Budget making in India is the sole prerogative of the Ministry of Finance. However, diverse opinions go into the process leading up to the presentation of Annual Budget. Provide a succinct illustration of the role of pressure groups in the budget making process of India. (150 W)

Mentor’s Comment:

The  question  pertains  to  the  consultative  process  leading  up  to  the  finalization  and  presentation  of annual budget in India. Hence, the Introduction should identify the role of Ministry of Finance as the Nodal agency in this context.

Further in the main body highlight the consultative process in budget making. Illustrate the role of pressure groups representing industry/ business; Agriculture; Non-Profit sector, Women’s group etc.

Conclude by highlighting the need of greater transparency and citizens participation it the process.

 

Model Answer:

Introduction:

  • Article 112 of the Constitution of India stipulates that Government should lay before the Parliament an Annual Financial Statement popularly referred to as ‘Budget’. The Ministry of Finance acts as the nodal government agency  in  the  context  of  preparation,  presentation  and  implementation  of  the  budgetary provisions.
  • The budget  making  process,  however,  involves  multiple  inputs  before  the  final  formulation  and presentation of annual budget by the minister in charge.
  • Over the  years  pressure  groups  have  emerged  as  important  participants  in  the  pre-  budget consultations.

Main Body:

  • Pressure groups  are  the  interest  groups  which  work  to  secure  certain  interest  by  influencing  the public policy. As such they represent diverse interests and agendas such as business/industry; Trade Unions; Agriculture/rural sector, Women’s groups etc.
  • In India  the  role  of  pressure  groups  is  limited  to  providing  inputs  and  putting  forward  their expectations and demands to the ministry through mechanisms such as pre budget consultation of the  finance  minister  which  take  place  around  the  months  of  December-January.  The Finance Minister chairs the meetings along with his deputy and key Ministry officials. The effort is to collect views and suggestions from various groups that help in finalising the Budget.
  • For Example Industries/businesses are represented through groups such as the ASSOCHAM, CII and FICCI putting  forward  demands  of  rationalisation  of  tax  structure  and  improving  business environment.
  • Similarly, the trade unions and Employees associations such as AIBEA participate in the consultation to put forward their interests such as demands of Government holding in the Public Sector Banks not reduced below 51%.
  • Agriculture sector has been represented by groups such as Consortium of Indian Farmers Association putting forward demands of adequate pricing mechanism as well as subsidy support.
  • Similarly, Women’s’ group played have played an important role in putting forward gender specific concerns and have played an important role in mainstreaming the idea of gender budgeting.

Conclusion:

In sum it can be said that pressure groups in India play an integral role in the pre -budget consultation. The  idea  of  participatory  budgeting  which  has  been  gaining  ground  in  recent  year’s  demands  greater transparency and capacity building of citizens as participants. The role of pressure groups and CSOs in this context remains important to make the process sustainable.

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