The Indian finance minister presented the Union Budget for 2000-2001 on 29 February. Under the Indian Constitution, the finance minister has to present an annual financial statement of the central government´s revenue and expenditure before Parliament. The Indian Constitution provides for a Consolidated Fund. All money must go into this Fund and all money must be spent from it. However, this cannot be done without Parliament´s approval. Hence the need for the budget. (There are small sums of money that can be spent from a Contingency Fund and there is a Public Account where deposits like small savings are kept. But these are not very important.)
Traditionally, the budget has been important because it varied excise, import duties and direct tax rates on a year-to-year basis. And if reforms had really taken hold, this would not have been the case any longer, and people would have lost interest in the budget. But since that has not yet happened and we are still in the transient phase, the budget is still important. Not because of the numbers, but because of what it does to the reform process, and the growth stimulus it imparts.
Since the first attempt at reform in 1991, the popular perspective of the budget has thus changed. But, except for some tinkering in the financial sector, there have been no substantial reforms since 1993-94. On fiscal deficit, the bulk of expenditure is non-plan expenditure (meaning expenditure that is not for projects, but is current expenditure). Today, if one adds up revenue expenditure on four heads —interest payments, defence, subsidies and salaries and wages of government employees — and compares this with revenue income, there is already a deficit. That is how serious the deficit problem is. There is no surplus on the revenue account to finance an expected deficit on the capital account.
The expectation from Finance Minister Yashwant Sinha was that he would introduce reforms in the budget and address problems of subsidies, wages and salaries of government employees, and interest payments. And the finance minister was remarkably well placed to present a truly "Millennium Budget", so called by the minister over and over in his speech, as the government is under no immediate threat, and the economy is recovering.