Indian political economy is at test. The Union Budget has caused discomfort in opposition ranks. It has taken away the wind out of their sail as the government proposes income guarantee and welfare of the most populous communities – farmers, labourers, working class, the low-earners, and indicates more sops after polls.
Income guarantee is a masterstroke as it keeps farmers out of the WTO ambit.
Has it turned the opposition jittery? Is it not the reason for upping their ante? May be. More so as the figures of total subsidies from food, urea, LPG, cotton procurement, North-East industries and Jammu and Kashmir interest subventions are continuously rising from Rs 2,24,428 crore in 2017-18 to Rs 3,34,234 crore in 2018-19.
The allocation for scheduled castes’ welfare has also jumped to Rs 76,800 crore from Rs 49,177 crore in 2017-18 which is a Rs 27,623 hike. This is at a time when the government claims that it has been reducing subsidies.
The railways for long were used for populist purposes. The Modi government has carefully showcased it through the Train 18 – semi superfast.
The budgetary figures indicate that the railways are being given special attention. Its capital outlay has seen whopping rise of Rs 72,407 crore from Rs 152,255crore in 2017-18 to Rs 224,662 crore. The total outlay increases by over Rs 115,810 crore. It means a lot and it touches almost all corners of the country.
The ruling NDA can carefully use it for electoral campaign. The opposition has to work overtime to negate these figures.
A careful rejig of e-tail (electronic retail) rules is to help Indian businesses – a plus during the poll time. The new policy puts a series of curbs on how the world’s giant retailers Amazon India and Flipkart operate — restricting discounts, now ownership in sellers on the market place platform and disallowing exclusive product launches – forcing them restructure operation to take a hit on sales.
The grand swadeshi move has led to $50 billion market value loss in the global equity market for the US giants – Walmart and Amazon, which owns 77% stake in India’s online retailer Flipkart.
A quiet Indian move that saw the two giants committing less investment in the Indian market as their business saw a slower growth.
The figures are spread to various heads and the ruling combine is likely to make a kill during the campaign. The opposition has reason to feel jittery.
So is not there anything for bashing the NDA? There are many but the recent offers of sops would not make it easy to counter these. Jobs are definitely one. Unemployment in 2017-18 was a 45-year high of 6.1%, says the labour survey of the National Sample Survey Office against 2.2% in 2011-12. It was higher in urban areas at 7.8%. That is the BJP’s major support base. In rural areas it is 5.3%.
A major job crisis is reflected as over 6% more people have been found to be displaced from jobs since 2011-12 and 10% since 2004, the NDA-I.
This shows that proportion of people in the 16-64 age group have less chance of having a job, technically signified as fall in labour force participation. In 2004, labour force was 43%, in 2011 this shrunk to 39.5% and in 2017 to 36.9%.
The Centre for Monitoring the Indian Economy (CMIE) shows job deterioration throughout 2018, when 11 million jobs were lost – 7.4% unemployment till December 2018. The figures suggest that job crisis has persisted during the UPA and despite promises NDA could not check it.
The overall investment rate has also come down. Bank credit growth is slow. The employment is falling. The stark question is how India would be able to maintain 7% growth.
The GST has created a pan-India market. It looks good but it has also hit many small businesses that could survive on tax avoidance.
Demonetisation also caused loss of jobs and slowing down. But the subsequent poll results right from UP in 2017 to MP in 2018 does not show much loss of votes for the BJP. While should not make the BJP complacent, it has also little logic for the opposition to be buoyant unless they play deftly.
What can hit the BJP are some no-traditional aspects that nobody has taken note of. In the rural areas, major criticism of the party is not so much on job losses but imposing of various cess from petrol, tolls on roads, city entries, junking of ten-year-old vehicles as per NGT orders and post-demonetisation “scrutiny” by the income-tax department (I-T).
Despite income guarantee now, farmers are not getting remunerative prices. The LPG price increases has hit the rural hearth. The slowdown of the real estate sector has hit many supportive industries like brick kilns. Even NGO work has been hit by imposition of GST on their donations. These are raising discontent at the minutest levels.
The issues could be cashed by the opponents. The people are wondering why the government did not take note of these issues.
The I-T can become a major issue as there is six-fold increase in scrutiny – from the 20,088 cases in 2017-18 to 134,574 cases as per finance ministry data. Majority of these are for I-T returns of 2015-16. It has hit many marginal farmers.
Separately, 2,99,937 notices were sent by the department during 2017-18 to those who deposited large sums during demonetisation but did not file income tax returns,
There is a cry that rent-seeking has increased. A progressive society lets the people move freely. But tax shackles are causing harassment. The Modi government has done well in freeing those earning upto Rs 5 lakh from the I-T net.
It needs to consider I-T abolition in its manifesto. It would save the people from tax terror as also increase essential money flow into the economy.
The path to the elections is interesting. It is a major social churning. The emerging Mahagathbandhan and NDA are poised to woo the voters with easing of the economy. Brain wracking for a new economy would continue.