Union Budget – misplaced priorities, displaced outcomes!
In today’s world, any company failing to generate value for its shareholders is mercilessly stripped down in the bourses. Then why is it that when a government, year aft er year, creates negligible value for its stakeholders (tax-paying citizens) should be allowed to get away? The fact is that if one has to draw a simile then there is no difference between the Union Budget and AGMs of listed corporations. If on one hand, the chairman of the listed company discusses the balance sheet of the company in front of its shareholders, then on the other, the Union Finance Minister reads out the revenue and expenditure of the nation in front of the representatives elected by the citizens. So, if on one hand, the chairman of the company announces the achievements of the previous year and the plans for the future, the Union Finance Minister does the same. But then, this is where the similarity ends and the reality begins.
When it comes to listed companies, corporate governance is mandatory. A listed company needs to follow disclosure norms laid down by SEBI to ensure that they are accountable and responsible for every action that they take. This is only to ensure that the shareholders’ interest is safeguarded in such a way that they aren’t left in the dark and no one messes with their investments. Moreover, a shareholder has every right to question and recommend during an AGM and in the worst case, if he does not see value in staying invested, he has the right to walk out with his money (by selling his shares). Now, consider the case of India’s stakeholders (citizens). In spite of making contributions through taxes, they depend upon their elected representatives who, in most cases, are found to be yawning during the Budget sessions. Our Budget is more like an one-sided affair with no intervention from the citizens for whom the budget is made. Moreover, one would be disheartened to know how key Budget documents like the Pre-Budget statements, yearend reports and annual audit either go missing or are kept in sub-standard conditions – which is a prerequisite when it comes to transparent and accountable Budget.
In most of the Nordic and Scandinavian countries, transparency is high and is more effective; rather, shall I say, is more corporatized and the citizen participation is so high. Budget documents are not formed until the public passes them. In South Africa, the Pre-Budget statements are coupled with the Mid-Year Review. Similar procedures are followed in Brazil and Kenya. Talking about audits, in India, citizens have only one way to find out about the way their money is used – RTI – which is not enough and eventually have no rights to challenge the wrong doings of the government, if found. Take for instance, France produces a comprehensive audit report (certificationdes Comptes de l’Etat) while New Zealand, Russia and UK follow similar fool-proof procedures. Many countries follow public expenditure tracking system that gives a perspective to its citizens to monitor the public fund expenses, and further acts as a tool to raise voices against ineffective and inequitable management of funds.
The significance of such systems is even more pertinent in our case as lack of transparency and accountability has only benefited the middle and upper middle class at the cost of the masses. And whatever is being doled out in the name of masses has been blatantly embezzled for personal gains. The Budget has become an exercise to take contributions from all and to distribute amongst a few!
In today’s world, any company failing to generate value for its shareholders is mercilessly stripped down in the bourses. Then why is it that when a government, year aft er year, creates negligible value for its stakeholders (tax-paying citizens) should be allowed to get away? The fact is that if one has to draw a simile then there is no difference between the Union Budget and AGMs of listed corporations. If on one hand, the chairman of the listed company discusses the balance sheet of the company in front of its shareholders, then on the other, the Union Finance Minister reads out the revenue and expenditure of the nation in front of the representatives elected by the citizens. So, if on one hand, the chairman of the company announces the achievements of the previous year and the plans for the future, the Union Finance Minister does the same. But then, this is where the similarity ends and the reality begins.
When it comes to listed companies, corporate governance is mandatory. A listed company needs to follow disclosure norms laid down by SEBI to ensure that they are accountable and responsible for every action that they take. This is only to ensure that the shareholders’ interest is safeguarded in such a way that they aren’t left in the dark and no one messes with their investments. Moreover, a shareholder has every right to question and recommend during an AGM and in the worst case, if he does not see value in staying invested, he has the right to walk out with his money (by selling his shares). Now, consider the case of India’s stakeholders (citizens). In spite of making contributions through taxes, they depend upon their elected representatives who, in most cases, are found to be yawning during the Budget sessions. Our Budget is more like an one-sided affair with no intervention from the citizens for whom the budget is made. Moreover, one would be disheartened to know how key Budget documents like the Pre-Budget statements, yearend reports and annual audit either go missing or are kept in sub-standard conditions – which is a prerequisite when it comes to transparent and accountable Budget.
In most of the Nordic and Scandinavian countries, transparency is high and is more effective; rather, shall I say, is more corporatized and the citizen participation is so high. Budget documents are not formed until the public passes them. In South Africa, the Pre-Budget statements are coupled with the Mid-Year Review. Similar procedures are followed in Brazil and Kenya. Talking about audits, in India, citizens have only one way to find out about the way their money is used – RTI – which is not enough and eventually have no rights to challenge the wrong doings of the government, if found. Take for instance, France produces a comprehensive audit report (certificationdes Comptes de l’Etat) while New Zealand, Russia and UK follow similar fool-proof procedures. Many countries follow public expenditure tracking system that gives a perspective to its citizens to monitor the public fund expenses, and further acts as a tool to raise voices against ineffective and inequitable management of funds.
The significance of such systems is even more pertinent in our case as lack of transparency and accountability has only benefited the middle and upper middle class at the cost of the masses. And whatever is being doled out in the name of masses has been blatantly embezzled for personal gains. The Budget has become an exercise to take contributions from all and to distribute amongst a few!
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ReplyDeleteWHEN EVER SOME ONE IS MAKING PROFIT THERE IS SOME ONE MAKING LOSS SO CORPORATION AND GORMENT CANNOT BE PUT IN SAME BRAKET.
ReplyDeleteAND SIR BUDGET DOES NOT TAKE CONTRIBUTION FROM ALL RATHER IT TAXES FEW AND GIVES THE POWER TO THAT FEW PERSONS TO MAKE A LOOT. I.E CORPORATIONS ARE TAXED so that they can EXPLOIT THE LABOURS WORKING CLASS and get away with it