Vinod Anand

IN common nomenclature, a budget includes an estimate of income and expenditure for a future period as opposed to an account which records financial transactions. Budgets are an essential element in the planning and management of the financial affairs of a nation, business and even household. They are made necessary because income and expenditure do not occur simultaneously.

Talking of business and households, micro and small businesses and even small households (essentially in terms of empowerment), the annual budget is not that important and even complicated. In fact, it is also sometimes not needed. For example, most of these units and households live from morning till evening and do not much bother about what happened in the past, and what is going to happen in the future. On the other hand, in the context of large businesses and large households, the budget normally extends to one full year, and is complex and complicated as it is normally broken up into monthly and weekly periods, and it takes several months to prepare. To start with, one has to estimate the sales and the resulting income for the given period, which has to be balanced by the various costs incurred on buying various inputs, technical know-how, production processes, management, marketing, and research and innovation. In other ways, the detailed cash flows and capital expenditure have to be estimated for the given period. Sometimes, the borrowing requirements and capacity requirements have also to be estimated.

As compared to large-scale business budget, the national or the government budget is based on the estimates of government expenditure and revenue for the financial year (also termed as fiscal year or budget year), which varies from country to country. For example, the USA it is from October 1 to September 30 of the following year. The Australian government's fiscal year begins on July 1 and concludes on June 30 of the following year. In the United Kingdom, the fiscal year runs from April 6 to April 5. In Canada, New Zealand, India, Hong Kong, Japan and South Africa, it runs from April 1 to March 31. In essence, often the fiscal or tax year is specifically established not to match the calendar year (also called natural year) so that accounting year-end work does not coincide with periods of high activity, such as the Christmas or Diwali shopping rush for retailers, or with holiday periods when employees may prefer to take vacation. There is another thing to remember: in the context of India, the Government Budget can either be a union budget (for the whole country) or state budget (for a given state).

There is a marked difference between the national budget and the household budget. Let us look at these distinctions:

1. Any budget (national or household) gives an estimate of receipts and expenditure for the given period, but the period is necessarily one fiscal year for the national budget, whereas, it could be a month or so for a household budget. In other words, the national (or union) budget is an annual event, and the household budget is generally a monthly affair. Beyond that, national budget has a massive scale both in terms of revenue and expenditure, whereas household budget is highly limited in both respects;

2. A budget can either be balanced, deficit or surplus. A deficit budget is one when current receipts are equal to current expenditure for the given period. In other words, taxes on income and expenditure etc. are sufficient to meet payments for goods and services, interest on debt etc. In case current receipts are less than current expenditure, it is termed as a deficit budget, and when current receipts exceed current expenditure, it is a surplus budget. In a developing economy, and even in developed countries, the government budget is normally deficit. It is rarely balanced or surplus. But in the case of households, it is the other way round. It is normally balanced or surplus, and rarely deficit except when there is severe inflation, or other natural and unexpected calamities. It is a known fact that surplus household budget is highly desirable to accelerate gross domestic savings that eventually give an effective push to accelerate economic growth. It is not out of place to mention here that such a saving pattern of the majority of Indian households is an important and unique virtue of “Indian ness”. That is why the Gross Domestic Savings in India account on an average to about 30 per cent of the Gross National Product.

3. The receipts of government budget are categorized into revenue receipts and capital receipts. The revenue receipts consist of tax revenue and non-tax revenue, and the capital receipts consist of various earnings of the government like, dividends from non-debt public sector enterprises and other sources, and also borrowing from the market for financing the growing expenditure. The sum total of these two for the given period estimates the gross receipts of the government. Let us see how these two kinds of revenue receipts stand in the case of a household budget. Tax revenue exists only for the government, and not for the households, but non-tax revenue exits for both. A household does not earn its income from taxes. It earns its income in terms of salary or profits from business. But the non-tax income of households is like a dividend earned from investments in shares and bonds, mutual funds, and cumulative or non-cumulative interest from short and long period deposits in the banks. Capital receipts also exist for households. These are in terms of personal loans from banks to finance consumption beyond means of income. But most of the households, except when they are under severe pressure and distress, do not go for it. They live a frugal life and try to live within their means. This is another important trait of “Indian ness”.

