Finance minister Arun Jaitley’s budget speech on Monday marked a shift in the NDA government’s economic and political outlook from its belief in the trickle-down effect of big-ticket foreign and domestic private investments to reliance on rural India to drive the economy.
The budget offered something to every section -- doubling farmers’ income by 2022, a thrust on rural infrastructure to create jobs, incentives for senior citizens and middle-class people living in rented houses and aspiring to own one.
At an election rally in Bihar, Prime Minister Narendra Modi had talked about the plight of women who had to light chulhas to cook food for their children. He said he understood their pain as his mother was poor. On Monday, Jaitley brought succour to such mothers as he announced a mission to provide them LPG connections with government subsidy.
The finance minister made cars, especially in the luxury segment, SUVs and cigarettes more expensive, but spared bidis. While he increased the tax rebate for those earning up to Rs 5 lakh a year, he increased the surcharge on income tax for those with an annual income of over Rs 1 crore. If the finance minister had used the words “farmers” and “rural” 19 times in his budget speech last year, he used them 54 times on Monday.
The obvious shift in the government’s focus came against a backdrop of a year of electoral reverses, be it in the Delhi and Bihar assembly elections or in the civic polls in many BJP-ruled states. Coming as it did before the assembly elections in four states and one union territory in April-May, Budget 2016-17 is expected to help the BJP counter the Opposition’s projection of the NDA government as anti-poor and a “suit-boot ki sarkar”.
Seven states, including the electorally crucial state of Uttar Pradesh, Gujarat and Punjab, among others, will go to the polls next year. The Opposition’s attempt to paint the NDA anti-farmer had gained steam after the government’s unsuccessful attempt to bring new legislation amending the land acquisition bill.
Jaitley reached out to the upwardly mobile sections among the Dalits and tribals, announcing a “Start Up India Scheme” to promote entrepreneurship among them and proposing to constitute a national SC and ST hub to provide them professional support.
The allocation of Rs 100 crore to celebrate the birth centenary of Pandit Deen Dayal Upadhyay should please the BJP’s ideological patron, the Rashtriya Swayamsevak Sangh. Jaitley drew applause from politicians from poll-bound Punjab as he set aside an initial sum of Rs 100 crore to celebrate the 350th birth anniversary of Guru Gobind Singh.
Some analysts called it a “political budget” but Jaitley offered a sound economic rationale for this. Given that foreign markets were weak, he had to rely on domestic demand and Indian markets. Besides, as the recent agitation by the Jat community indicated, there is growing unrest among agrarian communities.
Successive spells of a weak monsoon have made it worse for farmers. An economic slump has meant fewer new jobs, causing unrest among the youth as well. The finance minister obviously had all these factors in mind as he announced huge investments in rural infrastructure, especially the irrigation sector.
To give farmers easier access to markets, a unified agricultural marketing platform will be dedicated to the nation next month. Jaitley announced a new FDI policy, which will help the food processing industry and farmers growing fruits and vegetables.
Farmers will also be the biggest beneficiaries of the new health insurance scheme.
Days before Jaitley’s budget speech, a top Congress functionary had claimed credit for forcing the government to change its outlook towards farmers. Be that as it may, Budget 2016-17 promises a much-needed intervention by the government to address agrarian distress.