FM has a fine eye for detail

Finance minister P Chidambaram is a tough task master, especially when it���s the time to chart the course for the nation, its economy. Ask any senior official in the finance ministry and he���ll tell you many stories about P Chidambaram���s fine eye for detail.

A very hands-on finance minister, Mr Chidambaram is meeting finance ministry officials round the clock to give the Budget its final shape. But the war general has a team of firebrand lieutenants battling at every stage the pulls and pressures of coalition politics.

Mr Chidambaram���s A Team has eminent faces such as finance secretary Ashok Jha, revenue secretary KM Chandrashekhar and expenditure secretary Sanjiv Mishra. Ashok Lahiri, in his capacity as Chief Economic Adviser, and Parthasarathi Shome as adviser to the FM are his two important aides. This core team will give final shape to the vision of the PM and FM within the contours of the ruling coalition���s National Common Minimum Programme.

Mr Lahiri, a distinguished economist from the Delhi School of Economics, is responsible for key government documents like The Economic Survey and the Fiscal Responsibility and Budget Management (FRBM) report, spelling out directions for the Budget and macro-economic polices of the country.

He has worked both at the World Bank and the International Monetary Fund, while at one time having headed India���s top think-tank on public finance, the National Institute of Public Finance and Policy (NIPFP). Regarded as a pioneering psephologist in India, number-crunching comes naturally to him. He also headed the committee on FII policy.

Mr Shome, who lives and breathes tax policy, is truly global in his outlook. He has worked with various governments in Latin America and the Asean community, contributing to their tax polices and administration.

He brings with him a unique repository of knowledge to ideate on the country���s tax policies, bringing with him the experience from his days at the IMF and as head of India���s NIPFP. Having written the tax policy report for the Tenth Five Year Plan, Mr Shome has his work cut out, given the PM���s stated position on phasing out tax exemptions.

As the Centre���s permanent nominee on the empowered committee of state finance ministers, he has been the driving force behind introduction of value added tax in the country and will now roll out of single Goods and Service Tax (GST) from 2010.

The finance secretary is reckoned as ���the first among equals���, the one who makes an objective assessment balancing compulsions on both the revenue and expenditure fronts. Ashok Jha has a very crucial role to play.

With a formidable academic background in economics, Mr Jha is the pointsman who will have to strike a trade-off between yielding to the demands of various ministries and constraints on government revenues. Having served at ministries such as agriculture and industry, he is sure to draw a budget giving equal emphasis to both the sectors.

Lending him support on the revenue side is Mr Chandrashekhar, known for his negotiating skills. His major contribution as India���s ambassador to WTO was in institutionalising the voice of developing countries in the form of G-20. An economic honours graduate from St Stephens College, New Delhi, Mr Chandrashekhar has held various positions of importance at the Centre.

His negotiating skills are sure to come in handy when he attempts to phase out tax exemptions, unveil the Exempt Exempt Tax regime or expand the Annual Information Return. It���s not just planning which is his forte; he has been able to leave a mark on the administration as well, resulting in huge buoyancy in direct as well as indirect tax collections.

His colleague on the expenditure side complements him well. Sanjiv Mishra as the expenditure secretary has the toughest job of first examining the expenditure profiles of each ministry within the constraints of the FRBM targets, limit on government borrowing and planning expenditure. This soft-spoken assiduous reader has handled crucial subjects like FDI and disinvestment.

This experience will help him steer through the plethora of demands placed by various ministries and departments and strike out a balance in resource allocation. His signature will sanction more than Rs 5 lakh crore for government of India���s expenditure, 80% which goes to meet interest payments, subsidies, defence, salaries and transfer to states.

Various ministries and departments flood the expenditure department with their ���demands���. The department then takes a view based on revenue projections and the previous year���s allocation.

Deficit financing has been stamped out by FRBM commitments, the government can no longer borrow at will. For nearly a decade, the government has been planning to move to zero-based budgeting but has been unable to do so. By mid-February, the expenditure department seals the proposals and communicates it to the respective ministries.

But implementing the vision and giving shape to the Budget are the men and women of the Budget division under the department of economic affairs who move the government machinery while setting in motion the Budget exercise itself.

For a large part of the Budget exercise, revenue and expenditure departments work in near watertight departments. Within the framework of revenue projections and the previous year���s allocation, the numbers will have to be hammered out.

