Pre-election budgets are all about understanding the political economy and delivering a sharp message. Finance minister Arun Jaitley seems to have dipped into his party’s successful electoral playbook to design his budget for 2018-19. And his manual of choice seems to be the Uttar Pradesh (UP) elections, compelled by the erosion of margins during the recent Gujarat state polls.
A new paradigm for categorising voters helped the Bharatiya Janata Party (BJP) sweep the UP elections in 2017. Apart from using the conventional tools of mass appeal and deploying a predictable Hindutva message, the BJP changed the rules of the game by slicing voters horizontally along socio-economic backgrounds and gender. This was a marked departure from the opposition’s shop-worn tactic of vertically dividing voters along caste lines or as Hindus and Muslims. As part of the exercise, the BJP converted the autocratic demonetisation decision (which inconvenienced millions of citizens) into a virtue as a battle against the wealthy. And this seems to have worked.
In contrast, Gujarat voters expressed scepticism about the party’s message of successful economic management in the face of visible disruption, stagnant incomes, and growing unemployment. So, seemingly, it’s back to the UP formula for now.
Jaitley’s last full budget, and opportunity to showboat before the next general elections, focuses on three large socio-economic cohorts: those engaged in farming and allied professions, women, and the elderly. There are the customary paeans to the middle-class and salaried individuals as well, but those don’t amount to much.
So let’s start with the last category first because it’s not only the most interesting but also counter-intuitive. In a country that boasts of a demographic dividend, with 50% of the population below 35 years of age and viewed as an engine of economic growth, a policy bias towards senior citizens seems to go against the grain. Jaitley has announced numerous benefits for the elderly: A 400% rise in the tax-exemption limit on interest income, an over 60% increase in tax set-off limits for health insurance, an increased deduction limit for medical expenditure, and other benefits. The policy bias towards senior citizens seems to go against the grain.
These benefits are more like corrections and have been long overdue; it is the timing that attracts attention.
The choice is all the more interesting because the number of senior citizens in India is not very high—between 100-110 million, less than 10% of the total population. While the population census of 2011 put the number of Indians above 60 years of age at 104 million (8.4% of total population), the registrar general of India’s 2014 sample registration system estimated the number closer to 107 million. Peeling down the group data from the 2011 census further reveals some interesting highlights: Rising literacy rates (44% in 2011 against only 27% in 1991), a gender divide born out of varying life expectancy rates (53 million women against 51 million males), 41.6% still engaged in some occupation and earning (with a higher working population in rural areas), and a predominantly rural bias with only 29% based in urban centres.
The surprise lies in the electoral data. According to the election commission’s annual report for 2016, there were up to 868.6 million voters registered as on Jan. 01, 2017. According to the commission’s Electoral Statistic Pocketbook, 2017, only 11.5% of the total registered voters—or slightly below 100 million—are above 60 years of age. It is not a sizeable chunk but could be a decisive voting bloc if husbanded and harvested strategically.
Jaitley’s budget perhaps takes the first step in that direction.
Apart from its innate significance, the focus on senior citizens also marks a pivot from the BJP’s pronounced courtship with the youth in 2014. In the run-up to general elections, the party promised jobs for the youth by reviving investment in manufacturing and making a decisive break from past style of governance. While the jury’s out on the last issue, promises of more jobs and higher incomes have not materialised.
The Gujarat elections provided a brief glimpse into the youth brigade’s frustration and disillusionment. It is, therefore, logical for the party to search for newer pastures.
It is unlikely that the BJP will give up totally on the youth—though it will be interesting to see the nature of messaging adopted and the varying degrees of chauvinism built into it—but it doesn’t harm to hedge one’s bets.
The second interesting population segment is women, a vote bloc that over the years has proved to be exceedingly influential. During the 2014 general elections, women voters constituted 47% of the turnout. While it was quite high in the UP polls, even outnumbering males in many seats, it was significantly lower in Gujarat (about 10% lower than men). This might have given the BJP reason to believe that women voters required special treatment.
And so Jaitley duly opened the budget tap, with special emphasis on rural women: 30 million free LPG connections to be added to the earlier 50 million, some 40 million more rural households to get free electricity, 20 million toilets, and close to 14 million affordable houses. What rings odd in all this is a mechanical positioning of broad livelihood proposals as women-centric proposals, treating the household and women as synonymous. While free electricity, affordable houses, and toilets benefit all household members, they have been pitched as women-centric.
Finally, the farm sector deserves many structural reforms.
With close to 60% of the country’s population dependent on farming and allied occupations—directly or indirectly—continuing distress in the sector has been affecting income levels and livelihoods across a broad swathe of rural India. There is an additional sense of disenchantment, given the widening gap between expectations raised and actual benefits delivered. It was widely expected that Budget 2018 would undertake some course correction, especially after the Gujarat electoral rebuff.
It might be instructive to parse Jaitley’s budget speech: “For decades, the country’s agriculture policy and programme had remained production-centric. We have sought to effect a paradigm shift. Honourable prime minister gave a clarion call to double farmers’ income by 2022 when India celebrates its 75th year of independence. Our emphasis is on generating higher incomes for farmers.” The last two sentences seem to indicate Jaitley is injecting a dose of reality into the PM’s lofty promises: PM Modi may want to double farmers’ incomes, but let’s just generate higher incomes first. Or, perhaps, we’re reading too much into a simple statement.
Jaitley has also provided the BJP with ammunition to wage a faux class war: tax on long-term capital gains. One thing is clear: The BJP does not seem so sanguine any longer.
Even though there is merit in such a progressive tax, the undertone suggests that this tax is likely to be showcased as the government’s attempts to reduce economic inequities, and position itself as a champion of the poor. There is also a passing gesture to the oppressed castes in a somewhat curious turn of phrase: “…the present top leadership of this country has reached this level after seeing poverty at close quarters. Our leadership is familiar with the problems being faced by the SC (scheduled castes), ST (scheduled tribes), backward classes, and economically weaker sections of the society. People belonging to poor and middle class are not case studies for them, on the other hand they themselves are case study.”
Make of it what you will. One thing is clear: The BJP does not seem so sanguine any longer; it’s all hands to battle stations.
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