Vote Junkies vs Fiscal Ninjas: Piyush Goyal's election-year Budget a Game of Thrones script with House of Cards feel
It does not take a rocket scientist to tell you that Finance Minister Piyush Goyal's Interim Budget for 20190-20 was an election year act. Nor does it require a quantum physicist to say that the fiscal deficit target has been missed.
With our historical orientation towards a caste system, Indians have created two distinct communities: Vote Junkies and Fiscal Ninjas
Looking at Piyush Goyal's Budget, the Vote Junkie script looks good
At the slightest whiff of indiscipline, Fiscal Ninjas crib and, in turn, spoil the market mood
It does not take a rocket scientist to tell you that Finance Minister Piyush Goyal's Interim Budget for 2019-20 was an election year act. Nor does it require a quantum physicist to say that the fiscal deficit target has been missed and falls particularly short under the Fiscal Responsibility and Budgetary Management (FRBM) Act's plans. The question we should be asking after the Budget is whether Prime Minister Narendra Modi's NDA government is enjoying the best of both worlds — electoral populism and fiscal prudence-driven growth — or whether it is falling between two stools.
It all depends on who you are talking to. We Indians, with our historical orientation towards a caste system, have created two distinct communities. Let us call them Vote Junkies and Fiscal Ninjas. Since that tired cliche, "sop opera", has been used to describe the Budget that is an attempt to woo voters with freebies and goodies, we might as well look at this like a soap opera, or its digital age version, the web series.
In the latest episode, the Vote Junkies seem to have triumphed over the Fiscal Ninjas. The two tribes at war look at different sets of numbers. The first wants to spend money to catch votes. The other wants to save money to invest on the premise that higher productivity will lead to manna in some undefined future and rain jobs that currently seem to have a higher vagary rate than the annual monsoon.
The question is: has Goyal, the clever career chartered accountant who can produce fine balance sheets, done enough to impress the voters? Farmers who hold land up to 2 hectares will get Rs 500 per month as an income support handout in an economy in which Rs 400 per day is an increasingly common daily wage for even landless workers. Unorganised industry workers will have to pay Rs 100 a month to get a pension of Rs 3,000 on reaching the ripe age of 60. Will young workers find that good enough in an increasingly youthful nation where telescoping oneself into the sunset years is not easy? And so on and so forth. Be it the Mahatma Gandhi National Rural Employment Guarantee Scheme or the Defence Budget, increased outlays barely cover up for a surge in population and inflation.
Yet, going by Goyal's words, the Vote Junkie script looks good: 12 crore small farmers in a nation of 125 crore people join 15.5 crore MUDRA account loanees for self-employment; 10 crore would-be unorganised sector pensioners; 6 crore Ujwala scheme cooking gas beneficiaries; 3 crore lower middle-class taxpayers; sundry fishermen; and tribals and scheduled caste manna-receivers to bring up a visual procession of happy voters walking into polling booths come summer. It all depends on whether the imagined beneficiaries buy the NDA narrative, while big-time loan waivers and a handsome minimum income guarantee by the Rahul Gandhi-led Congress bring in competing promises of populism.
That brings us to the Fiscal Ninjas, the other tribe Goyal is trying to please. This tribe resembles India's famous mothers-in-law. They measure their life in decimal points and grumble and mumble in moral outrage at the slightest whiff of indiscipline. Fiscal deficit for the current year is expected to close at a questionable 3.4 percent of the GDP against the targeted 3.3 percent, and the FRBM goals of sub 3 percent post-2020 remains an elusive dream as the 2019-20 fiscal is projected at 3.4 percent again — even as North Block officials hope a revised GDP growth rate will lead to the deficit being on track to a 3.1 percent target. Is that on sound enough ground?
Public sector companies' disinvestment target of Rs 90,000 crore in the coming fiscal, at Rs 10,000 crore, or 12.5 percent, above the current year's so-far elusive target, looks in shaky territory, though Goyal is confident the current year's score will see a beneficial late swing. The Budget assumes there will be no unsettling political uncertainty in the markets even as the latest opinion polls show the NDA falling short of a clear majority in the coming Lok Sabha elections. There is no guarantee that there will be no other mood breakers in the market (Think Brexit). The surplus from public sector banks and the Reserve Bank of India, a topic of hot controversy and discussion is estimated at more than Rs 74,000 crore in 2019-20, some Rs 20,000 crore above the current year's level. Is that realistic?
The Comptroller and Auditor General only recently made uncharitable noises about unwelcome fiscal accounting jugglery in 2016-17, and the ever-vigilant Fiscal Ninjas — a tribe no finance minister can truly please in the foreseeable future — even speak of state government deficits on their radars. So what if inflation remains charitably low? The Ninjas shall crib, and that can spoil the market mood in which foreign institutional investors are an important lot.
Politics and economics are intertwined in India. And yet the Vote Junkies and Fiscal Ninjas prefer talking at each other than to each other. Please note it is not kosher now to measure the J word beyond a point because labour data is all mixed up in the Department of Achhe Din. We are playing a game with no acceptable scorecard on the jobs front, even as conservative estimates put the number of people joining the workforce in India every year at 4.75 million.
Be it the vote game or the fiscal matrix, does that all look like a 'Game of Thrones' script? Or is that a 'House of Cards', built on promises, hopes and a Formula One ride that shall have no skids or pit stops? The jury — and that would be hundreds of millions in number — shall troop into press their fingers in the coming elections on digital buttons, assuming electronic voting machines shall see no further hurdles to their usage.
It is best for us now take a break from invoking the names of popular web series and instead, dip into our own filmy lexicon of quotes because election speeches and manifesto poker has not even begun yet. "Picture toh abhi baaki hai mere dost."
The author is a senior journalist and commentator. He tweets as @madversity.
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