Who exactly would measure the pennies and pounds of a government budget when one is not sure who will be in power after the polls? The 1 February budget — the last from Prime Minister Narendra Modi's government elected in 2014 — will be a Vote on Account, and it would be better to look for political signals in the economic document.
Speculation is on whether there would be regular tax cuts but then, uncertainty is the leitmotif.
There is too much up in the air out there as the NDA gets set to present the Budget for 2019-20, but this much is clear: Fiscal deficit measurement is only for the academically inclined and the big one to watch out for would be how much the exchequer bets on the Ayushman Bharat scheme to bring affordable health insurance for the masses and do something to correct its anti-farmer image painted by Opposition parties.
While there is informed speculation of varying degrees that an income support scheme for distressed farmers is on the anvil to benefit an estimated 150 million farmer households, chances are that the rulers put the better part of it on the election manifesto than an immediate Budget, except perhaps as a teaser to provide ammunition for the frenetic election speeches that will fill the summer air across India.
If Modi's recent pronouncements after the Congress party upped the ante by seeking farm loan waivers on a large scale (and winning crucial Hindi heartland state elections) is any indication, the BJP wants to blunt the Opposition edge by raising hard questions on the implementation of farm loan waivers. It is, meanwhile, coming up with its own alternative to what Modi calls the "lollipop" inspired by the Telangana government's Ryothu Bandhu scheme in the fervent hope that it can eat the rural cake and have it too.
Though the fiscal deficit target has already been missed for the full year, there is room for optimism — enough to provide legroom for some benign allocations in the Budget.
First up, global oil prices have softened enough to remove the threat of cost-push inflation, giving the government a leeway to replace the scare it faced in the last July-September quarter when GDP growth shrunk to 7.1 percent year-on-year from 8.2 percent in the previous quarter. If that is one bonus, a second one could come in the form of an anticipated bonanza from the Reserve Bank of India's surplus.
In hindsight, the installation of a career bureaucrat, Shaktikanta Das as Reserve Bank of India (RBI) governor in place of the more-or-less ousted Urjit Patel has already begun to bear fruit.
First, we saw an enlightened forbearance of the central bank towards bad loans to micro, small and medium enterprises. We now have indications that an estimated Rs 30,000 to 40,000 crore may be handed over as an interim dividend by the RBI to the government, though Das is mum on it.
Maybe something will happen with precision timing to help the Budget. Shall we call it a pre-election gift from a chosen one? All that provides the floor to dance in an election year. Reports suggesting that the interim budget would be a 'vision document' indicate that we may see a thinly disguised economic manifesto.
The BJP is not populist in the Congress sense of the word, but the prime minister's oratory comes close enough. It is difficult to justify ballast in a re-election speech unless there is some performance to go with fresh promises.
Modi is keen to keep his statesman-like image — and that includes avoiding the kind of fiscal profligacy the Congress is famous for. More important, he may not want to be hung by his own words in case he returns to power. A reasonable expectation would, therefore, be some Budget allocations that would power-up election speeches without inviting a major charge of violating any pre-poll code of conduct.
There is also the fact that time is too short for any real ground-level impact from increased government allocation to any populist head. Soft populism is what we may look for: Stronger on words than numbers.
The populist lynchpin may be the Ayushman Bharat scheme. The National Health Agency has been upgraded to become the National Health Authority in the new year — and that could well set the ground to put big money on it and make it the focus of election speeches.
Finance minister Arun Jaitley's budget last year had targeted 100 million families — and that means 500 million beneficiaries for health cover of up to Rs 5,00,000 per family. Since the scheme was announced last year, increased allocation in the interim Budget cannot possibly invite charges that it is a pre-poll stunt that goes against the electoral code of conduct.
Also, even the scheme's CEO, Indu Bhushan, said last year after the government allocated Rs 2,000 crore that its own upper end of the expenditure is not more than Rs 10,000 crore. Without biting its fiscal tongue, the ruling party can spew sufficient poll rhetoric with that kind of money.
The big question of job generation hangs in the winter air of Delhi. The Modi government has bet its farm (a perfectly mixed metaphor) on small business loans through its 59-minute loan scheme offering a credit of up to Rs 1 crore. More than 1,12,000 loans have been approved under the scheme already. Enough to spin a web of words around how many jobs that can create.
The hard-nosed analysis of professional economists may be drowned in the electoral noise that would follow. The RBI's new word of caution on MUDRA loans facing a potential threat of going bad by turning into non-performing assets (NPAs) may raise eyebrows among the discerning economy watchers. No one would miss their sighs and whispers until a new government is formed.
(The writer is a senior journalist and commentator. He tweets as @madversity)
To keep watching India’s No. 1 English Business News Channel – CNBC-TV18, call your Cable or DTH Operator and ask for the Colors Family Pack (inclusive of 24 channels), available for Rs. 35/- per month, or subscribe to the channel for Rs. 4/- per day.
To keep watching the Leader in Global Market & Business News – CNBC-TV18 Prime HD, call your Cable or DTH Operator and ask for the Colors Family HD Pack (inclusive of 25 channels), available for Rs. 50/- per month, or subscribe to the channel for Rs. 1/- per day.
Find latest and upcoming tech gadgets online on Tech2 Gadgets. Get technology news, gadgets reviews & ratings. Popular gadgets including laptop, tablet and mobile specifications, features, prices, comparison.
Updated Date: Jan 16, 2019 16:45:59 IST