Budget 2018: Union budgets presented under Narendra Modi's watch have so far failed to create the euphoria that usually surrounds anything that has the PM's stamp on it. With little headroom for populism, FM Arun Jaitley will have to walk the talk on the Modi government's reforms agenda going into polls in 2019.
Budget 2018: Bharatiya Janata Party-led National Democratic Alliance government’s decision to prepone the presentation of the Union Budget 2017 to February 1 instead of the regular practice of presenting it at the end of the month every year sparked a political furore last year. Opposition parties saw the saffron fold politically benefiting in poll-bound Uttar Pradesh and other states where polls were scheduled soon after. The government refused to budge, the matter went to the Supreme Court which ruled that Budget announcements could not deter the mood of the electorate. However, it did caution the Centre against making any announcements for the five poll-bound states and refrained the government from listing out any of its achievements in these states during the Budget speech.
Cut to Budget 2018 and Finance Minister Arun Jaitley faces what has been termed his most daunting challenge yet – one that is being viewed as a make or break for the ruling combine. This will be the BJP government’s last full Union Budget ahead of the general elections, and many believe that the FM won’t just be outlining the roadmap for India’s economy over the next financial year. He will also be spelling out the political fortunes of his own party in the Lok Sabha elections due in 2019.
However, the political impact of Budget 2018 may not be as drastic as what is being presented. While a populist Union budget alone may not guarantee a political win, successive governments in the recent past have refrained from outlining tough measures before an election. In fact, there is historical evidence to suggest that populist budgets, by and large, have done little to alter the electoral fortunes of a ruling establishment. If anything, it has done otherwise.
Sample the outcomes of these Lok Sabha elections:
- In 1979, Chaudhary Charan Singh of the Janata Party doled out a populist budget but lost decisively the next year.
- In 1989, the Congress lost under Rajiv Gandhi despite two successive populist budgets.
- A year ahead of the 1996 elections, the Congress government led by PV Narasimha Rao doubled the allocation for departments of Rural Development and Education, besides significantly increasing subsidies by Rs 1,200 crore. But the Congress lost.
- A year before the 2004 elections, the BJP-led coalition government presented a populist Budget but lost, paving way for a decade-long UPA rule
Perhaps the only time in the recent past that a populist budget measure went in favour of the ruling government was in 2009. In its interim Budget just before the elections, the UPA government under Manmohan Singh effected an 87.5 percent increase in the Plan allocation for its flagship NREGA programme. This move was credited for the UPA’s return to power.
The data cited above does not suggest that popular welfare measures do not resonate with the electorate, but that they alone cannot ensure electoral wins. There are several other factors that come into play while deciding the mood of the electorate and Budget announcements, though important, do not necessarily play the most important role in deciding electoral outcomes. Budget 2018 is thus not solely a ‘populism versus prudence’ debate for FM Arun Jaitley or the Modi government. The Prime Minister has already said that February 1 is unlikely to see the Finance Minister present a populist budget. And there are various sets of data that show that the government has little room to dole out populist measures in any case.
Change in narrative
If the government’s focus lies in taking on the Opposition ahead of an election year, it requires a change in the narrative – one that can draw masses in its favour to the extent that the BJP managed to do ahead of 2014. With the Congress looking to corner the BJP-led government following a decent run in the Gujarat Assembly elections, the government will need to silence its critics and demonstrate that it means business. The real challenge for the government will be in quantifying the benefits of these tough measures to change the narrative in its favour like it did in 2014. Reduced corruption, the economic benefit of black money crackdown or the government’s infrastructure push, health benefits of Clean India mission or replacing traditional ‘chulhas’ with gas cylinders – these are noble measures but difficult to quantify in terms of its impact on masses.
Politically speaking, the government’s idea behind Budget 2018 should be to put the Congress on the backfoot. Issues that have given the Opposition an opportunity to attack the government need to be addressed first-hand. Issues such as the problem of jobs or private investment have been raised time and again by Congress president Rahul Gandhi. The government could do well to address these concerns in the Budget instead of only listing out its achievements in the Budget.
The BJP under Modi had swept to power in 2014 on the promise of reforms and economic development. The biggest takeaway for this government is that even tough measures like the roll-out of the Goods and Services Tax or demonetisation, or the move to crack down on bad loans, have done little to damage its electoral prospects. If the government can demonstrate the same grit and resolve in Budget 2018, it could pave way for the narrative that the government needs to storm back to power. This could well be its biggest challenge as well as opportunity.