India Today - - INSIDE - By Raj Chen­gappa

The Union bud­get’s big farm push is de­signed to please a large irate con­stituency of vot­ers. But will it also man­age to spur eco­nomic growth?

BBUDGET 2018 WAS A Modi mo­ment. With­out doubt. And as with ev­ery­thing he does, he made sure every­one knew it. Soon after the Union bud­get was tabled in Par­lia­ment, the prime min­is­ter, pen in one hand and notepad in the other, went on na­tional tele­vi­sion and for a good 25 min­utes spoke on its high­lights with ad­mirable flu­ency. He was acutely aware that this is his gov­ern­ment’s last full-fledged bud­get be­fore the gen­eral elec­tions. So ev­ery word he spoke had an un­der­ly­ing mes­sage for the elec­torate: I am your prime se­vak. I care for you, I care for our coun­try, I am a prob­lem-solver and I am think­ing not of the next elec­tion but the next generation.

Naren­dra Modi has al­ready demon­strated his ca­pac­ity for big ideas. His new­est catch phrases are a ‘New In­dia’ by 2022, en­sur­ing ‘so­cial and eco­nomic democ­racy’ and en­hanc­ing ‘Ease of Liv­ing’. He also has an

ap­petite for big risks. Whether it was the sur­gi­cal strikes against Pak­istan, the de­mon­eti­sa­tion drive against black money or ram­ming through the Goods and Ser­vice Tax, Modi showed he wanted ac­tion, what­ever the price. De­mon­eti­sa­tion proved to be a po­lit­i­cal suc­cess but was an eco­nomic mess. GST was an eco­nomic ne­ces­sity but a po­lit­i­cal quag­mire. As the coun­try’s growth slid un­der the weight of these two back-to-back eco­nomic shocks, Modi be­gan to lose his aura of in­vin­ci­bil­ity. But the prime min­is­ter showed that he is ever will­ing to fight back, learn from his er­rors and make amends speed­ily. Bud­get 2018 re­flected his abil­ity to take big risks even while man­ag­ing the in­her­ent con­flicts and con­tra­dic­tions be­tween pol­i­tics and the econ­omy.

The eco­nomic im­per­a­tives be­fore the bud­get were clear. There was a need to find jobs for a young and bur­geon­ing work­force. The widespread agrar­ian dis­tress had to be ad­dressed even while rais­ing farm pro­duc­tiv­ity and re­silience. Key so­cial sec­tors like health and ed­u­ca­tion needed ur­gent re­form to de­velop a skilled and healthy labour force. Eco­nomic growth had to be speeded up by stim­u­lat­ing pri­vate in­vest­ment and boost­ing ex­ports if Modi was to keep the prom­ise of Achhe Din that he had rid­den to power with. All this with­out in­dulging in what an ad­vi­sor has termed the mind­sets of ‘crony so­cial­ism’ or the ‘stig­ma­tised cap­i­tal­ism’.

The po­lit­i­cal com­pul­sions were even more force­ful and ur­gent. Opin­ion polls, in­clud­ing one done by in­dia to­day re­cently, had shown that while Modi’s per­sonal pop­u­lar­ity re­mained high, that of his gov­ern­ment had steadily eroded mainly be­cause of the eco­nomic slide. If the BJP has to re­tain its ma­jor­ity in the next elec­tion, he would have to win over vast sec­tions of the pop­u­la­tion. Par­tic­u­larly dis­grun­tled farm­ers and agri­cul­tural labour, who con­sti­tute a bulk of the work force and the elec­torate. He would also need to firmly es­tab­lish a sym­pa­thetic image with ev­ery other sec­tion of the pop­u­la­tion that would make a dif­fer­ence at the bal­lot— youth, women, trib­als, Dal­its and small busi­ness­men. All this while main­tain­ing the Sangh Pari­var’s faith in his abil­ity to usher in a Hin­dutva In­dia.

For Modi, there are no half mea­sures. In ev­ery­thing that he does, he strives to be dar­ing, daunt­less and daz­zling, but this can be dis­turb­ing too. So Bud­get 2018 is dar­ing be­cause Modi went all-out to woo farm­ers by promis­ing to pay them 1.5 times the Min­i­mum Sup­port Price (MSP). His team also set aside vast sums to bring in much-needed agrar­ian re­form in terms of boost­ing in­fra­struc­ture, es­pe­cially for food pro­cess­ing and hor­ti­cul­ture. It was daunt­less be­cause al­though it could re­sult in a rise in prices for con­sumers, it was a risk the prime min­is­ter was will­ing to take. Also be­cause he was will­ing to earn the dis­plea­sure of big busi­ness by not low­er­ing cor­po­rate tax and in­tro­duc­ing cap­i­tal gains tax for long-term in­vest­ments. Nor did he pro­vide any new sops to the in­flu­en­tial mid­dle class. The bud­get was daz­zling be­cause it ush­ered in the world’s largest health in­surance plan called “Ayush­man Bharat”. Un­der this scheme, the gov­ern­ment will of­fer to pay for an­nual med­i­cal costs of up to Rs 5 lakh for nearly 10 crore needy In­dian fam­i­lies.

YET, IT IS DIS­TURB­ING be­cause there is an in­her­ent risk for Modi in as­sum­ing the man­tle of a Pop­ulist Re­former. Among the known un­knowns is the ris­ing price of oil. In the first three years of his rule, the wind­fall of low crude oil prices al­lowed him to fund a host of in­fra­struc­ture and wel­fare schemes while main­tain­ing fis­cal dis­ci­pline. But if oil prices con­tinue to shoot up, it could re­sult not only in loss of rev­enue that could im­pact his largesse to­wards the poor and farm­ers but also see in­ter­est rates harden and in­fla­tion spi­ral out of con­trol.

Modi is also bank­ing on the huge in­vest­ments in in­fra­struc­ture his gov­ern­ment has made, es­pe­cially in the trans­port and hous­ing sec­tors, to pro­vide em­ploy­ment and stim­u­late pri­vate in­vest­ment, thereby en­sur­ing eco­nomic growth. Yet, there are ma­jor damp­en­ers, such as the twin bal­ance sheet chal­lenge, with many cor­po­rates heav­ily in debt and banks over­bur­dened with non-per­form­ing as­sets or bad loans. These are be­ing ad­dressed, but it may take a while be­fore the sit­u­a­tion eases. There is the added risk that im­ple­men­ta­tion of the big schemes an­nounced in this bud­get may prove to be tardy. That could cause widespread re­sent­ment and dent his re-elec­tion prospects. So the risks are high. But for­tune, as they say, favours the brave. And in Bud­get 2018, Modi has showed plenty of that qual­ity.

The prime min­is­ter’s new­est catch phrases are a ‘New In­dia’ by 2022, en­sur­ing ‘eco­nomic and so­cial democ­racy’ and ‘Ease of Liv­ing’. Bud­get 2018 in­cor­po­rates all these

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