INSUBCONTINENT EXCLUSIVE:
1 in India, Prime Minister Narendra Modi's government will present its last federal budget before general elections are held in a few
Unlike most other budgets, this typically isn't a high-octane affair; governments are discouraged from locking their successors into any new
finance minister seems ready to break with that requirement
Politicians from India's ruling Bharatiya Janata Party insist that there's no legal requirement to present just a vote-on-account
And the reason's obvious: They want to pack in as many big-ticket, populist announcements as they can before the election campaign
formally begins and governments are forbidden to make new promises outside party manifestos.While Modi doesn't exactly have his back against
the wall in his re-election campaign, he won't be feeling entirely comfortable either
A round of state elections towards the end of last year saw the BJP lose control of three crucial North Indian states -- in the very region
that propelled him to his landslide victory in the last parliamentary elections in 2014.The truth is that Modi doesn't have very many seats
His majority in the lower house of Parliament is both unprecedented by Indian standards and, nevertheless, razor thin
He won 282 seats out of 543 in 2014, and has lost several in by-elections since
A dip in the prime minister's popularity doesn't need to be significant for him to lose his majority
And if he has to try and craft a coalition, he may wind up being vulnerable to leadership challenges from within his party.That's why
these last few weeks before the full-blown campaign begins are crucial
Modi will want to use that time to win over those sections of the Indian electorate that are the most disappointed with his underwhelming
record -- small business owners, the salaried middle class and farmers.Small business owners have traditionally been the backbone of the
BJP, as they are of its ideological parent, the Rashtriya Swayamsevak Sangh
But, Modi's decision in 2016 to withdraw all of India's high-value currency notes from circulation overnight hit such businesses --
which, in India, often rely on working capital in cash -- particularly hard
Worse, the government's switch to a new indirect tax system, the goods and services tax or GST, was very badly planned and implemented
As a result, businesses that were already reeling from demonetization saw their compliance costs increase sharply.There's a tangible sense
of betrayal in the air: The BJP is a small businessman's party, the argument goes, yet its government has signally failed to understand
The government's already said it will exempt businesses with an annual turnover of up to Rs
4 million (just under $60,000) from the tax
Other such announcements, including about cheaper credit, are likely to be made in the budget.India's relatively small -- but politically
influential -- middle class has always been something of a swing vote
Their shift from former Prime Minister Manmohan Singh's Congress Party to Modi's BJP in the years prior to 2014 was crucial to the
current prime minister's victory
While Modi remains by far their most popular politician, there's far less enthusiasm this time around, and an all-pervasive sense that the
government doesn't share the middle class's concerns
That's why most people are convinced that some form of income-tax cut will be announced in the budget.Finally, Modi has become somewhat
unpopular with many of the large swathe of Indians who depend upon farming for their incomes
Agricultural prices -- and thus incomes -- haven't risen as quickly as under the previous government, and the currency ban hit the
agricultural trade hard as well
Modi's government says it believes that spending in rural areas should go into creating infrastructure, such as irrigation systems and
This is a wise priority, but the effort hasn't been sufficient in scale or efficient in nature -- and, as a result, hasn't had enough of an
Pressure is growing to try direct transfers to farmers, or to ensure that they get even more access to credit at concessional rates.Populist
spending is to be expected in an election year
But, the simple fact is that Modi has left it till too late
At this stage of the game, few voters are likely to see any promised spending in a budget as any more solid than the easy promises made in
election manifestos or from the stage at an election rally
Modi and his officials should realize that that's where such promises belong -- and not in an interim budget
All prime ministers before him have respected the tradition of treating the last budget before elections as just a way to keep the
government going for a few months
Modi should too.(Mihir Sharma is a Bloomberg Opinion columnist
The facts and opinions appearing in the article do not reflect the views of TheIndianSubcontinent and TheIndianSubcontinent does not assume
any responsibility or liability for the same.(Except for the headline, this story has not been edited by TheIndianSubcontinent staff and is
published from a syndicated feed.)
