Come February 1, the NDA government should ideally present a Vote on Account, even when the complex poll arithmetic provides enough temptation for it to provide sops to the struggling manufacturing sector by tabling another full Budget.
The government may like to follow the convention that elected governments must table five full-Budgets, and in a lame-duck session, it should neither make major policy pronouncements nor make tax adjustments that benefit domestic manufacturers.
What can the government do, given its limited degrees of freedom? First, the government should provide a signal of its willingness to back its past measures for the benefit of the industry. For instance, since the 2018 Union Budget, the Finance Ministry has enhanced tariff protection for a wide range of sectors, including mobile phones, electrical and non-electrical machinery, automobiles and textiles.
Many analysts have argued that the sequence of tariff increases is nothing but a reversal of the policy of tariff liberalisation undertaken by the previous governments. The NDA government needs to stand its ground and argue that its decisions to enhance tariffs were taken to protect the interests of domestic manufacturing, which has been battling to keep itself afloat in the face of predatory tactics of the Chinese companies.
The government has a plausible defence in support of this position since it has always argued that its primary aim is to bolster India’s interests, even when the measures sound populist.
In the same vein, the government must underline its continued commitment to provide the necessary support, including by undertaking investments in infrastructure, for the development of a strong and resilient domestic manufacturing sector. This was a commitment that the NDA had made in its election manifesto in 2014, and a reiteration of its position when the government is seeking a fresh mandate, may be quite timely and appropriate.
The writer is a Professor at Jawaharlal Nehru University