Prime Minister Narendra Modi has clearly got supreme faith that voters in India would give him a second five-year term. The calculation is clearly that in the voting booth, voters will choose the stability of a Modi government over the lack of clarity about either the leadership or the policies of an opposition “Gathbandhan” government. Stability has eluded such governments in the past, and developments in Karnataka indicate that the internal dynamics of the Congress is such that several within the country’s former ruling party will chafe at any alliance in which their party is not in the driver’s seat, as in Karnataka, where JDS leader H.D. Kumaraswamy is the Chief Minister, replacing the still powerful Congress CM, Siddaramaiah. Only in Kerala during the tenure of the Chelat Achutha Menon government did the Congress not create problems for the coalition, with the CPI Chief Minister serving his term undisturbed. While V.P. Singh came to power as a consequence of anti-Congressism, both H.D. Deve Gowda and I.K. Gujral saw their tenures cut to a year and less as a consequence of the Congress withdrawing support to them. There is no guarantee that the same fate would not befall any future government headed by an individual not from the Congress. Indeed, the peremptory shrift given to the Samajwadi Party and the Bahujan Samaj Party by the Congress in the matter of seat allocation to these parties in the just concluded Assembly elections in three Hindi-belt states was met by a similar attitude on the part of the SP and the BSP in Uttar Pradesh, a state that is key to Prime Minister Modi’s fortunes in this year’s Lok Sabha elections. Given such currents of inherent tension between the Congress and several regional parties, Prime Minister Modi appears confident that the BJP will come back with a sufficient number of seats. This explains the relative absence of major concessions to taxpayers in the Interim Budget presented by Finance Minister Piyush Goyal, who resisted loud calls to slash income tax rates as also GST rates. Given the keystone role of Prime Minister Modi in the government, it is clear that he has refused to walk the populist path through major cuts in tax rates.
This is not to say that concessions are wholly absent. Direct taxes have been abolished for those with an annual income below Rs 5 lakh, while this benefit can be availed of even for those with a slightly higher income, depending on the investments and expenditure he or she incurs. At the same time, the farm sector has received needed attention, with a Minimum Income Scheme for farmers owning 2 hectares or less. The plight of such individuals is dire and any concession is welcome. It is not surprising that the Modi government continues to defend the 8 November 2016 demonetisation announced by the Prime Minister, despite several voices claiming that the move brought less than the benefits that have been enumerated by the government. Finance Minister Goyal has largely remained faithful to the tenets followed by Arun Jaitley, who focused on fiscal deficit as well as on inflation. Some would say that such a concentration of effort on these two parameters may divert attention from the need to achieve higher growth rates, a necessity for the creation of the 10 million jobs needed by the young in India. The surest way of abolishing poverty is to ensure that growth rates rise substantially to double digits, as indeed has been the case in China for over a generation. The consequence of that has been the growth of China as an economy that is more than 70% the size of the only country with a bigger economy, the United States. As far as the farm sector is concerned, the sops on offer may not have a major effect on voting behaviour, as the average benefit to the small farmers is around Rs 500 per month, which is not a big sum by any stretch of the imagination. More than the actual proposals, what was noteworthy was the way in which the Finance Minister detailed the numerous schemes of the Modi government and the benefits they have spread among millions. Especially in urban centres, millions would have tuned into the budget speech, and many would have been grateful that no adverse measures were proposed which would involve higher taxation of specific segments of the population. Resisting the pressure to make too many promises for the future, this sixth Modi Budget concentrated on what has been done since 26 May 2014. More than 80% of the budget speech focused on schemes carried out by the government, and only 20% related to actual proposals. Voters in India will need to choose when they visit the ballot boxes as to whether they would seek a change or remain loyal to Prime Minister Narendra Modi.