4. The expenditure of the government is categorized into plan and non-plan expenditure. Each of them is further classified into capital and non-capital (also termed as revenue) expenditure. Plan expenditure is basically concerned with development expenditure essentially on social sectors, like education, health, human and gender empowerment, insurance, public distribution and son on. Non-plan expenditure is akin to non-developmental expenditure. It includes defence expenditure, debt-servicing payments, subsidies and grants to states and union territories. As has been said above, it is further classified into capital and non-capital (also termed as revenue) expenditure. The former relates to capital expenditure on defence and loans to public sector enterprises, and the latter relates to expenditure on loan repayments. In the context of household budgets, expenditure is also classified like the government budget into plan and non-plan (also called revenue) expenditure. Each of them is further classified into capital and non-capital expenditure. Plan capital expenditure indicates expenditure that creates tangible and durable assets leading to future returns. Some of the examples of such expenditure are refrigerator, washing machine, television, books, automobiles, and so on. Each of them lasts for long period and can be continuously used. Books can be read a number of times, and car can be used as and when required for long time. All of these assets can be sold if required and they can fetch resale value. Some of the examples of non-capital plan expenditure in the context of a household budget are loan repayments, household expenses, electricity bills and telephone bills payments, school fees for children and so on. Coming to the non-plan expenditure, as we have said, it is categorized into capital and non-capital (also termed as revenue) expenditure. Non-plan expenditure, whether it is capital or non-capital, is, in fact, unexpected expenditure which is not planned in advance. Examples of non-plan capital expenditure are buying a glucose meter, or say a blood pressure instrument urgently required by the household. Examples of non-plan non-capital expenditure are expenses on medication, sudden traveling expenses, and so on.

It is, therefore, concluded that there is a lot of similarity between the government budget and the household budget. The only thing is that the semantics are different and one has to correctly understand them. The distinction between Government and Household Budget is briefly depicted on the next page:

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Terrorists aim for destabilisation, media attention

Beena Sarwar writes for IPS from Karachi

SOUTH Asia seems to be caught in a vortex of violence as the countries that form this region - from Sri Lanka at the southern-most tip, Bangladesh to the east, Nepal crowning the north, Pakistan along the west and India in the middle - deal with internal nightmares that their governments routinely blame on neighbours.
The armed attack on the Sri Lankan cricket team in the historic city of Lahore in Pakistan has sent shockwaves through a country already racked by regular suicide and other attacks.

Eight Pakistani policemen died and several were injured saving the Sri Lankan cricketers, six of whom were wounded in the attack.

At the other end of the sub-continent, Bangladesh is still reeling from the shock of a border guards’ mutiny over pay and working conditions, resulting in soldiers massacring over 70 officers, including some of their wives.

Some analysts fear that the horrific incident might elicit copycat responses elsewhere too, where soldiers are unhappy with the tasks they are made to do.

Meanwhile, India has yet to recover from the horror of the attacks in Mumbai that claimed some 180 lives. New Delhi had, as a direct result of the attacks, called off participation of the Indian cricket team in the Pakistan tests.

Sri Lanka, in the last stages of a heavy-handed army operation against the Tamil separatists who have been fighting a guerrilla war against the state for over two decades, could hardly have imagined that its cricket team would come under fire in Pakistan, a friendly country.

Still, as the Sri Lankans told journalists after the Lahore attack, they had come here "well aware of the risks".

Analysts point out that Tamil separatists are unlikely to be responsible for the attack, given the back foot that they are operating from.

The Sri Lankan team, in Lahore for a five-day test match where they already played for the first two days, were en route from their hotel to the stadium early in the morning on Mar. 3 when the gunmen attacked.

The firing reportedly began from three directions as the van slowed down near a roundabout close to the red-brick cricket stadium. Shaky television footage showed men with guns and backpacks taking position and firing. Their first target was the police escort.

According to the van driver, one of them flung a hand grenade which rolled under the van without damaging it. He said that the cricketers flung themselves to the floor of the van as he accelerated to escape the gunfire, managing to get the bullet-riddled van with the cricketers to the stadium.

There is universal condemnation for an act which many believe is an attempt to further discredit and isolate Pakistan. Many are praying for the quick recovery of the injured cricketers who were airlifted to Sri Lanka.

"They were our guests, they came to Pakistan when most people were not willing to come," one man in Peshawar told a television journalist.

"We are a friendly and cricket-loving nation," said another passer-by. "Now no cricket team will want to play here."

The incident has more or less put paid to Pakistan’s aspirations of hosting the next World Cup in 2011, say observers.

The attackers struck at a sport that is hugely popular across South Asia, a quick throwback to a common colonial past (for all the countries except Nepal which was never under British rule), a legacy that includes the English language, administrative systems and railways.

In normal times, India and Pakistan’s cricket teams on the wicket pitch elicit responses akin to surrogate battlefields. A Pakistan-India game is referred to in parts of India as 'Qayamat' (doomsday).

Despite the keen rivalry, love of the sport is a unifier. ‘Cricket diplomacy’ has featured among the permissible people-to-people contacts that have grown immensely over the past decade or so.

"Cricket is not the bone of discord between the two countries," Gul Hameed Bhatti, group editor sports of the country’s largest media group, Jang told IPS. "Basically the problem is the tensions between both countries, and cricket becomes the casualty. This incident has thrown cricket and other sports back into the dark ages. I don’t see anyone agreeing to come and play here now."

