A smart chess move for the long game

Nirmala Sitharaman, India's finance minister, during a news conference in New Delhi, India, on Thursday, Feb. 1, 2024. (Bloomberg/Prakash Singh)
Nirmala Sitharaman, India's finance minister, during a news conference in New Delhi, India, on Thursday, Feb. 1, 2024. (Bloomberg/Prakash Singh)

Summary

  • This interim budget has been used not as a tool of populism, but as an instrument to shape public expectations and perceptions about public expenditure policy

One could read as a metaphor the finance minister’s reference to Rameshbabu Praggnanandhaa’s well-fought battle with Magnus Carlson in her budget speech on Thursday. Ahead of the 2024 general election, finance minister (FM) Nirmala Sitharaman chose to place long-term welfarism over short-term populism, and in the process, delink the budget from the ballot. This strategy of aspirational welfarism over pragmatic populism is akin to a gambit—a chess move sacrificing an obvious electoral opportunity for a subsequent positional gain.

The budget consciously forgoes the temptation to announce freebies and take populist measures aimed at garnering immediate voter favour. This interim budget has been used not as a tool of populism, but as an instrument to shape public expectations and perceptions about public expenditure policy. This is an important departure and development carrying the signature style and stamp of Prime Minister (PM) Narendra Modi—using the opportunity to disengage economic policy from the short-term compulsion of winning elections. Modi’s message of country first and party second—the FM referred to the PM and his statements 21 times in her speech—is reiterated in the interim budget.

Overall, the tone of Sitharaman’s speech and the fiscal stance of the Bharatiya Janata Party’s (BJP) sixth consecutive budget reflect the confidence of a government firmly entrenched on the path to an electoral victory. The well-founded belief that BJP will be back in power for a third successive time underlies the restraint of not being populist in any manner or method.

Historically, Union budgets in general, and interim budgets in particular, have kept a keen eye on the impending elections—from former Congress leader Indira Gandhi who politicized the budget in the mid-70s to BJP leader Piyush Goyal whose interim budget included the launch of PM-KISAN with an outlay of 75,000 crore aimed at the 2019 general election.

Whether delinking economics of the budget from the politics will elevate the discourse of economic policy and maturity of India’s democracy remains to be seen, but the FM might have just put a foot forward in moving India towards becoming a welfare state. Much will depend on how it gets taken forward in five months, when the Union budget for 2024-25 will be presented. For, on this account, the interim budget is short of substance. Beneath the veneer of optimistic projections and grand promises lies an empirical landscape that warrants deeper scrutiny.

The FM’s assertion of a profound transformation in India’s economy is a bold claim. While there have been strides in certain sectors, such as technology and services, the overarching structural issues remain unresolved. The emphasis on GDP (another ‘catchy’ acronym)—governance, development, performance—is commendable, but the devil lies in the details of implementation.

Noted economist, banker and former finance minister of Jammu and Kashmir, Haseeb Drabu
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Noted economist, banker and former finance minister of Jammu and Kashmir, Haseeb Drabu (Hindustan Times/Waseem Andrabi)

The claim of lifting 250 million people out of poverty in a decade is bound to raise more than quite a few eyebrows. While poverty alleviation efforts have been made, the magnitude of this achievement requires rigorous scrutiny and transparent methodology. Without verifiable data and independent evaluation, such claims risk being dismissed as political rhetoric. Especially in view of BJP’s track record of scant commitment to evidence-based policymaking, and genuine social and economic inclusivity.

Similarly, the promise of reaching 40 million farmers through the crop insurance scheme sounds promising on paper. However, accessibility, coverage, and timely payouts are a major cause for concern. Agricultural distress remains a pressing issue, and the effectiveness of government interventions must be assessed in addressing the root causes rather than offering palliatives in the form of politicized central schemes.

The finance minister echoes a shift towards a more contemporary and globalized understanding of governance. In a world marked by short-term political gains, the ability to delink fiscal policy from the electoral cycle represents a level of political maturity that bodes well for the nation’s future. This departure from immediate gratification politics signals a commitment to long-term strategies that prioritize sustainable development over transient applause.

In the confluence of welfarism, political maturity and metaphors, the interim budget becomes a canvas on which FM has painted BJP’s evolving but increasingly compulsive narrative for the masses. As the nation grapples with complex challenges and ambitious dreams, it is imperative that governmental policies are not just about numbers and numerical strengths, but also about social inclusivity. In weaving together the threads of economic calculus, political arithmetic, and aspirational grammar, India should not impair its potential to chart a course that transcends immediate political victories and ideologies, to foster a legacy of sustained growth and collective welfare.

Haseeb Drabu is an economist and former finance minister of Jammu & Kashmir.

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