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ANALYSIS | It's My Populism Versus Yours This Budget Day. But Where's the Money?

From cash transfer for farmers to tax relief for the middle class, there has been much speculation about the populist measures the government may announce on February 1.

Sindhu Bhattacharya |

Updated:February 1, 2019, 10:09 AM IST
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ANALYSIS | It's My Populism Versus Yours This Budget Day. But Where's the Money?
Illustration by Mir Suhail/News18.com
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Each time general elections are near, the incumbent government turns quite benevolent.

Terms like ‘lifting the masses out of poverty’, ‘welfare schemes’, ‘income guarantee’ and ‘alleviation of farm distress’ are thrown about. Broad hints are delivered about impending state largesse and reduction in tax burden on the common man. The electorate is, thus, lured with fancy promises, in the hope that it votes the outgoing government back to power. This is the norm, regardless of which party holds the reins at the Centre. And the incumbent Modi sarkar is hardly likely to veer away from this long-held practice.

In this backdrop, can the government really be faulted for wanting to present a full budget on February 1? Why would it want to waste the last chance to please every voter, especially now as some opinion polls are saying that the BJP may not be in as strong a position in the 2019 Lok Sabha as it was in 2014? Populism has its uses, as has recently been proven in the three heartland states where a cocktail of promises about farm loan waivers and other measures brought the struggling Congress back to power.

As for a constitutional norm being violated by presentation of the full budget, the Modi government has amply demonstrated its contempt for institutions and norms to remain bound by mere convention in this matter.

But the Opposition continues to cry foul, citing constitutional precedent.

Of course, it is also wary of populism aiding the Modi government back to power if allowed to present this full budget. Why else would Congress president Rahul Gandhi jump the gun and announce a basic income scheme for the poor? If populism is to be eschewed, then it should be a bad word for both sides of the political divide.

Speaking at a media interaction on Monday, former finance minister Yashwant Sinha said that any attempt by the government to present a full budget would be unconstitutional. He said the government can merely seek Parliament nod for expenditure for the next two-three months. “No new services should be announced, no Finance Bill should be presented and no Economic Survey should be tabled this time... The government should place its 12-month statement of income and expenditure of the outgoing year and then ask for Parliament approval for expenditure for the next two-three months.”

Sinha gave examples of outgoing governments presenting interim budgets in 2004, 2009 and in 2014 and cited article 116 of the Constitution to say any attempt by the Modi government to present a full budget would fall foul of the Constitution. He also said there was no precedent in Independent India of any outgoing government presenting a full budget.

There has been much speculation about the populist measures which the government may announce on February 1. It has been hinting at bringing an income transfer scheme for farmers, which assures them income based on acerage, in lieu of various subsidies now being provided.

In simple terms, this means instead of subsidising bijli, paani, fertiliser and irrigation, the farmer may get an assured sum in his bank account, but will then have to pay market rates for all these ingredients.

Whispers have also begun about a small tax relief for the middle class and a possible universal basic income scheme. Whether any or all of these measures will be announced on Friday remains to be seen.

In any case, there are ways of presenting ambitious budget proposals even if the government were to stick to past convention and treat the February 1 exercise as an interim budget. Sinha himself said that indirect taxes — the Goods and Services Tax now — can be tweaked through a separate government notification, after a mention in the budget speech. The only bar is on mega government schemes and changes to direct taxes (income tax and corporate tax etc) which must be made through the Finance Bill.

Let us assume that the Modi government throws caution to the wind, presents a full budget replete with several populist schemes requiring mega budgetary allocations. Let us also presume that a different government assumes power at the Centre this summer. Would the new government then find it easy to put aside these populist announcements made by an outgoing government by merely citing financial constraints?

The Congress has been unable to resist populism even now, when it is not in power, and has already promised a Minimum Income Guarantee (MIG) scheme without specifying how such an ambitious sop would be funded.

Former finance minister and the man handling the Congress manifesto, P Chidambaram, tweeted that “the first right on the country's resources is of the poor of India. Congress Party resources Jutayegi to implement Rahul Gandhi's promise”, without explaining where these resources would come from.



Since populism seems a sure way to the voter’s heart, why make a distinction between populism of the BJP or the Congress or other parties? In any case, no one seems to have given a thought to the question of generating resources for these grandiose schemes. Remember, analysts have already said that the fiscal deficit could rise by 20 basis points to 3.5% this fiscal against the target of 3.3% as revenue falls and expenditure rises. A string of new welfare (populist) schemes may provide a balm to some sections of society, but could further skew the fiscal math.

Perhaps this should be a bigger worry now than whether the government will present an interim or a full budget.

(The author is a senior journalist. Views are personal)

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| Edited by: Nitya Thirumalai
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