Pre-Budget consultations make budgeting more participatory but risk being captured by organised interests. Evaluate.

Article 112 requires the Budget to be laid before Parliament, but it is drafted inside the executive. Pre-Budget consultations let outsiders into that drafting stage. In the round for Budget 2027, the Finance Ministry met CII, FICCI, PHDCCI and ASSOCHAM, and some of them asked for the LTCG tax on equity to be abolished [1]. That round shows both what the process can offer and how it can be misused.

Participatory strengths

• Breadth: The 2025-26 round had more than 100 invitees from 9 stakeholder groups, including farmers, trade unions and economists [2].
• Ground-level inputs: Trade unions have used these meetings to ask for more MGNREGA funding and EPF cover for unorganised workers [3].
• Technical feedback: Industry points out where India's markets fall behind others, such as how its tax on equity gains compares with Korea, Taiwan and Brazil [1].
• Legitimacy: Proposals that stakeholders have already discussed tend to face less resistance and see better compliance after the Budget.

Risks of capture

• Unequal organisation: Industry chambers have research cells and lobby all year. Small investors, informal workers and consumers have no comparable voice.
• Self-serving demands: PHDCCI wants LTCG on equity abolished and STCG cut from 20% to 10% [1]. Most of that benefit would go to wealthier households.
• Losers who are not consulted: SEBI found that about 93% of individual F&O traders lost money in FY22–24, more than ₹1.8 lakh crore in total [4]. Market bodies are asking for STT cuts, but these traders have no seat at the table.
• Selective evidence: Industry cites three peer countries. The OECD found that 33 of 40 countries tax gains on shares [5].
• Opacity: The government does not publish the submissions or any reasoned response to them, so the public cannot see whose input changed the Budget.

Verdict The process is participatory in form. But a bargaining group's voice depends on how well it is organised, so in practice it is only partly representative. The risk of capture is real, but it can be managed.

Consultation is still worth keeping, provided it is opened up. The Ministry could publish all submissions with written responses, add an open online portal, include groups that are under-represented, and test lobby claims against regulator data such as SEBI's. These changes would make the process more transparent and accountable, and keep the Budget focused on inclusive growth rather than on the interests of the best-organised groups.