Thursday, February 2, 2023
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Why Narendra Modi has taken the big and the bang out of the Budget

Modi likes the Budget to be a low-key, routine, annual statement of accounts. Big bang announcements can be made through the year, when it suits his politics.

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Among the first things Narendra Modi had done after he came to power in 2014 was to abolish the railway budget. For a while, some complained, especially politicians from Bihar, West Bengal, former rail ministers, and as usual, old socialists.

Now, nobody misses the rail budget. In the course of time, a generation of Indians will go to vote with no memory or reference to something called the rail budget. No one day of new train announcements, ticket price increases or cuts, claims of electrification, and so on. Railways are now managed on a running, routine basis. There is no big story for the media, no excitement.

This is the Modi doctrine for the annual national budget too. The markets fell today, as Modi’s seventh budget also belied the expectations of a Big Bang. The dismay was rational, but the expectation was entirely irrational. There was nothing in any of the six Modi budgets so far to suggest he believed in such a Big Bang theory.

He likes the budget to be low-key, routine, and increasingly, just an annual statement of accounts, along with much verbiage, platitudes, virtue-signalling and some shlokas and poetry thrown in. The bangs, if any, have been of the kind that the markets wouldn’t want: To hurt the rich, and thereby give the poor vicarious satisfaction.

Beyond that, the budget dies after a day’s headlines. The bangs come across the year, whenever the prime minister so wishes, or sees the need. It can be a really big one, like demonetisation, a plethora of amnesty schemes accompanying it. Or it can also be a roll-back bang, even a series of them.

Exactly what followed the disastrous 2019 budget. The ‘soak the rich to please the poor’ spirit went too far, the markets broke out in rashes, stories of millionaires and entrepreneurs buying foreign passports spread, FIIs got furious, and Modi got his finance minister to roll back that budget almost on a Friday-to-Friday basis.

Last year’s corporate tax rate cut has been the most spectacular reform under Modi, and would usually be described as a largesse for the richest. It was announced without discussion, debate, like just another routine administrative decision. Such as launching another new train. In this particular case, it was more in the nature of a mea culpa as the truly povertarian 2019 budget had wrecked the markets. But, imagine if such a tax cut had been made the centre-piece of an annual budget, with studios packed with ‘experts’ and the opposition out with sharpened knives.

So many of the free-market backers, including this writer, fretted that even after winning his second big mandate, Modi did not bring in any dramatic disinvestment in the budget. But does he really need to do such things, and draw criticism and debate, when he can do it one fine evening at a press conference? He is underlining the fact that a government does not need the budget to do such things. Just be watchful Friday, the finance minister’s favourite, and Wednesday (the Cabinet meeting day) evenings.

Also read: No big fiscal stimulus in Nirmala Sitharaman’s Budget 2020, but govt can still do it later

It is nobody’s case that Modi doesn’t love spectacle. Nobody likes it more than him. But he also wants to be in control of the spectacle, always. A big budget is problematic. Because if it pleases the poor, it usually angers the markets, as 2019 showed. If it is what might be called market-friendly, the poor don’t like it, and Rahul Gandhi calls you ‘suit-boot ki sarkar’, the last thing you need.

The Modi doctrine for the national budget is clear now. If six of these in a row did not convince us, we have the seventh now. In journalism, usually, we follow the ‘three is a straight line’ rule. This is seven. Narendra Modi has euthanised the budget as a news story. You can find evidence all over.

This budget shows the defence allocation almost stationary, despite the pension bill having zoomed. There is criticism for now. But, at the same time, the defence ministry has written to the finance commission, complaining of a lack of resources. The finance commission is setting up a committee to examine the idea of a rolling acquisition fund and may be a defence cess. When it is announced, probably at another evening press conference, it won’t be half a story of what a sizeable defence budget increase would have been. And because it is defence, nobody would dare complain. That is the Modi approach to political economy.

The only thing that borders on the adventurous in this budget is talk of greater privatisation, and the Life Insurance Corporation of India IPO. With BPCL, Air India, Concor, Shipping Corporation etc, the public opinion groundwork for privatisation has already been done. Preparation for BPCL was made three years earlier when the act setting that up was quietly bundled with hundreds of obsolete laws and repealed. LIC has now been slipped in. But, if there’s too much noise, especially from the RSS and swadeshis, don’t be surprised if it is deferred. Exactly as happened with the plan for sovereign debt bonds last year.

