Mumbai: The Budget Session of Parliament will reveal the mind of the newly elected Modi government on critical policy matters pertaining to the economy — from where the money will come (taxes to be imposed) and the manner in which it will be spent through the various ministries and departments. These decisions will naturally indicate the government’s priorities and give us a picture of policy across the spectrum.
Parliament may, therefore, be expected to see debates and wrangling in respect of the government’s vision as regards each ministry before the two Houses clear the allocation of budgetary resources to the various sectors of government. Mr Modi and his team will be on test.
Going by what we have seen so far, it is safe to suggest that the government’s efforts will be to persuade us that its predecessor has left the national finances in a mess, and that its room for manoeuvre is thus limited in terms of fresh allocations for a range of important programmes. We may hence expect the axe to fall on projects like National Rural Employment Guarantee Act and food security and similar social security concerns that had informed some important decisions of the Manmohan government.
Whether these programmes are continued in a diluted form, possibly with limited coverage, or scrapped altogether, will become clear in course of time. The chorus may rise that these projects have become conduits of large-scale corruption and ought to go.
That will be a poor argument, though. The government leaks like a sieve no matter which party runs it. Every major item of government expenditure brings in the carpetbaggers — the corrupt politician and bureaucrat and their accomplices outside of government, but the Modi government is unlikely to be jettisoning these. Big ticket defence purchases are on the anvil.
These will go through. After all, Mr Modi and his cohorts have been telling us that the country has been rendered weak and vulnerable because the last government was lethargic about arms purchases, and that it wasn’t nationalistic enough (remember it is the Bharatiya Janata Party which owns the patent for patriotism).
So, typically, the expenditure heads this government is least likely to want to support are those whose intended beneficiaries are the poor, who are the majority in the country — people whose life conditions frequently evoke pity and occasionally concern, but not often government schemes backed by funding and long-term commitment.
The rising middle classes are not likely to complain much, if at all, if this section gets the chop. They backed Mr Modi’s rise to power in a big way. Their chief concerns are income-tax relief (and not thinking of the poorer classes), and the lowering of the prices of some high-value items whose ever new models enter the market at regular intervals and tantalise them. Some demands of this so-called “aspirational” segment are likely to be heeded in the Budget.
Business and industry persistently demand the lowering of taxes and duties they are liable to pay. They may expect a big leg-up from finance minister Arun Jaitley, for this government is eager to prove that it is good at creating a favourable domestic environment for investment (not that this is not needed).
If the interest rate cannot be lowered on account of inflation concerns, other ways would have to be devised to lend more money to business and industry and on better terms than before. The Modi government has to be seen to be industry-friendly. This is because the PM has built his reputation espousing the cause of big industry and is the progenitor of the so-called “Gujarat model” whose strong suit is just this.
When he says “minimum government, maximum governance”, he means the cutting of governmental expenditure in order to enhance the space for the market-wallahs (and not necessarily the market in every situation).
And what about inflation itself, especially food inflation, the scourge of the Indian people and retardant number one for the Indian economy? Evidently, the problem is a complex one and hasn’t gone away for the better part of 15 years — since the time of Prime Minister Atal Behari Vajpayee when its tenacity was first observed.
When the middle classes and big industry have been appeased, and those lower down in the social order are unlikely to see their lot improve, how are the poor to be managed, politically? Again, this is a complex question. One way is communal politics, to try to polarise and divert people in the name of their religious claims and make them rise in opposition to the “other”.
The other and this too is important way is to discredit parties and groups that try to speak up for the needy and demonstrate the government’s shortcomings.
