The very first line of the budget speech talked about expectations. But expectations can be dangerous. Great expectations can be even more dangerous. Arun Jaitley and Narendra Modi must be pondering over this as hosannas and diatribes swirl around in the next few weeks. In contemporary history, only two other leaders apart from Modi have generated such huge expectations. In 1971, Indira Gandhi rode a wave of popularity and great expectations like an avatar of Goddess Durga. By the time her finance minister, Y. B. Chavan, presented the fourth budget of her regime, a sense of betrayal, disbelief and despair had replaced expectations. Her son Rajiv Gandhi won the most decisive mandate ever in Indian electoral history. Indians expected much of him; perhaps too much. The fourth budget of his regime was presented by the now notorious N. D. Tiwari. But Bofors, Shah Bano and Ram Mandir had virtually derailed his regime by 1988. Arun Jaitley has presented the fourth budget of the Modi regime. Will Modi face what Indira and Rajiv faced or has Jaitley pulled enough rabbits out of his hat?
The demonetisation decision showed that Modi is capable of taking risky gambles. The billion dollar question after that has been: Will Modi become a Margaret Thatcher or re-invent Indira Gandhi? The latest budget makes it very clear he has opted for the later, with a wink towards the former.
“Garibi Hatao” is indeed back with a vengeance. Indira Gandhi had a 20 point programme. In his budget speech, Jaitley unveiled a de facto 10 point programme starting with farmers and ending with honouring honest tax payers? Just look at some numbers that Jaitley reeled off during his speech. Rs 10 lakh crore credit for farmers. A solemn vow to lift one crore rural households out of poverty. An all-time record Rs 48,000 crore allocated for NREGA. A promise to deliver one crore houses to poor Indians by 2019. Skill India schemes to be expanded from 60 to 600 districts. High speed Internet connectivity for 1.5 lakh villages. Total allocations for infrastructure sector are close to Rs 4 lakh crore. 2,500 crore digital transactions set as target for the year. Mudra allocations for small entrepreneurs doubled to Rs 2.44 lakh crore. Women and child welfare schemes to get Rs 1.84 lakh crore. One can just go on and on. Who knows, the poor who barely make Rs 100 a day might be enthused by the decision that no cash transactions beyond Rs 3 lakh in cash will be allowed.
Even when numbers were not reeled off, the emphasis on poor and the underprivileged was painfully apparent. Jaitley talked of protecting the poor from scamsters misusing cooperative banks. The poor versus rich narrative was evident from other bits of the speech. Jaitley pronounced, to much desk thumping, that laws will be changed to ensure that assets and properties of economic offenders who flee India would confiscated (Vijay Mallya, anyone?). This has become clear with Jaitley imposing a super tax or surcharge on the super rich. The narrative is clear: we are trying to be a surreptitious Robin Hood.
Has there been anything for those praying and hoping for some bold measures that would unblock the rigidities and distortions that prevent entrepreneurs and investors? Well, there was this promise that the Foreign Investment Promotion Board will be abolished. There was also a promise that public sector outfits like IRCTC will be listed on stock exchanges. But there was nothing about privatisation of public sector companies such as Air India that continue to bleed the tax payer. The exact opposite was proposed by Jaitley in fact. He talked about creating an energy behemoth owned by the state that will rival the ones seen in China, Russia and Iran. These moves are so radically different from what the Atal Bihari Vajpayee regime attempted between 1998 and 2003 that some cynics are saying, that this Modi regime is the UPA with a saffron lipstick. In fact, the “small is beautiful” ideology that has pervaded economic discourse in India since the times of Jawaharlal Nehru seems to be very popular even now. No wonder Jaitley announced a 5 per cent tax cut for companies with a revenue of up to Rs 50 crore a year. Sure MSMEs are the backbone of the Indian economy. But what about encouraging and incentivising them to grow and become billion dollar companies? One thing Modi has got right is his publicly stated belief that it is livelihoods and not jobs that really matter. After all, barely 10 per cent of the total 500 million work force of India has “jobs”. To that extent, encouraging small entrepreneurs sounds like a very sound policy. But what about entrepreneurs who don’t want to be confined to the Rs 50 crore league and dream of global markets?
Eye popping numbers and obeisance at the altar of populism apart, what exactly does this budget have when it comes to solving the really critical problems that confront the Indian economy and India Inc. The first is reviving private sector investment. The second is providing incentives to encourage creation of jobs or livelihood opportunities. The third is, at least curbing, if not eliminating, the inspector raj that Modi has often eloquently talked about. Sadly, the budget doesn’t seem to address these issues. In fact, a telling part of the speech was Jaitley proudly saying that the time period for assessments would be reduced from 21 months to 18 months. If that is the speed in the digital age, what more can you expect.
But budgets are mostly about political messaging. And pronouncements about political party and election funding make it clear that Modi is still determined to leave a mark in history. The big question is if his attempt to re-invent Indira Gandhi will deliver two things that he wants: an electoral victory in 2019 and a place in history books. Forget pundits. It is the average Indian voter who will decide.
