‘Sop Opera’. ‘A Budget for the Ballot’. ‘20,19…’ ‘Modi Goes Full Steam’... ‘Modi Begins Vote Count’. These were a sample of newspaper headlines on Saturday, a day after interim Finance Minister Piyush Goyal announced the ‘interim’ Budget in Parliament.
There is near unanimity among the media, commentators and analysts that this Budget, the last presented by the Modi government, has unabashedly gone about wooing the voter. Many of the major welfare measures announced in the Budget — income support of ₹6,000 a year for small farmers (PM-Kisan), pension scheme for unorganised workers, and income-tax sops for the lowest tax-paying slab — are aimed at vulnerable sections of society, with an eye on their votes.
Many commentators have expressed concern over the fiscal math going awry, given the scale of funding required for these schemes. The income support for farmers will cost the exchequer a whopping ₹75,000 crore.
Not comprehensive enough
Contrast this with the ₹52,000 crore farm loan waiver scheme that then Finance Minister P Chidambaram announced in the 2008 Budget, which played a major part in the UPA getting re-elected in the 2009 polls.
There is also near consensus now that the farming community is in desperate need of some kind of income support. It was the Telangana government that got off the block on this by announcing the Rythu Bandhu scheme some time back. As BusinessLine reported, there are crucial differences between this scheme and the one announced by the Centre. In the PM-Kisan scheme the income support is meant only for farmers holding less than two hectares of land. But Rythu Bandhu has no such cap. Crucially, in the Rythu Bandhu scheme, tenant farmers are excluded, which has caused some heartburn among this vulnerable section.
Taking a cue from the Telangana government, the Naveen Patnaik government in Odisha came up with the KALIA (Krushak Assistance for Livelihood and Income Augmentation) scheme, in which every farmer gets annual income support of ₹12,500. This seems a more comprehensive programme as it covers all sections of the farming community.
Also, if the farm income support scheme is conditional on land holding, then the land holding records have to be beefed up; otherwise, the benefits will be siphoned off by the unscrupulous. In this, the Telangana and Andhra Pradesh governments have taken the lead by digitsing land records. Other State governments need to emulate this.
Pension scheme, tax sops
The second major scheme is the monthly pension of ₹3,000 for all unorganised sector workers. This scheme, too, comes with conditions. Only workers earning up to ₹15,000 a month are eligible for it. Again, this pension scheme is a contributory one, with workers joining the scheme at the age of 29 having to contribute ₹100 per month and those joining at 18 contributing ₹55 a month, with the government putting in a matching contribution. This laudable scheme is perhaps a belated acknowledgment by the government that the demonetisation exercise hit this section hard.
The third major announcement — raising of standard deduction from ₹40,000 to ₹50,000 and full tax rebate for tax-payers earning income up to ₹5 lakh – is aimed at the small tax-payer. This, again, is an electorally crucial segment and youngsters just entering the job market are also most likely to fall into this tax bracket. So the Modi government is clearly eyeing this ‘aspirational’ segment as a vital vote bank.
Where’s the money?
Now comes the hard part of finding the money to fund these schemes, which is clearly causing concern to many. Just a day before the Budget, the CSO released growth figures which bumped up the GDP growth rate and showed that the economy grew at a healthy clip even when the worst ravages of demonetisation were being experienced. Also, average growth in the NDA years has been put at 7.6 per cent against the 6.7 per cent under the 10-year UPA regime. This tweaking of numbers, along with the suppression of jobs figures, has set off a round of political bickering. More worryingly, it has put a question mark over the CSO’s credibility, which is bound to have damaging implications in the long run.
The government is also pinning its hopes on disinvestment proceeds, despite netting only ₹35,500 crore against a target of ₹80,000 crore this fiscal. Also alarming is the rise in market borrowings from ₹5.7 lakh crore to ₹7.1 lakh crore.
Those who took Narendra Modi’s libertarian mantra of ‘minimum government, maximum governance’ seriously will be bitterly disappointed, not just with this Budget but by the way things have turned out in the last five years. Those who didn’t take this mantra seriously are probably barely able to conceal their sniggers.
But if the BJP is voted back to power it will end up having the last laugh.