Narendra Modi Government Chooses Populism in Its Last Budget Before National Elections as Damage Control

The Bharatiya Janata Party (BJP) government of India led by Prime Minister Narendra Modi presented its final budget of the tenure on February 1. The financial document, called the interim budget since it is just for a few months in the run-up to the national elections this year, was presented by interim finance minister Piyush Goyal in the absence of an ailing Arun Jaitley, who has served in the position for most part of the tenure.

The interim budget was a matter of immense interest since the super velocity of Modi and his party in India’s electoral politics has seen a slowdown of late. Defeats in three major states (Rajasthan, Madhya Pradesh and Chhattisgarh) in India’s Hindi heartland, considered to be the BJP’s electoral strongholds, in December caught the saffronists by surprise.

After winning several elections across the federation following the parliamentary poll in May 2014, many hardcore BJP supporters were so confident of another win in 2019 that they even felt the election was redundant. But recent developments have put the Modi regime in some discomfort and the interim budget was the last opportunity for it to recover some ground.

Populist measures to save the day and survive the elections

The budget saw a whole lot of populist measures, ranging from pay-outs to farmers, to tax reliefs to the country’s teeming middle class and also a pension programme for informal sector workers. The party has tried to kill many birds with one stone – pleasing the traders and shopkeepers classes that represent its key voting demographic besides the upper-caste Hindus. Economically, the thrust was hinged on appeasing the middle-class, which has felt increasingly squeezed, besides the farming community by providing them with direct cash help. India has witnessed a snowballing agrarian crisis in recent times and the BJP has been accused of not doing enough for them.

The recent defeats in three states that are agriculture-dominated have been perceived as a major trouble for the BJP government and the direct cash transfer, even if small (INR 6k or USD 84 a year), could still be seen as a counter stroke to the Opposition Congress’s farm loan waivers in those three states and also its president Rahul Gandhi’s promise of a minimum income guarantee programme for the poor if elected to power in the general elections this year.

The Modi government has also been hit by revelations that India’s unemployment rate touched a 45-year high amid the controversy over the government allegedly withholding the report. The timing of the controversy has been critical for the government just months ahead of the national elections and the interim budget was used to address that concern as well.

The interim budget was also a well-calculated move

But the interim budget has certainly laid a challenging foundation for the incoming government. The BJP made a well thought-out move by making a populist budget, for any government that comes in next will think of reversing it at its own peril. If Modi cannot again become the PM in the upcoming election, the only other alternative for India is an unstable coalition which might struggle even more to fulfill the promises made in this budget. The BJP will be in a position then to point out the fact that it tried hard to allay people’s plight but others did not. Populism, like nationalism, is also a currency in politics that is hard to beat.

At the end of the day, Modi showed he too is just another populist leader

But the disappointing part is that PM Modi, despite all his pro-development sloganeering and stress on inclusive growth, had to eventually resort to desperate populism. He took the gamble of some risks, the biggest of which was demonetisation in 2016, and its real effects have started showing as India inches closer to another election that will decide his fate. One would have expected from the man to set up a culture of long-term planning as his predecessor Jawaharlal Nehru had done so that the country could gain from his legacy.

But the populist interim budget confirmed that Modi is not much different from leaders who seek overnight results somehow to remain relevant even if that comes at the cost of the state’s coffers and dignity of those who are already finding the going tough.

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