Modi rules out a populist Budget & then drops hints what it could be

In his recent interview to Times Now, Prime Minister Narendra Modi ruled out a populist Budget. He gave enough indications that the upcoming Budget will not be a populist one. According to him, it’s a myth that the common man expects freebies and sops from the government.

A lot of people expected the Budget to be populist given the upcoming elections in several states. This would also be the last full Budget before the next Lok Sabha elections. Also, the BJP saw erosion of rural votes in the Gujarat elections. All these factors pointed at a Budget full of sops for farmers and whichever section the BJP would want to please.

But after Modi’s comments on freebies and sops, there is little chance of the Budget splurging on populist measures. “When elections come near, politicians start distributing things and they keep competing about it. One says I will give this much, the other tries to top it,” he said. This may mean the government may not use the Budget as a way to address the voters for the upcoming elections in several states.

Perhaps that’s why Modi refused to speak on the subject of fiscal deficit which is seen to go up due to low GST collections and a likely increase in government spending when the government is seen to be under pressure to please the rural voters. When asked that some people have apprehensions about fiscal deficit, Modi chose not to explain. Many people have argued that meeting fiscal deficit target is not as important as increased government spending which can boost the economy, expecting a lot of sops in the Budget. But Modi did not try to defend the possible breach of the target, which could mean the government is determined to stay within the limit.

Though Modi refused to speak on the Budget which he said was the job of the finance minister, one can get an idea about the government’s budgetary priorities from what Modi emphasised in his interview.

Modi’s comment on “ease of living” indicate that could be the focus of the next Budget.

“This is my personal belief that ease of doing business is very good but in a country like India, the ultimate goal should be ease of living. That is why my focus is more on ending the struggles of the common man who has to fight the system. The system should be proactive for the needs of the common man and this should be only what is designated. No one is asking for more. The poor in this country never ask from the government to convert his hut into a bungalow. He just wants changes in his daily life. I believe we should make more efforts towards ease of living. I am making efforts too in the same direction for example, what will be the ease of living for a poor woman, who uses a stove to cook food and spends her entire life in that smoke? According to me, her ease of living is possible if I free her from that smoke. I took the big step of Ujwala and provided gas to 3,30,00,000 families. I may even complete the target of 5 crore families before the deadline. This, in itself, is our step in the direction of ease of living,” he said.

This implies the government might increase allocation to schemes that target at enhancing “ease of living” such as the Ujwala scheme.

On farm distress, Modi admitted that his government was justly criticised for problems in the agricultural sector. ” So I believe that our first priority is to find out a solution for our farmers who are in distress,” he said. Since he admitted that there is distress in the sector, it points at the Budget proposing measures to tackle farm distress.

But it may not be loan waivers or higher minimum support price since Modi spoke of right policies making impact on the ground. It could be higher allocation for existing schemes such as Pradhan Mantri Krishi Sinchayee Yojana, Pradhan Mantri Fasal Bima Yojana and ENAM, the scheme to promote a national agricultural market.

Modi’s praise of electricity-for-all scheme Saubhagya Yojna too indicates the Budget might spend more on schemes that enhance capabilities and promote better lifestyles instead of freebies.