Union Budget 2018 shows Modi govt could be preparing for early elections

On a day it is on course to lose Ajmer and Alwar, Modi govt learns lessons from Gujarat verdict to reach out to farmers, rural poor, youth

Finance Minister Arun Jaitley’s fifth and final Union Budget of the current term of the Narendra Modi government was evidence that the top BJP leadership has drawn the right lessons from its tenuous poll victory in Gujarat in December.

In Gujarat, the BJP had to face the ire of farmers for agrarian distress, of youth for lack of job opportunities and of the MSMEs (the micro, small and medium enterprises sector). The Budget has reached out to these key sectors. 

The middle class, a strong support base of the BJP, is likely to be disappointed that no significant tax exemptions have come their way. Excise duty on petrol and diesel has been decreased but a Rs 8 per liter levy of road and infrastructure cess on petrol and diesel has meant the tax remains the same. But the middle class can expect relief once the proposed direct tax code is implemented.

As the FM was reading out to his Budget speech in the Lok Sabha, news trickled in from Rajasthan of the BJP’s heavy defeat in Lok Sabha bypolls in Ajmer and Alwar, and Assembly bypoll in Mandalgarh. The BJP had swept all the 25 Lok Sabha seats in Rajasthan in 2014. Assembly polls in Rajasthan, Madhya Pradesh, Chhattisgarh and Mizoram are scheduled in December. After the Budget, the view among Opposition parties was divided on the speculation that the government might advance the Lok Sabha elections from April-May 2019 to the end of 2018.

The Opposition parties met under the leadership of UPA chairperson Sonia Gandhi in the evening. With the spectre of an early Lok Sabha polls looming, there has been hectic activity in the Opposition space since the Gujarat poll verdict. Even BJP allies – particularly the Shiv Sena and Telugu Desam Party – have flexed their muscles in recent days.

If Prime Minister Modi and BJP chief Amit Shah lauded the Budget for being “development friendly”, for its focus on rural India and for strengthening the vision of a ‘new India’, Rashtriya Swayamsevak Sangh-affiliated Bharatiya Mazdoor Sangh (BMS) said it had no relief to labourers and the salaried class. The BMS said it would hold a countrywide agitation on Friday.

In a detailed critique, senior Congress leader and former Union finance minister P Chidambaram said the Budget was an exercise in jumlas, or political gimmicks. He said in the light of farm distress and no jobs being created, the Budget should have been “bold and radical and (should have had) adequate provision of funds”. But it was a big let-down.

Chidambaram said the FM has failed the fiscal consolidation test. He said there was nothing in the Budget to boost exports. “The FM has imposed additional Customs duties to restrict imports. The PM’s speech at — and the spirit of — Davos has been forgotten within a few days!”

The Congress leader said the Budget lacked details on how the government promises to increase MSP 1.5 times, or the Rs 500,000 announced for healthcare for the poor.

Other Opposition leaders criticised the Budget. Congress President Rahul Gandhi said “thankfully” the Modi government had only a year more to go, while Trinamool Congress’s Derek O’Brien termed it a “super flop, big bluff show”.

Key announcements

• Outreach to farmers by promise of increase in MSP
• National Health Protection scheme to provide Rws 500,000 cover to 100 million poor
• Increase in government’s budget for health, education and social security
• Target for loan disbursement under Mudra scheme at Rs 3 trillion
• Rs 160 billion to be spent on providing electricity connection to 40 million poor households
• Institutional credit to agriculture to be raised to Rs 11 trillion (Rs 11 lakh crore)
• Increase the number of women provided cooking gas connections under the Ujjwala scheme from the earlier target of 50 million to 80 million