Click to play videoNew Delhi: The United Progressive Alliance (UPA) Government is expected to defy convention and go for major tax sops in its Interim Budget on Monday even as General Elections are just a couple of months away.
External Affairs Minister Pranab Mukherjee, who is also handling the Finance Ministry in the absence of Prime Minister Manmohan Singh, will present the Interim Budget.
With elections close at hand, the UPA may announce some major sops to woo voters.
The Prime Minister has already signed the Interim Budget related papers and has forwarded them to President Pratibha Devisingh Patil.
Interim budgets in the past have essentially been maintenance exercises. Though there is no constitutional bar, it would be improper for a House to approve schemes for the entire year when it would be in office only for a part of that year.
Deputy Chairman of the Planning Commission Montek Singh Ahluwalia had said in Davos a few weeks ago that there would be a substantial increase in spending - but in the next Budget - if the UPA government returned to power.
In Delhi he said that to revive the economy the fiscal deficit should be high - between the target of 2.5 per cent of Gross Domestic Product (GDP) for this year, and the actual gap of 6.3 per cent, excluding oil bonds, estimated by the Prime Minister's economic advisors.
When the economy is on life support, should the government bow to propriety and refrain from economic boosters, when there is no constitutional bar?
"I think it is a bit of a both. It would not be proper for a political party to prevent a rosy budget, spend so many crores on the poor and needy and so forth and leave it to the elections saying this is what we will do if voted to power," says constitutional expert Fali Nariman.
Though Home Minister P Chidambaram says technically there is no constitutional impediment to changes in taxation, they are unlikely because a House that is on its last legs should not bind the one that succeeds it.
But there could be an increase in allocations for flagship programmes like the rural jobs scheme, as spending during the year has almost doubled to Rs 30,000 crore this year.
There have been 11 Interim Budgets since Independence but none of them sprang a surprise.
The then finance minister Morarji Desai also tabled the Economic Survey in 1962-63, unlike this time. The Interim Budgets of YB Chavan, HM Patel and R Venkataraman happened after the elections.
Yashwant Sinha, like Desai, presented two Interim Budgets. Manmohan Singh's Interim Budget before the May 1996 elections, was a virtual election manifesto.
He took credit for Rs 5,000 crore in disinvestment receipts and Rs 4,000 crore in dividend from state owned enterprises, money that his successor would have to find.
The Finance Bill will be presented along with the Interim Budget, because the existing income tax structure will survive for only 75 days after the financial year. Can there be changes?
The then finance Minister Jaswant Singh in 2004, wanted standard deduction raised for the salaried class but did not seek Parliament's approval.
R Venkataraman in the 1980 Budget gave three rather innocuous exemptions. If fringe benefit tax is to be suspended for exporters for one year, then there is a precedent.
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