The woman in the hot seat is the cool-headed LM Vas, joint secretary, budget. In charge of putting together the final Budget document, she handles a whole gamut of tasks, including publication and printing to more mundane ones like arranging snacks for those burning the midnight oil.

In the high-octane drama of number crunching that unfolds every day in the Budget division as it prepares the demand for grants from 109 government departments, it takes a silent worker like Ms Vas to keep the tempo going. Ms Vas has already been a part of the action for three Budget exercises. She has held various positions, including at the Ghaziabad Development Authority.

For the revenue department, generating more revenue and simplifying tax structures are cornerstones of formulating tax policies. It is driven by the implications of tax proposals on the economy as a whole, on individuals and on industries.

The foot soldiers who implement the diktats of their senior officials at ground level are officials at the Tax Policy and Legislation Division (TPL) and Tax Research Unit (TRU). Joint secretaries in TPL for direct taxes are Arbind Modi and Anita Kapoor.

Mr Modi, who is from the 1981 batch of Indian Revenue Service, is a postgraduate in economics from the Delhi School of Economics. He has had the rare distinction on being involved with every committee on tax policy, right from the Raja Chellaiah committee to the Kelkar Committee on taxation.

After having been associated with the Saral form and the Fringe Benefit Tax (FBT), Mr Modi is now involved in drafting the new Income Tax legislation. His team evaluates the various tax proposals which come from various industry bodies, government departments, weigh their implications and work out actual quantum of who is to pay how much on the income he earns.

Anita Kapoor, a postgraduate in English literature, has done several courses abroad, including one on tax administration from Leeds University, in addition to this, she has been through courses in securities markets, banking and fiscal polices from France, the UK and Japan. Ms Kapoor, has also served in the department of economic affairs and Sebi. She and her team will work on the phase out of tax exemptions in the coming Budget.

On the indirect taxes front, Gautam Ray, joint secretary TRU will chalk out the future course of where the excise and customs duty structure is headed this Budget. With the government planning to bring out a single GST by 2010, Mr Ray, who has been involved with various committees on VAT and GST, has a lot to do on the excise front. Mr Ray is also the moving spirit behind removal of various exemptions in the indirect taxes.

R Sekar, joint secretary in TRU, handles service tax. His contribution to the service tax structure is yielding results in terms of whopping growth witnessed in collections. A Chennai university alumni, Mr Sekar was involved with the Kelkar committee on tax policy and is known for his deft handling of legal issues and defending the government when dragged by industry to courts.

With states to get 77 services from next fiscal, Mr Sekar has a huge task ahead this Budget, and a tough one too. The government has to take a call on whether or not to increase the service tax rate from 12% to 14% to make up for the revenue loss and to align it with the excise duty rate, currently at 16%, for the roll out of the GST by 2010.

The establishment is open to new and innovative ideas, but then, many of them may germinate for months if not years, before taking root as policy. Most of the proposals are from external sources including think tanks like NIFPP, and various expert committees.

While political figures and ministers with political clout can, to some extent, communicate specific suggestions to the top brass in the finance ministry, a lot of it is in effect only ���public posturing���, knowing fully well that they cannot always be accommodated, given the limitations.

Lobbying by various interest groups is part of the run up to the Budget, providing photo-ops to journalists. In the US, for instance, these lobby groups are institutionalised. The Budget speech itself ��� invariably a personal stamp of the finance minister ��� is typical of his style and language.

The speech is frozen at least two weeks ahead of the big day. But there have been instances, where, the finance minister and his men stayed up till wee hours in the morning tinkering with the speech, to be read the next day. The department of economic affairs is vested with the responsibility of the speech.

The printing of the Budget documents starts about seven days in advance. The staff involved is virtually under house arrest. Down below in the basement in the finance ministry���s press, the Budget division will deploy new machines this year.

After the Team has firmed up the figures, tallied the numbers, the Budget is sealed. As many as 100 faceless staff give the Budget a physical form. Mind you, not a digit can go wrong in the Budget.

The morning of the budget is crucial not only because the FM ���may rise to deliver the Budget speech,��� but to be officially taken up by the Cabinet. And finally to the Rashtrapati Bhavan for the president���s clearance for the introduction of the Bill in Parliament.

Interestingly, there is no term called ���Budget��� in the Constitution of India. It is called the Finance Bill or the Finance Act when it is approved. Barely would the dust on Raisina Hill have settled, and they are at it again, germinating ideas half a year in advance.