The massive mandate for Prime Minister Narendra Modi in May 2019, made those trapped in the idea of the dream-Budget, salivate at the prospect of a Budget full of “tough decisions”, “bold ideas” and “fundamental reforms”. Big election victories can bring about great changes. But to get a tiger to change its stripes is not one of them. Damn the details and focus on the sauce of symbolism, has been the Modi-mantra. Why fix something that works just fine?
Fittingly, in her speech that lasted more than two hours, Finance Minister Nirmala Sitharaman chose not to be bogged down by the details of sectoral allocations. That was not the only precedent the first full-time woman FM broke away with. In keeping with the spirit of symbolism, the burgundy leather briefcase made way for a red cloth folder. The-five-trillion-dollar-economy is the newest Modi buzz phrase, plonked like an obelisk that not just this Budget but most other economic policy decisions will have to ritually circumambulate.
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There was symbolic praise for industrialists and wealth creators, soon after the FM arrived at the crease. The very next ball, there was an assurance that gone are the days of looking down on legitimate profits. By the time Sitharaman’s Budget innings came to an end, the same industrialists who earned upwards of Rs 2 crore and Rs 5 crore learnt that their income tax rate had gone up by 3 per cent and 5 per cent respectively. That’s hardly an incentive for high-skilled individuals to choose India over say, Singapore. Given the circumstances, a status quo in income tax rates, is the best the salaried middle-class could have hoped.
Budgets are usually a weathervane of a government’s socio-political objectives. The emphasis on small and medium enterprises (SME) and startups reflects this government’s worries on the job creation. The Bharatiya Janata Party (BJP) believes that the Mudra scheme, where young entrepreneurs could get access to capital from state-owned banks without any collateral, was a key contributor to its electoral success. Therefore, in continuation of the theme, the FM in her Budget has tried to make life a lot easier for SMEs with better access to loans, and a 25 per cent corporate tax rate for companies with revenues of Rs 400 crore.
Among the plans articulated in the Budget that can be termed ambitious are piped drinking water for every household by 2025, the big push to make India a hub for electric vehicles and aerospace manufacturing, and the Rs 105,000 crore target from disinvestment of public sector undertakings (PSUs). Given the gargantuan scale of the prevailing water crisis, universal access to piped water can certainly be a game changer. But for that to happen, Indians will have to be convinced to pay for the precious resource, perhaps the most difficult part of the deal. The disinvestment target and the commitment made by the government a few days ago to pump in more than Rs 70,000 crore to revive the terminally ill state-owned telcos MTNL and BSNL simply doesn’t square.
While there were obligatory references to increasing FDI limits in aviation and insurance, curiously, FDI in media too merited a mention after many long years. The decision to offer a Rs 3,000 monthly pension for three crore shopkeepers with turnover of less than Rs 1.5 crore may perhaps mark the beginning of serious efforts to open multi-brand retail up for foreign investors. With this carrot for the small traders, their opposition to the entry of Walmarts and Tescos could lose a bit of bite.
On agriculture, another bugbear for the government, there were no major announcements except the promotion of zero budget natural farming (ZBNF). At best it is a quaint practice that uses cow dung, urine and jaggery as productivity boosters. Farm scientists don’t consider it a scalable solution. Yet, the focus on ZBNF over high-tech farm innovations is perhaps indicative of this government’s instinctive attraction for “Indic” innovations that border on quackery.
But then, on the highway to $ 5 trillion symbolism matters, detail is overrated.
(TR Vivek is a Bengaluru-based journalist)
The views expressed above are the author’s own. They do not necessarily reflect the views of DH.