Bhatti added that he had long "feared that this was a disaster waiting to happen because the situation in the rest of the country is so volatile. It was unrealistic to think that sportsmen could remain isolated from it’’.

Nor, say analysts, can other areas of society, like culture. In early November, explosions on the penultimate night of a major international performing arts festival in Lahore caused panic. There were no casualties although some people sustained minor injuries. Artists, foreign and local, defiantly rallied around to make the festival’s last day a resounding success.

Ironically, the festival was held in the cultural complex next to the Gaddafi cricket stadium where the Sri Lankans were headed when they were attacked.

Most people, said Bhatti, "had become complacent, thinking they would never target sportsmen."

They included Pakistani cricket hero turned politician Imran Khan who shortly after the Mumbai attacks categorically told an Indian newspaper, "There is no problem about the security of cricketers in Pakistan. The terrorists will never target cricketers knowing that they will then lose the battle of hearts and minds of the people. Cricketers are safe in Pakistan."

The audacious attack in an up market Lahore locality is now being compared to the Mumbai attacks, where ten gunmen targeted symbols of national strength. Police are saying that about a dozen gunmen were involved in the Lahore attacks.

Cricket is an area where Pakistan has traditionally shone as a global power with a huge fan following around the world.

Security fears have, however, massively dented enjoyment of the sport as many foreign teams have over the past years cancelled tours, including India after the Mumbai attacks that similarly cast a shadow over ‘India shining’, raising doubts about internal security.

Pakistan, already beset by multiple political problems, has for some time been facing a deadly threat from the ‘jehadi’ forces - regional players like the Taliban (from Afghanistan and Pakistan), the international al-Qaeda, and local militant outfits like the banned Laskhar-e-Tayyaba and the Jaish-e-Mohammed, many of whom with roots in the southern Punjab and links to Pakistan’s intelligence agencies that nurtured them during the Afghan war of the 1980s.

Following the events of 9/11, these forces have converged, to emerge as a greater threat than ever before, not just for Pakistan, but for world peace, say analysts.

Their agenda is not just to enforce what they consider to be an Islamic system, but to overrun and destabilise the state itself. Pakistanis have suffered heavily under this agenda, paying a heavy price for the policies of military rulers - who have run the country for more than half its 60 years of existence - that civilian governments have been unable to change.

These policies include cultivating ‘Islamic warriors’ to fight against the Soviet occupation in Afghanistan during the 1980s, supporting the Taliban in order to create ‘strategic depth’ in Afghanistan (citing the threat of a hostile India on the eastern border), and using some of these elements to bleed India in the disputed region of Kashmir.

No elected government in Pakistan has ever completed its tenure. They are routinely overthrown either by the army or dismissed by various Presidents using the powers invested in that office by the military dictator Gen. Ziaul Haq who also got himself appointed as President.

The current elected government, say analysts, is the first that is actually serious about fighting the jehadi threat which it recognises as endangering the country’s very existence. "But it appears that various elements within the establishment are still bogged down in the old policies and are unwilling to give democracy a chance," said an observer.

Just as enraged Indians had "jumped on the blame Pakistan bandwagon" immediately following the Mumbai attacks of November, "some here are now blaming the Indian hand," says Bhatti.

Many see the attack on the Sri Lankan team as an attempt to take ‘revenge’ for Mumbai and an attempt to isolate Pakistan internationally.

Lt. Gen. (retd.) Hameed Gul, former head of Pakistan’s shadowy Inter Services Intelligence (ISI) and a known hawk, was on television saying that "India wants to declare Pakistan a terrorist state". The attack on the Sri Lankan team, he declared, "is related to that conspiracy."

The Pakistan government itself has been more circumspect as have other analysts, including retired army officers like Maj. Gen. (retd) Jamshed Ayaz Khan who cautioned against such accusations "without a full investigation".

The Sri Lankan government’s response has been conciliatory. "Pakistan's cricket team was willing to visit our country when others weren't because of security worries," said Palitha T.B. Kohona, Sri Lanka's foreign secretary, "and his government was pleased to reciprocate. The game must not be affected by a lunatic fringe".

Ironically, media proliferation, particularly the 24/7 television news channels, has increased the intensity and probability of such dramatic high-profile attacks, say analysts. Terrorism thrives in the media spotlight which terrorists successfully attracted in Mumbai last November and now with the Lahore attack.

Ultimately, those who suffer the most after such incidents are ordinary people in India and Pakistan, say observers. The Lahore attack is bound to generate further tension between the two countries which have still not resumed the composite dialogue process stalled after the Mumbai attacks in November.

Rather than cooperating to solve a common problem, India and Pakistan remain prisoners of their hostile pasts. The ultimate winners in this game, note analysts, will only be the terrorists whose aim is destablisation and creation of tension around the world. [Courtesy IPS]

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