Jaitley's budget with an eye on Bihar and Bengal polls, keeps allies happy

Opposition terms Budget anti-poor; P Chidambaram says it lacks overarching goal or underlying theme

If Railway Minister Suresh Prabhu presented one of the most apolitical budgets in recent times by not introducing any trains, Finance Minister Arun Jaitley delivered a Budget that provided a peep into the developing architecture of the Centre-state relations. The Union Budget has an eye on the Bharatiya Janata Party (BJP)’s coming political challenges.

The Congress-led opposition termed the Budget “pro-corporate and anti-poor”. Former prime minister Manmohan Singh expressed concern the budget had reduced allocations for welfare schemes. Jaitley’s predecessor P Chidambaram said the Budget had lacked any overarching goal or underlying theme, strayed from the path of fiscal consolidation and ignored a vast majority of people.

But the finance minister announced enough social welfare schemes and special packages to not only keep Bharatiya Janata Party (BJP) allies happy but also get thanks from Bihar Chief Minister Nitish Kumar. The finance minister on Saturday delivered on a longstanding demand for a special economic package for Bihar and West Bengal. He said the eastern states had to be given an opportunity to grow faster. The Budget provided Rs 20,000 crore as “special assistance by specific intervention” to the National Institution for Transforming India (NITI) Aayog for the two states. Bihar is to have Assembly elections in October, while Bengal will go to polls by mid-2016.

The Jaitley Budget is also a first in terms of changing the funding patterns of some central schemes, in the light of the recommendations of the 14th Finance Commission, which increased the states' share in central taxes. The states will not receive any central help for schemes such as police modernisation, Backward Regions Grant Fund, for creating tourist infrastructure, National e-Governance Plan, etc. Several other schemes will undergo a changed sharing pattern between the Centre and the states. The Centre has reduced its contribution to some of these — Integrated Child Development Scheme halved from Rs 16,316 crore to Rs 8,000 crore, the National Food Security Mission reduced from Rs 1,830 crore to Rs 1,300 crore, and the Rashtriya Krishi Vikas Yojana reduced from Rs 8,444 crore to Rs 4,500 crore. Schemes of the United Progressive Alliance era, such as the Jawaharlal Nehru National Urban Renewal Mission, have nearly been phased out, with the allocation to the government's 100 Smart Cities scheme.

The BJP hopes to form a government in Bihar and emerge as at least one of the two major parties in Bengal. The latter will have municipal elections later this year, including the politically crucial Kolkata Municipal Corporation’s. Jaitley promised an All India Institute Of Medical Science (AIIMS)-like institute for Bihar.

He also reached National Democratic Alliance (NDA) allies Telugu Desam Party (TDP), Shiromani Akali Dal, potential ally Telangana Rashtra Samiti (TRS), and even the Christians of Goa. The BJP runs a government in Goa, where nearly 40 per cent are Christians.

Jaitley said the Centre was committed to deliver on all commitments made at the reorganisation of Andhra Pradesh and Telangana, including concessions to new manufacturing units set up in the two states from April 2015 to March 2020, and setting up an Indian Institute of Management (IIM) in Andhra. Jaitley promised schemes for the development of churches of old Goa and the Qutb Shahi tombs of Hyderabad.

For Punjab, Jaitley announced funds to develop the Jallianwala Bagh complex and a post-graduate institute for research in horticulture, both in Amritsar. Punjab was also promised an AIIMS.

“We are very happy with the Budget. He has been generous to Punjab. Being an agrarian state, the announcements to allocate Rs 5,300 crore for micro-irrigation, cheaper crop loans and monetary assistance for checking soil health will help us,” Akali Dal member of Parliament Naresh Gujral said.

Jaitley said an AIIMS and an IIM will be set up in Jammu and Kashmir. Funds for the development of the Leh Palace in Ladakh will be given. A BJP-People’s Democratic Party (PDP) coalition government will be sworn in on Sunday in Srinagar. An AIIMS each has been promised to Himachal Pradesh, Tamil Nadu, and Assam. The latter and Tamil Nadu go to polls by mid-2016.

Jaitley paid his tribute to two BJP icons — Atal Behari Vajpayee and the late Deen Dayal Upadhyay. The government will launch the Atal Pension Yojana, Atal Innovation Mission, a skill development project in Upadhyay’s name and also mark the leader’s 100th birth anniversary this year.

Congress president Sonia Gandhi said: “It is a pro-corporate Budget.” Congress leader Jairam Ramesh said the Budget was dhan wapasi or a repayment programme of the money the BJP had taken from companies in the elections.

A POLITICAL BALANCING ACT

• Rs 20,000 crore to NITI Aayog as special economic packages to Bihar, Bengal
   
• IIMs and AIIMS in J&K, Punjab and Andhra, ruled by NDA allies
   
• Govt commits to meet economic packages for Telangana, Andhra Pradesh