Confident Modi chooses prudence ahead of polls in no-surprise budget

Exuding political confidence ahead of the Lok Sabha elections, PM Narendra Modi’s government chose to go with fiscal prudence and no major surprises in its last budget before the polls. Finance Minister Nirmala Sitharaman stayed the course with a balanced, workman-like interim budget.

Asserting that she would deliver a roadmap for developed India in the full budget after the polls, Sitharaman framed her budget speech fundamentally on four social groups: women, poor, farmers, and youth. These interest groups, which the PM has previously described as the only four castes that matter in India, bookended the political narrative of her 58-minute speech, the shortest in recent times.

Welfare schemes for women and housing for the poor have formed the backbone of the Modi government’s political economy narrative around building a new welfare net for the poor in the past ten years. Schemes like PM Awaas Yojana- (PMAY) and Ayushman Bharat which provides insurance for the poor have been at the centre of the push. Tellingly, some of the budget’s new announcements focused on these schemes:

· Allocations for PM Awaas Yojana have gone up massively from Rs 54,103 crore(revised estimated) to Rs 80,671 crore.

· Two crore more homes to be built for the poor in the next five years under PM Awaas Yojana-Grameen.

· The Ayushman Bharat health scare scheme is to be extended to all Asha and anaganvaadi workers. Its allocation has gone up from Rs 6,881 crore (revised estimates) to Rs 7500 crore.

For context, the PMAY had resulted in 2.85 crore houses sanctioned for the poor by April 2023. Over 2.21 crore of these approved houses had already been constructed. Crucially, a whopping 2 crore (70.2 percent) of 2.85 crore rural houses sanctioned under the scheme were registered in the names of women individually or as joint holders with their husbands.

With women and rural voters forming a critical new social constituency for the BJP, the decision to expand PMAY-G reflects PM Modi’s commitment to expanding this political outreach.

While interim budgets normally do not deliver surprises, the Modi government had gone full tilt politically in the interim budget before the 2019 polls, when it introduced the flagship PM Kisan scheme. In fact, two installments (of a total of three annual payments) under PM Kisan were made to 4.74 crore registered farmers in February and March 2019, just before the elections, with the Election Commission’s consent. By March 2023, the number of registered beneficiary framers under the PM-Kisan scheme had risen to 11.8 crore. Cumulatively these beneficiaries had received Rs 2.41 lakh crore.

The 2019 budget was presented soon after the BJP lost three crucial states in north India – Rajasthan, Madhya Pradesh, and Chhattisgarh in December 2018. The budget reflected the political uncertainty felt by the government at that point.

This time though the BJP has just swept these same states in the Hindi heartland. The decision to not announce any new schemes ahead of general elections this time reflects Prime Minister Narendra Modi’s quiet confidence that he is headed for a third term in office.