Will Budget help BJP achieve narrative shift?

Prime minister Narendra Modi and finance minister Piyush Goyal faced some pressing issues in the run-up to the most anticipated interim budget in recent Indian economic history since the one delivered by Pranab Mukherjee in February 2009 in the aftermath of the global financial crisis in September-October 2008. They badly needed to change widespread perception that the middle-class and farmers were angry over non-redressal of major grievances and that this anger was going to cost them in the elections.The Congress under Rahul Gandhi had already upped the ante by announcing an income guarantee scheme for all below poverty line people and the combination of Congress and Akhilesh Yadav’s SP and Mayawati’s BSP was getting ready to oust BJP from the one state they needed to win big in 2019, Uttar Pradesh. Daily protests and stories of farmer anger and distress in various parts of the country over poor farm prices meant that the BJP went into this budget under pressure to deliver and change the narrative. A tone-deaf budget with little to show to farmers and the angry middle-class was not going to work and would have only ended up hurting the BJP badly. The party needed to show that it cared but also needed to do it without spooking the markets, the global credit rating agencies who would have been aghast at a reckless, populist cash binge. Mr Goyal’s 90-minute speech appears to have achieved just that. A shift in narrative with a carefully-crafted, pragmatic budget that did little to disrupt the success of the past few years Going by initial reactions from markets, experts, rating agencies, fund managers, CEOs and members of the general public, one could gather that it achieved the basic purpose of giving everybody a little of what they want without doing the unthinkable, blowing a hole through government finances. The farmers got a monthly income scheme which did not cost the exchequer the lakhs of crores that the markets were fearing; the middle class, at least a large section of them, got tax relief; the property owning uber-rich got concessions on notional income from second property and relief from rent; the ever-wary foreign investors got to trade on revival in consumption growth story, the workers got old age pension, while bond traders and the gimlet-eyed rating agencies got only a marginal increase in the fiscal deficit in contrast to expectations of a drastic increase. Now, whether this is enough for the BJP to win the 2019 elections comfortably is a completely different question which we cannot try and answer here with the limited information that we have. Will it be enough to assuage farmers anger and middle class angst? Difficult to say without polling data but the measures and the speech would go some way in undoing some of the damage the party has taken in recent months.Mr Goyal also used the occasion to deliver a political, rally speech. Amidst dry recital of numbers and the names of schemes, Mr Goyal talked about the BJP’s vision for the country and dropped broad hints at the path it would take if it were to be voted back to power in May 2019. It is possible that Mr Modi has chosen this route to send a clear message to the opposition about what it thinks about the coming battle of the ballot box. By choosing to present an almost full-fledged budget instead of just a plain vanilla vote on account, Mr Modi is telling the opposition that his confidence is high and that he is willing to take them in what may be a do or die battle!Even if that is the case, the BJP should be careful about some of the high sounding items in the budget which, if left unfulfilled may come back to haunt the party if it retains power. The budget contains some aggressive assumptions about direct and indirect tax growth next year and has pegged disinvestment receipts at Rs 90,000 crore for 2019-20. The government has struggled to achieve disinvestment target for 2018-19 and it may want to be careful about another high target that remains unfulfilled towards the end. But for now though, it can celebrate in the knowledge that a narrative shift at a crucial time before the elections is taking place thank to Mr Piyush Goyal’s maiden budget.

from Economic Times http://bit.ly/2S3Isqs