In what could be considered a virtual throwback to the populist pre-reform era politics of the Indira Gandhi variety, the United Progressive Alliance (UPA) government has finally rediscovered the common man, after four years of benign neglect.
Along with the staggering Rs60,000 crore farm loan waiver package, Budget 2008 had something for every section of the society, be it the increase in threshold limits of personal income-tax exemption or a reduced excise duty on two-wheelers and cars, the sweet spot of the middle classes; insurance for the below-the-poverty line households; health insurance for weavers; and formal expansion of the National Rural Employment Guarantee Programme to 596 districts.
From the Budget, it now appears that the Congress leadership is planning to advance Lok Sabha elections by about six months, to potentially hold them simultaneously along with elections to the state assemblies of Rajasthan, Madhya Pradesh, Chhattisgarh and Delhi. This will be necessary as the impact of this small-bore Budget proposals are unlikely to have a lasting impact, at least not until next summer when the Lok Sabha elections are actually due.
With the deadline on the Indo-US nuclear deal fast approaching, there is also a possibility that the UPA government may sign the deal and go in for dissolution of the Lok Sabha after the Budget session. Much will, however, depend on the ruling combine’s assessment of its electoral prospects after presenting this kind of a populist budget.
The loan waiver is something that the UPA bosses believe would help it to harvest a rich crop of votes. After all, the loan waiver sop translates into a monetary per capita benefit of around Rs16,000 for most of the farmers.
But whether the loan waiver scheme rakes in votes for UPA will depend on many factors. The scheme is not universal in its application. Only farmers who have borrowed from eligible institutions—scheduled commercial banks, regional rural banks and cooperatives—and have not repaid them would stand to benefit. This could lead to disaffection among those who do not benefit from the scheme.
Further, even the eligible beneficiaries may face difficulties in securing relief as banks are notorious for harassing farmers even when they are eligible to get relief. Poor implementation could cause serious problems to the ruling combine on the eve of crucial elections.
Indian farmers are a major voting bloc and are a large swing group. They mainly comprise the upper castes and the backward castes. They tend to vote in large numbers for parties that pursue pro-farmer policies. With the loan waiver announcement, the Congress party has taken a huge step in reaching out to this electorate.
The poor and the landless have been the traditional constituency of the Congress party. The infamous Garibi Hatao (eliminate poverty) slogan and reservations for scheduled castes and scheduled tribes have endeared the Congress to these sections and the party already tends to get a sizeable chunk of their votes.
The Congress party’s efforts to emerge as a champion of the farmers may dilute its stranglehold on the poor and the labourers as they rarely back the same political formation given their conflicting interests. If they get a signal that the Congress party has a pro-farmer stance, there is a potential danger that the poor may gravitate towards another party such as the Bahujan Samaj Party, which is championing their cause.
Populism works best when people for whom such measures are intended perceive that the government in question is sincere about their interests. Election year announcements are often perceived as poll gimmicks. This is the oldest political trick played by the parties on people.
All parties have started eyeing farmers as a voting bloc and have begun wooing them. Pre-empting the Budget announcement, the Bharatiya Janata Party, at its national council meet last month, promised that it would waive all farm loans taken not just from institutional sources, but from money lenders as well. With different parties making competing and alluring promises to lure farmers, has the Congress-led UPA gained a first-mover advantage with its big ticket announcement? The Congress party, for one, is convinced that it has scored an early political victory over its rivals.
G.V.L. Narasimha Rao’s The Bottom Line column runs every Monday in Mint. He is a political analyst and managing director of Development and Research Services, a research and consulting firm.
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