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Signals from a mid-year review

A K Bhattacharya

Finance Minister Jaswant Singh is scheduled to present a mid-year review of the Indian economy in Parliament on Tuesday. Expectations have been running high for the last few days.

What message would the finance minister like to convey through this review? And how significant would it be?

In less than 13 weeks from now, Singh is to present his first Budget for the next financial year. The exercise for preparing the Budget has already begun and is at a fairly advanced stage.

Any document to be presented at this point of time is bound to be replete with meaningful pointers to what the next Budget might have in store for the economy, the corporate sector and the markets.

The review would also be an opportunity to know Singh's mind on how he looks at the key issues confronting the economy. Barring a few interviews to the media, this finance minister has deliberately shied away from expressing his views on economic and business issues.

In sharp contrast to his predecessor, Singh has kept away from the media. No bytes from him on the strengthening rupee, the falling interest rate or the burgeoning foreign exchange reserves.

Singh took charge of North Block in July. In the last five months, the country's financial capital has had the privilege of according a formal welcome to Singh only once. In Delhi, Singh has eschewed most of such public meetings where he might be expected to share his views on economic issues.

The Ficci tax conference, the World Economic Forum meeting on India and the international banking summit are among those that the finance minister declined to attend.

Not surprisingly, therefore, even a book release function on a Saturday evening is well-attended because the chief guest happens to be Singh and many of those who attend the function do so because they want to hear the finance minister of the country.

Given the manner in which Singh has made himself and his views scarce, there is no doubt that the mid-year economic review to be presented today would be read from the beginning to the end, whatever its content.

But apart from this immediate justification, is there any need for a mid-year economic review? This is the ninth month of the current financial year. The first half of the year was completed more than two months ago.

Just about 12 weeks from now, the finance ministry would present the full year's pre-Budget economic survey. If there is a proper mid-year review now, what new data and assessment can possibly emerge in the next two-and-a-half months to make the annual economic review an equally meaningful exercise? One of these documents is certain to lose its importance.

In any case, the legitimate demand for a mid-year economic review was met several weeks ago when the Reserve Bank of India governor presented his busy season credit policy in October.

Economic administrators do recall that the annual calendar of economic reviews is fairly well-established. Every year, the pre-budget economic survey takes care of all data till December, the RBI annual report takes care of developments in the economy till March and the busy season credit policy updates the data and assessment till September.

Apart from running the risk of becoming redundant, the new document on the mid-year economic review by the finance ministry can, therefore, only upset this annual routine.

But then, no other finance minister in recent times has presented a mid-year economic review. P Chidambaram presented an abridged version of the economic review while presenting his budget in July 1996, because he felt there was no need to amend or modify the annual economic survey presented by his predecessor in February the same year.

Chidambaram would have been justified in presenting a new economic survey, for his was a new government.

Even Madhu Dandavate resisted the temptation of presenting a mid-year economic review in 1989 even though the perilous state of the economy would have justified a proper review from the new finance minister. His successor, Yashwant Sinha, too did not break the tradition, when he took charge of the ministry in 1990.

Jaswant Singh's mid-year economic review would thus set a new precedent. It would also have created some extra work for the economic division in the finance ministry, which had been languishing for several months ever since the Geethakrishnan committee came down heavily on it, recommending the abolition of several senior posts.

Even after the abolition of those posts, the economic division, with the new chief economic advisor at the helm, could do with some more work. Making the presentation of the mid-year economic review an annual feature could be of some help. Perhaps.

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