Narendra Modi’s is the most political, ideological and statist government in India yet. More than even Indira Gandhi’s. Every decision or move here is determined by its implication on voters. He will not take economic risks on the reformist side. Market players, fund managers, the money people, better get used to this. If you let your voting preferences colour your market judgement, you will build irrational expectations, as leading up to today’s budget. So, learn to watch the big picture through the year, not just the headlines on 1 February.

Also read: LIC to tax charter: Budget 2020 wants India in the big league, but offers mere quick fixes


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  1. But this what the economists have been saying for last many years that budget is an account of expenditure and incomes. The announcement of policies for any economic development/growth should not be tied up with it. Also, many economists who not ant BJP are finding the budget balanced and the economic reforms are taking place continuously as expected by the economists and businessmen. The ease of doing business and ease of living are also going up continuously.

  2. It appears that Shekhar is endorsing this PM’s neutering of the Lok Sabha’s role of overseeing the income and expenditure of the central government. In effect, Shekhar has repudiated the parliamentary system itself.

  3. The content of this article is substantially similar to Shekar Gupta’s 21 minutes video in which he was interviewed by Jyothi Malhotra. It is a fair assessment. This is one angle which none of the Talking Heads of TV channels have caught on to. Budget is just an annual financial statement. This is what Constitution mandates. Budget does not need Band baaja! But, that does not stop her highness our FM from playing havoc with Income Tax, such as tax collection at source on remittances sent abroad, though the money would have already suffered IT!

  4. “The first Budget of this new decade is a #JanJanKaBudget. It combines futuristic vision with a definitive action plan for growth. The Budget will boost income, investment, demand and consumption. It will strengthen our financial systems and the credit flow.” – Prime Minister Narendra Modi

  5. Whatever Modi does, he has only good of India in his heart. He is the first PM, to work for common people of India. He is least bothered about the criticism by pseudo seculars, Khan market gang or corrupt opposition leaders.

  6. I fully agree with Shekar, Modi likes big bang credit should come from his office. If they are in the budget the credit will go to FM.

  7. Economic or niche Jayega q k yeh govt. KO economic k bare Mai kuch nhi pata h.or agar yeh jhut hua toh within 2 months Mai pata chal Jaye ga. Modiji gareeb or middle class k liye kuch kijiye,Jo abhi tak aap ne 6 saal Mai nhi kiya h.or kya hua mera act. Mai 15 lakh aaya nhi abhi tak Jo har gareeb k act.Mai aane wala tha.or haa aap Pakistan ka maa behen Jo Karna h kijiye humlok saath hai.but 15 lakh Jldi bhej dijiye q k aap k kaha h black money WAPAS aa gaya hai.hum daily account check krte h 1 rupya bhi nhi mila h.

  8. Some people no matter what they do are always demonised and painted a villan. Narendra Modi is probably one of them. There is an adage in Sanskrit which means, “In excess even nectar is poison”.

    Over the years media abused him to a point of no return. Now they are cribbing. The same is happening with the opposition. Trying to be over zealous, they missed the plot.

    Modi now feels he is accountable only to his electorate and not the intermediary!!

    Play by his rules for now or change the game. You have very limited options.

    It’s a good sign though that the government has a mind of its own now and is not influenced by the who is who in media and other places like in the earlier days.

    • I have not seen even a few brahmins criticizing the moodi dispensation ,even for legitimate wrongs offending the Indian judiciary ,citizen and most often making a mockery of democracy! This is why many in india hate brahmins ! Unabashedly foot lick those in power ,whether they are good or not ,whoever those were in power centers ,be it pre-independebce Britishers or post independent Indiraji (during emergency ) or the most dictatorial ,anti poor.,anti people and controversial Govt of Moodi and co ,without any shame ,social responsibility rationality or care for the nation!They have an outright selfish attitude !Sometimes even rational and balanced people feel that brahmin bashing is a definite must to keep these demonic menaces in check !Wait for your
      “moment of glory” ,when it arrives ,once this moodi mess is cleared by the people of India ,by the sons of the soil,true indians !Jai bharat !

  9. Perfect analysis…he is the clever mr PM…knows how to manipulate and control our fake-left and other communists and make them irrelevant. Jai ho! The Messiah for India.

  10. Shekhar ji at his best. Reforms in budget or not. We just want country to move forward, economy to create prosperity, honest critique of the government and an honest critique of that critique too. A too and fro honest debate.

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