Delhi’s unprecedented dustup over problems at the Supreme Court, considered India’s most respected institution, has taken the NDA government’s focus away from the year’s first, most important task – The Budget.
Like every year, the annual task has far-reaching implications for politicians and people in the chaotic South Asian democracy, the exercise done in both public and political interest.
But this time, political considerations weigh high on the mind of Finance Minister, Arun Jaitley, especially in the light of BJP’s not-so-happy performance in the recent Gujarat polls. Top voices and industry captains have shared their concerns and areas of focus for the budget, divided on whether it will be populist or reformist.
Jaitley would like to consolidate on major steps taken than opening up of any new front, steps could also be taken to progress things done in the past. But before that, the FM would weigh his political options. He wants the party to stay on course with fiscal discipline and allocate to schemes on rural development and job generation.
The FM knows the BJP won in Himachal Pradesh and Gujarat but there are many more state elections coming up in 2018 before the national polls hit the road in 2019, amidst rumours that PM Narendra Modi could even advance the date of the general elections to match it with the state polls. Scheduled for April, the Karnataka – a mini India – election campaign is already underway. Then there’s Rajasthan, Madhya Pradesh, Chhattisgarh – states where BJP rules. There is Nagaland, where the politics are all its own and heavily tribe-driven, and the red bastion of land-locked Tripura bordering Bangladesh, and of course, Meghalaya and Mizoram.
The FM will not ignore the states in his budget, he will not make the exercise too aggressive. Global credit rating agency Moody’s has already predicted that reforms in India and some other Asia Pacific economies like Indonesia may lose steam in 2018 ahead of the Parliamentary elections.
But the BJP is not showing any signs of nervousness.
Recently, NITI Aayog vice chairman Rajiv Kumar told reporters on the sidelines of a conference in the Indian capital that “PM Modi has never made any Budget to win elections.” Kumar was responding to questions that there were enough predictions in Delhi that the government will frame the Budget keeping in mind the 2019 elections. “It’s up to the Finance Minister & the Prime Minister to take a call on suggestions given to them, but if anyone is under the impression that this last Budget (of the present government) will be a populist one, then they’re wrong. The Prime Minister never made a Budget to win votes. It will be made to benefit common man and boost economy,” Kumar said.
But a top lobby outfit, ASSOCHAM, said in a note that “inevitably, it would be the popular voters’ sentiment that would be factored in by the Centre and the state governments in their policies for the budget.”
And considering this would the FM’s fifth budget – technically his last, as the next one due just months before the scheduled date of the 17th general election will be a vote-on-account, where Parliament approves routine expenditure such that the government continues to run till a new regime is in place – it will be most challenging for the economy’s primary steward.
Jaitley knows balancing politics with economics is an unenviable task, especially when prolonged farm distress and a delayed recovery in growth is shaping the nation’s politics. And he also knows structural problems of agriculture can’t be fixed by mere policy interventions. But he will still make an attempt, ostensibly because its important in politics to be perceived to be doing something important. Jaitley would definitely send that strong message to all the states which are headed for the polls in 2018.
The FM has made some well-meaning moves, considering the sustained policy action to clean up the legacy of bad loans with banks. But his rivals could argue how the BJP ignored agriculture. And Jaitley knows how vulnerable his party is to political charges from rivals, the Gujarat polls has been a great eye-opener.
There are pressures from the allies over the rising oil price. For almost a year, the prices have risen by almost 30 per cent, in contrast to the first three years of the NDA regime when low, falling oil prices provided a great boost to the economy.
“The budget will be a message from the BJP, it will be crucial in influencing the electoral message the BJP will like to project,” says the party’s economic cell head Gopal Agarwal.
Agarwal says BJP’s inheritance from the UPA was a nearly double-digit inflation and an anaemic growth trajectory. He says the BJP is happy that after the roll-out of GST, one component of indirect taxes (a fairly huge one) is now decided outside the budget. “The BJP has been able to tame the demon of inflation, growth is showing faint signs of a recovery. The 6.5 per cent growth forecast for the current fiscal year is not totally disappointing in comparison to the initial projection of 6.7 per cent.”
The BJP must explain its moves to its political allies, opposition and the masses. And it is here the FM – one of India’s most able politician – will have to wave his magic wand when he presents the budget on February 1, 2018. Indians must feel that the BJP is not offering distress like the pressures of demonitisation.
Indians must buy into Jaitley’s, sorry Modi's new, mega gameplan.
