Budget 2019 - Analysis

Multiclass coalition propelled BJP to power in 2019 as it did in 2014 also. BJP's base swelled due to the welfare delivery of rural housing, gas cylinders, toilet construction. Well, how much the poor, tribals and dalits are benefitted is debatable. Those who benefitted ignited the hope among this poor neglected class to benefit from the delivery system of the government.

Challenge has been seen in the realm of economy. All through 2014-19 has been a slow growth. Government failed to meet the expectation of young, educated and aspirational voters from the middle class and lower middle class in urban centres and smaller town seeking better opportunities. Manufacturing failed to pick up. Employment dipped due to poor job market. The fall in income resulted in fall in demand. Fall in demand resulted in fall in production and thereby fall in income. Fall in income resulted in fall in investment - the very basics of economy. So that was the session 2014-2019.

But still the quantum of votes was even greater in 2019 admittedly due to Modi charisma, lack of incredible opposition, willing middle class to still invest on Modi, corporate sector accepting Modi unapologetically, large sector of new voters voting for the first time with the hope that Modi is still capable to restore economy even though the economy has been in bad shape. In short Modi-lie and his attempts at not to make public the uncomfortable and real data on unemployment, GDP and sluggish economic growth also worked to lure vast multitude.

The budget 2019 is admittedly reattempt at trading political statement as even the government knows, but would not accept that her outreach programme for the poor, marginalized, farmers and rural India needs further attention to stick to their promises of housing, gas cylinder, electricity, water for every household and development of rural infrastructure, roads and PM Kisan schemes -- all by 2022 and water for every household by 2024. Very pious promises but with no plan as regard to fund generation.

We are well aware of the stressed domestic industries - private and public - lacking sharp pick-up in investment. In last quarter of 2018-19 GDP or the economy grew by just 5.8%. How the government is going to achieve the growth rate by 7% to 8% as proposed in the budget 2019 seems to be a very unrealistic assumption especially when there is too little in the budget to boost domestic private investment through incentive and support. A record 6% cut in capital expenditure to fund public investment has been proposed as the government intends to liberalise norms for foreign commercial borrowing through foreign institutional investment (FII),  foreign portfolio investment (FPI) and ceilings on foreign direct investment (FDI). This decision of the government is most likely to increase external debt to GDP that may create balance of payments crisis.

Plan to revive job opportunity  has no mention in the budget even though it is announced that India will become $ 5 trillion economy by 2024-25. It has been seen that even large economies failed to give improved well being for all. $ 5 trillion economy will be meaningful only if it delivers more jobs, better services and improved and secured well being of the people. At present the announcement of $ 5 trillion seems to be another slogan the country has experienced many such during 2014-19.

We have a threatening year ahead due to prediction of likely bad monsoon, raised excise duty and road and infrastructure cess on the auto fuels by Rs 2 per litre and Re 1 per tonne customs or import duty on crude oil cess levied on petrol may cause cost escalation and inflation.

Though the budget abundantly praises the agrarian sector and promises to invest widely in agricultural infrastructure it has not put forward any specific schemes for rejuvenation of the said sector. An idea mooted for marketing agricultural products through producer institutions is the only positive reference about that sector.

However, One Nation One Grid for electricity, gas and water, i-ways and regional airports are indeed ambitious and at the same time require a huge capital investment. From where the funds will arrive the  government knows better. The budget is predominantly a macroeconomic framework and leaves ambiguity on many aspects including avenues of fund and employment generation. There is a hide and seek attitude throughout the presentation as there is no adequate or specific budgetary allocation for many thrust areas such as aviation, rail development, water transport etc. In some areas the target and fund allocation are set as a 5-year plan, whereas in other areas the allocation is made for next financial year.

Hence Budget 2019 is more of vision, less of action.