Why Budget 2018 is going to be Modi govt's biggest challenge
New Delhi, Jan 17: In more than a three-and-a-half-year rule of the Narendra Modi government at the Centre, the Bharatiya Janata Party (BJP) has grown by leaps and bounds in terms of electoral politics.
The saffron party is not only running a majority government at the Centre, but has extended its rule in 19 out of 29 Indian states.
In such a scenario, the BJP and Prime Minister Modi look invincible. However, the economy has proven to be a thorn in the Modi government's otherwise "blissful" rule.
From demonetisation, an astronomical rise in price hike of essential commodities and fuels, the slowdown of growth rate to the Goods and Services Tax (GST), the Modi government has failed on several economic fronts.
Now, as the Union finance minister Arun Jaitley is all set to present the BJP-led National Democratic Alliance (NDA) government's last budget on February 1, it poses plenty of challenges to Modi himself as the country's head.
The upcoming Union budget will be the last full budget of the Modi government. The budget in 2019 will only be a vote-on-account. The re-election of the BJP government at the Centre during the Lok Sabha polls in 2019 depends on a lot on the upcoming budget.
The Union budget will prove to be a make or break event for the Modi regime, indicate experts. "A lot is at stake for the BJP, this Union budget. The economic decisions taken in the budget will have direct political implications for the BJP in the next General elections in 2019," stated an economist.
"All factors considered, this budget 2018 presents the biggest challenge to the Modi government since coming into power. Low growth numbers, subdued investment sentiment and a widening deficit when elections are around the corner leave a Herculean task at hand.
"The balance between populism and fiscal restraint will be difficult to manage. In any case, the document that will be taking the center stage on February 1 will define the course for a lot of things to come," Amit Kapoor, chair, Institute for Competitiveness, India, wrote in a column for IANS.
Along with fixing the economy during the budget, the finance ministry faces the challenge to woo rural population, which is miffed by the policies of the government if the Gujarat election results are to be taken as indicative of the national sentiment. The BJP government enjoys more popularity in urban areas than in the countryside.
"The recently released Central Statistics Office (CSO) growth estimates show why. The farm and allied sector grew at 2.1 per cent in the current fiscal as compared to 4.9 per cent in the preceding year. So, the ailing agricultural sector will receive much-needed redressal in the upcoming budget 2018.
"In fact, the finance minister has already confirmed this. Reviving growth in the sector can also be a viable mechanism for job creation - another economic aspect that the government will be looking to address with the budget 2018," wrote Kumar.
As per reports, almost a week ago, the government decided to include solutions for vexed problems such as rural distress, weak employment, and revival of private investments in the Union budget 2018-19.
During a meeting between Modi and senior cabinet colleagues with economists and sector experts from across the country, several immediate challenges to the economy were discussed at length.
Rajiv Kumar, the vice-chairman of NITI Aayog, told reporters that many experts suggested measures for raising farm productivity, reducing the cost of farming and improving market access for farmers.
Experts also suggested that fresh capital infusion into public sector banks should be followed by reforms so that there are fewer instances of lending decisions going wrong, stated a report by Livemint.
If the BJP wants to win the next General elections, the Union budget should lay the foundation to fight the three main challenges Modi faces as the country's PM.
"One will be attracting foreign direct investment. The second will be encouraging entrepreneurship and stopping the legal challenges that so many entrepreneurs have been facing. The third challenge will be a continuation of Modi's battle with India's gargantuan tax code," stated a report by The Businessworld.