What Budget 2024 says about the rewiring of India

The BJP managed to grab national attention with its compelling narrative of rural distress.

Contrary to expectations, the interim union budget ignored the temptation to go populist ahead of the upcoming general election.

Instead, Finance Minister Nirmala Sitharaman, presenting her sixth Budget, focused on sustaining the remarkable growth trajectory of 7 percent, while improving on the promised glide path for fiscal consolidation—providing welcome room for maneuvering to the Reserve Bank of India (RBI) in the conduct of its monetary policy.

In a speech lasting less than an hour – the shortest in recent memory – the FM unambiguously showcased her government’s confidence in returning to power in the general election based on its track record and not promises of freebies.

Further, the NDA reiterated its conviction about the ideological pivot – preferring entitlement over empowerment – it undertook in the last 10 years to deliver near saturation in basics like electricity, toilets, banking, cooking gas and substantial success in providing tapped drinking water and housing. This strategy of teaching people how to fish has impacted over 50 crore people.

To put it another way, a decade ago this cohort was outside the formal economy looking in. Today, they are stakeholders in the growth process. This fundamental shift is the new political economy of India.

Understandable then that the NDA is seeking to make the upcoming electoral battle one for this idea of India.

Undoubtedly, the FM was emboldened by the fact that unlike in 2019, the opposition was missing in action in the run-up to this year’s interim Budget. Five years ago, an opposition riding on a string of assembly election wins against the Bharatiya Janata Party (BJP), managed to grab national attention with its compelling narrative of rural distress.

In fact, the BJP-led National Democratic Alliance (NDA) was on the backfoot and was forced to announce a quarterly stipend for farmers and direct tax concessions for the lower middle class. Five years later, the change in circumstances is remarkable.

No finance minister has approached a union budget, leave alone a pre-election effort from an incumbent facing a two-term anti-incumbency, in such relatively stable macroeconomic circumstances.

Inflation has peaked and is decelerating from the high of 7.8 percent recorded in the post-Ukraine conflict phase; economic growth dramatically rebounded and is projected to grow at a very impressive 7.3 percent in 2023-24 – in fact, some analysts believe India has struck out on a new trend rate of growth of 7 percent; in turn, the acceleration in growth is ensuring revenue growth, strengthening the ongoing fiscal consolidation; the country’s foreign currency reserves are comfortable and the Indian rupee seems to have seen off the worst.

At the same time the NDA has substantially improved on the track record of its predecessor, the Congress-led United Progressive Alliance (UPA), in ensuring that  gains of development are distributed.

Ironically, it did so by using Aadhaar, which was rolled out by the UPA in 2009, to build a delivery architecture pinpointing the beneficiary. It did so by creating a kind of an economic GPS by combining a beneficiary’s Aadhaar, Jandhan bank account and mobile (JAM).

In the past 10 years the NDA transferred Rs 34 lakh crore in benefits, saving the exchequer Rs 2.75 lakh crore in leakages. The twin gains of delivering development while cracking down on graft, is no doubt yielding valuable social capital for the NDA.

Further, beginning with its plan to build toilets in every home – announced by PM Modi in his first Independence Day address in 2014 – the NDA placed women at the centre of all policy initiatives. The passage of the women’s reservation bill in legislatures last September, only confirmed the NDA’s intent to target the X-factor.

Significant, because exit polls in the recent round of elections to the Karnataka and Madhya Pradesh state assembly showed that overwhelming support from the cohort of women swung the election in favour of the Congress and BJP, respectively.

In the final analysis it is clear that the NDA has seized the fortuitous economic circumstances, a disoriented opposition and the opportunity to tap the social capital it earned through its development initiatives, to try and get a head start in the general election campaign.

The battle for the hearts and minds of India’s electorate has begun.

Anil Padmanabhan is a senior journalist. Views are personal, and do not represent the stand of this publication.