An Interactive Presentation of Union Budget for 2010-2011

Prof B P Sarkar, the Registrar of Bangalore School of Business, presented before the students of BSB Delhi an insight into the Union Budget 2010- 2011 on 16th March.  The presentation explained the Union Budget’s significance as a document highlighting the state of the economy and future direction of social and development policies. According to him the thrust of the budget has been to meet three challenges, viz., restore high growth, make the growth inclusive and futuristic and direct delivery by the implementing agencies.

At the outset, Prof. Sarkar explained how the government budget differed from that of a business enterprise, especially with the possibility of deficit financing. Before the enactment of Financial Responsibility and Budget Management (FRBM) in 2003, India’s budget was characterized by high fiscal deficit with resultant high inflation. The country was on course to meet the targets of Revenue Deficit and Fiscal Deficit envisaged in FRBM till 2007-2008. However, the recession and financial stimulus required to meet the challenges, set the clock back temporarily. Prof Sarkar explained the implications of high Fiscal Deficit for individuals, corporate and the economy. He supported these with some interesting facts and figures.

Prof Sarkar explained the various components of revenue and expenditure in the budget which aroused considerable interest among the students. He explained in details efforts of the government in simplification of the tax systems so far and  as proposed  through Direct Tax Code and unified Goods and Services Act, likely to be implemented from 2011-12, and how the budget announcements show gradual progress in that direction. He explained how, together with planned reduction in Fiscal Deficit, prudent steps are being taken by the government to follow internationally accepted accounting principles so that effects of the current deficit is not shifted to later years.

The roles and responsibilities of Central and State governments in a federal set up and sharing of taxes collected by the Centre with the States was clarified to the students. Role of the Finance Commission was explained.

In conclusion Prof Sarkar discussed the relevance of separate Railway budget in today’s context. The concept of separate Railway budget was mooted in 1924 when the Railway revenue accounted for Rs 98 crores out of total revenue of Rs. 180 crores of the government. Today it represents less than one per cent. There are other government departments with equal, if not larger, budgets. However, the greater visibility, larger employment potential and possibility of pursuing populist policies and nurturing own constituency, has made the Railway Ministry a coveted one in the Cabinet.

The presentation was interactive and followed by interesting questions from the students which Prof Sarkar answered. It was a very exciting session thoroughly enjoyed by the students.