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Modi’s budget tightrope

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Mahendra.Ved
Written by Mahendra.Ved

FORTY-FIVE days is too short a time for a new government to show results, new Indian Finance Minister Arun Jaitley has said. Yet, his government’s taking office under Prime Minister Narendra Modi after a decisive mandate in a contentious election needs watching.

It has signalled some of its political and economic priorities in an economic survey, a massive railway budget, the annual budget that Jaitley presented and much else.

Taking “much else” first, in his reply to President Pranab Mukherjee’s speech opening the new Parliament, Modi cited three thinkers of contemporary India — Mahatma Gandhi, socialist leader Rammanohar Lohia and Deendayal Upadhyaya, one of the principal ideologues of the Bharatiya Janata Party — each emphasising that India cannot develop without developing its villages. If it were to happen, the said development would be incomplete.

This homegrown message is very different from what one has heard over the last half a century, or the last two decades when economic reforms and globalisation began. If this provides a philosophical grounding for Modi, who dislikes any “ism”, and his government, there is a long-term solution for the country.

One would neither put complete hope on this course, nor discard it as Utopia. Now, moving to the nuts and bolts of governance, Modi has bemoaned the absence of a “honeymoon” for his new government. But it is enjoying one, mainly because shorn of rhetoric in and outside Parliament, and some negative developments that cannot be directly attributed to his government per se, it has, so far, been cautious.

And shorn of rhetoric again, the targets it has set for itself are modest. Both its budgets have been fairly innovative, underscoring thrust areas both old and new. But the basic arithmetic is the same as the pre-polls interim budget that the Manmohan Singh government had presented in February. This is because despite the changed political scenario, the economic problems confronting the country remain unchanged and demand a measure of continuity. Delivering on election promises would have to be gradual.

Commenting on the annual budget (2014-15) in Times of India, Swaminathan Aiyar called it (predecessor Congress finance minister) “P. Chidambaram’s budget with saffron lipstick”.

Halfway through Jaitley’s budget speech, the Sensex plunged 300 points and recovered only after he proposed personal tax concessions for the middle-class, putting more money into its wallet and duty reduction for numerous goodies this class consumes.

He has also made the trade and industry sector happy. Business leaders are unanimous in welcoming the twin budgets because of the heavy investment in expanding and modernising infrastructure.

Now, India Inc. wants more and would be getting it. Their hope for a wider scope is laced with a challenge with foreign direct investment (FDI) mooted in the railways and hiked in defence and insurance sectors from 26 to 49 per cent. The FDI would come with the happy rider of full Indian management control.

Frankly, none of these are new. The question is who will deliver it and how, and who will get the credit. Congress, now in the opposition, charges the Modi government with “copying” its agenda, even as the latter says it inherited a bad economy.

Both are right — and both will continue to battle. This is certain, going by their respective track record of scoring political brownies on economic and social issues. For instance, the opposition is raising alarm over FDI in railway, knowing well that one of the world’s largest rail network that is also the country’s largest employer, needs serious revamping.

Of course, Jaitley’s budgeting is an interim exercise. The next one should come within 10 months and offer a lot more scope for the government to be clear about its strategies, and allow it to be bold and decisive. The “hard” decisions, the unpopular ones, would come only next February.

For now, strategies for achieving them are missing. There are only indications of many bold strides on the intent to deliver on the election promises. Yet, keeping his poll promises, he has begun to deliver on smart cities, affordable housing, healthcare benefits, tax relief and incentives on savings.

The success of Modi’s politics has been in cleverly combining the material aspirations of India’s emergent middle-class, with the core ideology of the Sangh Parivar, the Hindu rightwing “nationalist” platform, as a subtext. Jaitley followed that formula. And this is more significant than the economics of the budget.

By naming new schemes after the ruling BJP’s ideological forebears — Syama Prasad Mookerjee, Deendayal Upadhyaya and Madan Mohan Malaviya — Jaitley gave reassuring signals to Hindutva, the core political constituency.

Calling for an “intellectual manthan (churning)”, Modi said Indians should move beyond roads, highways and ports — “New cities will be built where there are I-ways, not only highways”.

His thoughts found echoes in Jaitley’s speech.

“There is an imminent need to further bridge the divide between digital haves and have-nots,” he said while announcing a programme called Digital India to ensure broadband connectivity at the village level and improved access to services through IT-enabled platforms.

Urbanisation and connectivity are natural corollaries. The rail budget promises Wi-Fi services in larger stations and in select trains. Free Wi-Fi is coming at airports and most coffeeshops. India is now the world’s third largest Internet user after China and the United States. Everyman is sporting smartphones for bank transactions, bill payments, catching up on course work, booking holidays, hooking up with friends, business communication, having fun and doing work.

Though similar schemes were announced and initiated by the previous Manmohan Singh government, too, the BJP finds the political potential in it. This, again, underscores the need for continuity with cautious thrusts into the new areas. There are no short cuts to development. The urban India and the rural Bharat need to meet halfway.

The manthan that Modi advocates, would need to be sustained, with its course carefully stayed, for India to achieve its immediate and long-term goals.

photo credit: seaview99 via photopin cc

About the author

Mahendra.Ved

Mahendra.Ved

Mahendra Ved is a New Delhi-based journalist. He writes a column for The New Straits Times in Kuala Lampur. He is Senior Editor with Power Politics monthly magazine and contributes to several journals. He is a regular on All India Radio and had long stints before turning to freelance with The Times of India and The Hindustan Times. He began his career with United News of India (UNI) news agency. Ved has co-authored two books, Afghan Turmoil: Changing Equations (1998) and Afghan Buzkhashi: Great Games and Gamesmen (2000). He writes on political affairs and focuses on India’s neighbourhoods. He also lectures at the Indian Institute of Mass Communications and Times of India’s Times School of Journalism.

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