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BW Businessworld

Captured By The Bureaucracy?

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Since Arun Jaitley presented his first Union Budget I have asked myself: are the NDA government’s ministers being cleverly ‘captured’ by the bureaucrats as Humphrey Appleby did with Jim Hacker? Last week, I heard two others echoing the same concern — one a brilliant civil servant who served with distinction in highest places and knows the official machinery inside out, and another who was in government long enough to know how things work. Both spoke of adroit administrative capture of some new cabinet ministers. Could we be seeing another example of that superb French maxim, “Plus ça change, plus c’est la même chose” (“The more it changes, the more it remains the same”)?

So, I chose to pen an imaginary script.

Finance minister (FM): Gentlemen, the first budget must signal our government’s reform intent and make a clean break from the non-performance of the past. People have chosen a majority government after three decades. We must show the economic path to acchey din.
Finance secretary (FS): Absolutely, sir. It is our duty to help you attain the government’s objectives.
FM: Good. So, can we honestly achieve the fiscal deficit target of 4.1 per cent of gross domestic product (GDP) set by my predecessor? Economists and those in business say that it is impossible. We are hopelessly short on tax revenues; much of last year’s expenditure was pushed out to this year; and in just April and May, we have already spent 46 per cent of the targeted fiscal deficit.
FS: Sir, you are correct. Yet, please rest assured that we will do everything to attain the 4.1 per cent target. (Revenue Secretary (RS), Expenditure Secretary (ES) and all others  vigorously nod in unison).
FM: But why shouldn’t we make a clean breast of it? Instead of chasing an unreal number, come up with a reasonable one? Like 4.5 per cent of GDP, with a path to bring it down to 3 per cent in the next two years?
FS (with alarm): No, no! Absolutely not, sir! Any slip in 4.1 will cause mayhem in international financial markets. Rating agencies are dying to downgrade us. You wouldn’t want your first budget to attract a downgrade for no fault of yours. No, sir, the 4.1 is our thin red line. It cannot be breached.
FM: But if I stick with 4.1, how can I announce key programmes of the NDA?
FS (with a much relieved smile): No problems, sir. We have already prepared a list of priorities mentioned in the manifesto (shows it to the FM). You will see, each of these have an allocation. Some are Rs 100 crore. Others more. There is nothing in the manifesto that won’t be mentioned as a paragraph in your Budget speech. Sir, leave that to the team and I.
FM: Okay. Now I want the retrospective tax of 2012-13 to go.
FS (at his conciliatory best): Sir, we agree with you in principle. But, can we afford to give up Rs 11,000 crore that Vodafone will finally pay? And some other cases that have been moving along? We can’t give everyone a clean chit. Not with 4.1, sir.
FM (distraught): So, what do we say?
FS (now on the top of it): Sir, I have a draft: “The sovereign right of government to undertake retrospective legislation is unquestionable… This government will not ordinarily bring about any change retrospectively which creates a fresh liability… (However) a few cases have come up in various courts… (which) are at different stages of pendency and will reach their logical conclusion. At this juncture I would like to convey… that we are committed to provide a stable and predictable taxation regime that would be investor friendly and spur growth.” Will this do?
FM (relieved): Yes. But tell me, what if we don’t make the tax revenue targets?
RS: Sir, when you meet the revenue service, tell them, “I depend upon you”. They know what to do.

So, we had the Budget. But is this script imaginary? 

(This story was published in BW | Businessworld Issue Dated 25-08-2014)