New Delhi: The stage is set for the Narendra Modi government to present its final budget before the 2019 Lok Sabha elections, with the government finalizing the dates of the budget session—the last sitting of the 16th Lok Sabha. The budget session is likely to run from 31 January to 13 February. Finance minister Arun Jaitley will present an interim budget on 1 February.
According to convention, the finance minister does not announce any new programmes that could give the government an electoral advantage and impose a financial burden beyond the initial four months of the fiscal. But nothing prevents the government from using the opportunity to present an economic road map for the next five years.
The rules are not cast in stone: P. Chidambaram, while presenting the interim budget for 2014-15 ahead of the last Lok Sabha elections, had announced the One Rank One Pension scheme for the armed forces in a move that could win the support of voters in the defence services. Jaitley later criticized Chidambaram for providing only ₹ 500 crore in his interim budget, which was a pittance compared to the annual financial implication of the scheme at around ₹ 7,500 crore.
This time around, in a poll of 40,000 people conducted by citizen engagement platform LocalCircles on its social media platform, 64% of respondents said they wanted the government to include tax measures in the budget, while 71% said they were against the government announcing a farm loan waiver.
The policy initiatives that the government could take in the interim budget were limited as direct tax adjustments would require amending the finance bill, said D.K. Srivastava, chief policy adviser at EY India. “However, they have more flexibility on the expenditure front, where they can announce schemes without providing substantial funding for it." he added.
In an interview on 26 December, principal economic adviser in the finance ministry, Sanjeev Sanyal, said there might be “some policy guidance" in the interim budget, without revealing details. However, he confirmed that no Economic Survey would be released. “The Economic Survey will come out only with the full-fledged budget announcements in June-July," he added.
With opposition parties raising issues related to agrarian distress, unemployment and problems faced by micro, small and medium enterprises (MSMEs), the government may opt for a populist budget seeking to please all sections of society.
Senior Bharatiya Janata Party (BJP) leaders said the interim budget could focus on social upliftment and welfare, with a focus on healthcare.
“Petrol prices are under control and management of inflation is good. Direct tax collection has increased, which means greater availability of resources. The focus of the government has been the socially and financially weaker section and it would further get strengthened in the budget," a senior BJP leader said on condition of anonymity.
The government has taken a populist turn as elections have neared, most recently pushing for 10% reservation for economically weaker sections in the general category.
The BJP leader cited above also said the budget session would outline the government’s vision for the next five years—what the National Democratic Alliance plans to do if it comes back to power.
Agrarian distress remains a major issue ahead of the elections.er While the prime minister has all but ruled out a farm loan waiver, pointing out that it does not benefit the real needy despite demands by Congress president Rahul Gandhi, experts do not rule out a limited income transfer to farmers.
However, the precarious financial situation of the government, coupled with its resolve to stick to the fiscal consolidation path, may put the focus on how it has managed its finances in the year ending 31 March.