Jobs, not josh: Modi government’s interim budget missed the elephant in the room

Acting finance minister Piyush Goyal’s 1 hour and 45-minute budget speech had three acts of commission and one glaring omission.  

The mountain laboured, and produced a mouse.

Expectations from the BJP government’s last budget were sky-high. Despite its interim nature — tradition normally warrants only a vote-on-account, a modest rollover of expenditures to see the government through for the few months, until a new one is elected and presents its own budget — the media build-up was high. Knowing Prime Minister Narendra Modi’s flair for the dramatic, journalists and commentators expected some startling announcement that would take the nation’s breath away, grab banner headlines and send the stock market soaring.

One report even suggested that halfway through the interim finance minister’s speech, Piyush Goyal would give way to Narendra Modi himself, who would rise and issue some unimaginable “major” announcement that would achieve just that. Given Mr Modi’s fondness for the spectacular, and the relish with which he announced demonetisation over two years ago, it did not seem impossible.

In the event, it all turned out to be a damp squib.

The finance minister delivered the longest interim budget speech on record, although it was remarkably devoid of rhetorical flourishes, witty wisecracks or even that hardy perennial: a sprinkling of Urdu couplets. (One decidedly non-poetic Hindi poem at the end of the speech was all we literature buffs got.) He did not yield to Mr Modi.

Sure, there were the usual empty boasts of governmental achievements more illusory than real, peppered with numbers seemingly made up by the screenwriter of the movie he mentioned twice in his speech, Uri: The Surgical Strike. (Factchecker.in listed a series of what can only be politely called inaccuracies and exaggerations in the finance minister’s numerical claims.) There was the “vision thing”, in the form of 10 long-term goals for the future of India, mercifully unsupported by either imaginary figures or mundane facts. But after 1 hour and 45 minutes of somewhat hoarse delivery, we were left with – what? Precisely three major announcements, and one conspicuous omission.

The three acts of commission 

The most important of Mr Goyal’s announcements was certainly the much-anticipated basic income support for farmers, predicted by pretty much every pre-budget analyst. But it turned out to offer a grand total of Rs 6,000 a year – one Rs 500 note a month, in fact – to a community whose members have been committing suicide in record numbers. Would a farmer in the throes of existential despair find relief in a Rs 500 note? Would salvation come to him or her in the form of Rs 16.5 a day?

The Modi government missed an opportunity to rise to the challenge posed by Congress president, Rahul Gandhi, to devise a serious minimum income guarantee that would actually provide a living wage to the poorest of India’s poor, including by subsuming some of the existing subsidies into such a scheme.

Worse still, its subvention would only go to landholding farmers with two hectares of fields or less, not to the landless peasantry or farm labourers, and not at all to the urban poor. It would make absolutely no difference to the lives of its recipients.

But – and here’s the cynicism of it – it would be provided in three equal instalments starting immediately, in other words allowing Modi government to transfer Rs 2,000 of our (taxpayers’) money into 17 crore bank accounts just in time to reach them before the 2019 Lok Sabha elections. One may as well name it the Pradhan Mantri Re-Election Yojana.

The second major announcement, also widely predicted, was the doubling of the tax exemption limit from Rs 2.5 lakh to Rs 5 lakh. This overdue gesture to the middle-class is indeed welcome – all the more so since it comes from a government that has been regularly dipping its hands into the middle-class’ pockets with an array of swingeing taxes, ranging from about Rs 20 excise duty on every litre of petrol to unreasonably high GST charges on items of regular consumption. But precisely because it was expected, this news failed to send pulses racing.

The only other announcement of substance that seemed to signal any bold thinking was the proposed social security scheme for unorganised workers. While this section of our society desperately deserves a social safety net, the numbers Mr Goyal mentioned hardly inspire much hope. A 29-year-old would need to pay Rs 100 a month to be able to receive Rs 3,000 a month 31 years later. I don’t know what the actuarial calculations are, but it wouldn’t surprise me if almost any investment of Rs 1,200 a year over three decades produced better returns than that. And if you are 30 or older, the premiums would be even higher.

The one omission

So much for the three acts of commission. What about the one omission? Jobs. Put it in block letters: JOBS. The elephant in the room that the manager of the menagerie refused to see.

The BJP has plunged India into a jobs crisis. The reckless and ill-considered demonetisation, the botched and hasty rollout of GST, and five years of macro-economic ineptitude have all robbed India of either 11 million jobs last year (according to the Centre for the Monitoring of the Indian Economy) or more conservatively, 3.5 million jobs in two years (according to the All-India Manufacturers’ Organisation). Either way, it is the opposite of the 10 million jobs a year promised by Narendra Modi in his extravagant 2014 campaign rhetoric. The NSSO figures the Modi government tried to suppress reveal a 6.1 per cent unemployment rate, the highest in 45 years. Worse still, youth unemployment among males aged 15 to 23 is 18.7 per cent and for females, it stands at a staggering 27.8 per cent.

“Where’s the josh?” the Prime Minister and his education minister both asked different audiences recently. One must instead ask: Where are the jobs, Mr Prime Minister?

The one saving grace, government sympathisers defensively say, is that the finance minister has been responsible and prudent, projecting a fiscal deficit of just 3.4 per cent and vowing to reach the 3 per cent target next year. Unfortunately, we have heard this song before from this government. If you look back at the last five budget speeches, you will find that every year, the government has exceeded its own fiscal deficit projections, and every year it has vowed to pull things back to 3 per cent. Those of us who remember Mr Jaitley’s promises will tell you that we ought to have been at 3 per cent two budgets ago.

But Mr Goyal won’t have to worry about a broken promise coming back to haunt him – because given the disastrous shape of the economy, by the time the next budget has to be presented, there won’t be a BJP finance minister to do it.

Source : The Print