Truth, they say, depends on which side of Jerusalem you are. The fabled Israeli city is a metaphor for many things — such as the poverty line. Ahead of the budget, an expert group led by the chairman of the Prime Minister’s economic advisory council, Dr. C. Rangarajan, estimated that India had 363 million people below the poverty line. That is much larger than the entire population of the US, but there are twice as many above the line that measures basic needs — upon which is built a humongous market that makes foreign investors drool.
An estimated 21 million people — expatriate Indians or people of Indian origins — remit more than $70 billion to India every year, and that’s nearly a quarter of the nation’s foreign exchange reserves.
While poverty figures are numbing, India’s estimated gold demand, in excess 900 tonnes per year, is currently worth around Rs. 250,000 crore — eerily close to Rs. 274,000 crore — the amount of non-performing assets (or difficult loans) that India’s downturn-hit banks are sitting on.
Ratan Tata’s last four years at the helm of the Tata Empire saw him stumbling with the Nano, the people’s car, but in contrast, he succeeded when Tata Motors’ Jaguar Land Rover unit did well in the market.
In the narrow streets of Bangalore, Audis, BMWs and Benz , Jaguar’s famous luxury car rivals, are now a common sight.
India has more than 50 urban agglomerations that have a population of more than a million, each offering a potential for growth, while there are an estimated 250,000 US dollar millionaires in the country whose super-richness contrasts the sub-alterns below the line Dr. Rangarajan has drawn afresh.
But this is not about seeing the glass as half-empty or half-full. This is about the way in which the two Indias interact across the poverty line to unleash a new dynamism in the economy.
Arun Jaitley’s maiden budget for Prime Minister Modi has tried to harness that dynamism, with a push for two different kinds of startups –the artisan/handicraft rural variety and the high-tech/business urban variety.
Urban renewal and rural roads and highways mark another aspect of this double bill.
This demographic shift sparked a political ferment that led to an electoral upheaval this year. The budget is but an attempt to meet the economic hopes that it rode on.