Will Budget 2018 Pay Off?


The gambit will pay off in 2019, provided those benefited by this Budget stay grateful for another year and three months, and the middle class merely stays disillusioned rather than antagonistic towards the Modi government

Finance Minister Arun Jaitley on Thursday presented his annual Budget proposals that clearly bear a stamp of politician Narendra Modi, with maximum emphasis on the have-nots, the single largest section of the country’s electorate. The Budget is, of course, humane and futuristic too. The National Health Protection Scheme with a cover of up to Rs 5 lakh per family per year is the world’s largest healthcare programme that will benefit about 50 crore poor and vulnerable Indians. Integrating “the nation with a network of roads, airports, railways, inland water” and providing “good quality services to the people”, as the finance minister put it, is going to cost Rs 5.97 lakh crore. The increased budgetary and extra-budgetary expenditure on infrastructure is bound to boost employment at various rural and urban levels. The higher customs on mobile phones is a protectionist measure to encourage domestic players in the market and generate jobs. If there is a state transport that can be rightly called the national carrier, it’s the Railways, which will now have more funds for efficient functioning. This department deserves a special mention for the much-needed, apolitical stand Modi took on it right in the beginning of his tenure. He restricted Sadananda Gowda and Suresh Prabhu from announcing new trains recklessly to pander to their State constituencies, and finally abolished the separate rail budget that had been, before Modi’s reign, reduced to an electoral tool for successive Bengali and Bihari ministers who held this portfolio as if it were their birthright. This government deserves praise for the focus on consolidating the resources and ameliorating the service. A huge chunk of the capital expenditure going into capacity creations like 18,000 km of doubling, third and fourth line works and 5,000 km of conversion to broad gauge — added to 12,000 wagons, 5,160 coaches and 700 odd locomotives — would give the commuters and freight users, generally misled to think about the fare alone, a smoother ride. The short-distance commuters of and around Mumbai and Bengaluru must particularly be happy.

Farmers have been the most pampered lot in this Budget, in all likelihood because of their alienation from the Bharatiya Janata Party during the recent Gujarat election. In fact, farm distress has always cost any ruling party dearly, and this is where politician Modi got the better of statesman Modi. Setting the minimum support price at one-and-a-half times the cost of production for Kharif crops is a disincentive for the farmer to market his produce within the season. Instead of NITI telling the States how to offer farmers better prices, the crop producer should have been set free to decide his price like a manufacturer-seller in any industry does. Hand-holding has never helped the roughly estimated 60% section of the population. The future won’t be any different unless the majority of farmers who are poor diversify, the rich minority stays with larger, cultivable lands in the possession of each, employ the latest scientific knowledge in agriculture and are treated like regular businessmen who must pay taxes on their income. Buying the rhetoric of activists, the government has sought to boost organic farming, getting the legal sanction for which, those interested will soon know, is a tall order.

The middle class must be wondering how exactly Modi had asked Jaitley to cater to them. While about 2.5 crore people from the lowest taxable income group have been relieved due to the return of the standard deduction, those earning salaries beyond this range, but who are by no means rich, have got nothing. They may derive consolation from the push for infrastructure as well as Digital and Start-Up India, which should help the young, and the elderly will thank the concessions offered to them. However, selfless as this class is, it will speak like an economist about the macro-economic scenario that includes the fiscal deficit for FY 2019 being pegged at 3.3%, which is well within control. The manageable deficit means that governments in the near future will not have to take drastic and austere measures to shore up the revenue.

As for black money, other than the fact that India is now the fastest growing economy, there is little reason for those who have stashed our money abroad to invest it back in India. In fact, the failure of industrialists to honour their promise of generating millions of jobs at the 2014 function to launch ‘Make in India’ proves this country is yet to be their preferred investment destination. Expectedly, the stock market was today not impressed. The government forcing the people to use digital money is praiseworthy for the sake of transparency and accountability — more so after Jaitley has declared crypto-currency as illegal. The amount recovered through domestic means so far and the revenue added pale in comparison to the humongous figures that had been bandied about as lying overseas to shock the people against the Indian National Congress government and seize power from it in the 2014 election.

The gambit will pay off in 2019, provided those benefited by this Budget stay grateful for another year and three months. The BJP must pray that the middle class, in the worst case scenario, stays indifferent during the polling exercise. If, exasperated, it begins campaigning against the Modi government, this class’s smaller numbers and the much larger volume of the poor will be rendered electorally meaningless. For, it’s the educated that tell the teeming millions which side to tilt towards in every election. If Modi wins nevertheless, that still would not absolve him of the act of squandering the golden opportunity of transforming India through systemic rather than functional reforms. 1 February 2018 was the last chance for Jaitley to announce some big-bang reforms; he failed. And Modi has, at best, managed the money better than the Sonia Gandhi-Manmohan Singh duo.

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