By Dr Satish Misra
In a determined bid to win the next general elections, Union Finance Minister Piyush Goyal presented a full budget though labeling it as an interim one to please voters belonging to lower middle class, unorganized sector and farmers.
Goyal, who was given the Finance portfolio only a week before the presentation of the budget on February 1, presented the budget document in the Lok Sabha that proposes an expenditure of Rs 27.84 lakh crore-an increase of 3.42 lakh crore over the last year.
As one of its final act in office, the Modi government preferred to abandon yet another bipartisan tradition of not presenting a full budget in the election year because Goyal has listed spending giveaways but has not informed where funding is going to come from.
Goyal, in his speech, announced the creation of Pradhan Mantri Kisan Saman Nidhi Scheme that is aimed at providing income support of Rs 6000 annually in three equal instalments of Rs 2000 to vulnerable farmers whose landholding is up to two hectares.
With any eye on the coming general elections, the Finance Minister has taken care that farmers receive the money in their accounts in this financial year only just before the voting takes place and he has made provision of Rs 20.000 crores in the revised estimates of 2019-19 making it effective from December 1, 2018.
The interim Finance Minister also announced a new pension scheme for young workers in the unorganised sector. Workers, with incomes up to Rs 15,000 per months, can join this by paying a monthly amount varying from Rs 55 to Rs 100 depending upon the age of the worker. Enrolled workers would get a pension of Rs 3000 per month after attaining the age of 60.
The budget has provided tax relief to that section of middle class whose annual income is up to Rs 5 lakhs. This provision is going to provide tax benefit of Rs 18500 crore to an estimated three crore middle class taxpayers.
Such and other sops like that to real estate developers who have been permitted to hold unsold inventory for two years from the date of project completion without paying tax on notional rent have been offered in the budget this year.
Allocations to education defence and health sectors have not gone up as the Finance Minister has provided only that much amount that can take care of the inflation. In the process, the Modi government has bid good-bye to fiscal prudence. The Finance Minister informed that fiscal deficit would be 3.4 percent of the GDP for both 2018-19 and 2019-20, compared with a target of 3.3 ad 3.1 percent respectively.
The Government, on the eve of the budget presentation, had revised the GDP growth rate upwards otherwise, the fiscal deficit would have been higher. It is indeed noteworthy that the Modi led NDA government has a penchant for playing with statistics. In the beginning itself, the Modi government had changed the calculation methodology and had shown its GDP figures in much better numbers and that of the predecessor government in a poorer light.
The budget has been presented with a view that if the BJP loses the election then the next government would find it impossible to fulfill the promises that have been made by the Modi government. In military lingo, this approach is called a scorched earth policy that was followed by retreating armies who used to burn crops so that winning armies do not have anything to eat.
If their highly irresponsible budget mathematics and giveaways win Prime Minister Narendra Modi the election, then they are back in power. In addition, if the BJP-led NDA government is voted out, then the next government would have an impossible task. The BJP, then in opposition, would have an excellent opportunity to attack the next government from day one.
No other government has done it before. The UPA government, in the case of farm loan waiver, did not post the cost forward.
There is nothing in the budget for the unemployed youth while it tries to please the middle class by raising the income tax exemption limit to five lakhs. On the one hand, the Modi government is trying to hide and suppress employment data; on the other it is not doing anything to create employment. It could have been done by taking steps to boost investments but nothing has been done.
In fact, the Modi government had promised in 2014 that corporate tax would be reduced to Southeast Asian levels to render Indian companies’ workers competitive with its peer countries. Possibly, the ruling party is thinking that young unemployed could be fed on emotions and are employable at Ramjanmbhoomi mandir movement or in cow protection. They can be wooed by showing them films like ‘Uri-the Surgical strike’.
The Government had come in 2014 with the promise of creating two crore jobs every year and with that objective ‘Make in India’ programme was launched with lots of fanfare. It seems that the Modi government has bid farewell to it.
Goyal, who was supposed to be an interim Finance Minister until Arun Jaitley returns from the US, has done wonders in presenting a budget, which he called a road to development.
Another first of this budget was the slogan raising in the house. The BJP MPs supported by its allies shouted “Modi- Modi Modi” after the budget had been presented in the Lok Sabha. Modi was himself seen thumping tables at least over two dozen times.
The budget is full of propaganda and is going to be publicized well. In a lighter vein, the exercise is to save the prime ministerial chair. Every government tries to retain power and so has the Modi regime done it by offering sops but whether people will treat them as genuine or not will only be known when ballot boxes are opened.
Many governments have presented populist budgets but those have not proved to be guarantees for coming back to power. The budget, undoubtedly, has lessened popular anger against the government making the electoral battle open and even.
(Dr. Satish Misra is a Veteran Journalist & Research Associate with Observer Research Foundation).