and will satisfy itself with the Budget as it is. After all, passing a Budget is an exhausting exercise, and a Parliament should be glad that its predecessor has accomplished the task. Also, the next Parliament, if it goes to term, will pass the 2023-4 Budget, even though its successor will be in office afterwards.

[“Source-nation”]