Budget shuns populism

Past practice shows that in India, most Union Budgets preceding an election year are prone to “playing to the gallery”.

The practice seems to have been interrupted this year, with both the Railway and Union Budgets not quite answering to the description of election-year exercises. Clearly, since populism has not been the hallmark of both Budgets, it stands to reason to suggest that the Congress-led Government has embarked on a well-considered strategy not to make the fiscal exercises populist-oriented. How does one explain this?

Rating downgrade fears

There are some who have suggested that the Finance Minister’s principal concern has been to avoid a downgrade of the economy by international credit-rating agencies. This is perhaps why the main thrust of the Budget exercise has been to promote the image of fiscal prudence which, in fact, appears to have paid off, with Moody’s expressing satisfaction with its general orientation.

But was this also the driving sentiment behind the Railway Budget? Perhaps it was, in view of the fact that Railway finances are at their worst since Independence, mainly because of the overtly populist fare and freight policies of a succession of Union Railway Ministers, most of whom have hailed from smaller regional parties in the ruling coalition.

Populism vs economic realism

If this reading of the strategy behind the two Budgets is accepted, it would imply a sea change in the practice of drawing up election-year Budgets, namely, that populism has been overtaken by considerations of economic realism — even if it means making the electorate unhappy at a critical period of a Government’s life.

This certainly would be very good news for the country; it would indicate that, at long last, the politicians have woken up to the fact that you cannot continue to give free rides and lunches to your constituents: a time will come when you just cannot arrange for any such rides at all because there would be no resources left — even borrowed resources — to make them happen.

Such a transition in the mindset of politicians cannot be expected to take place overnight. The need to please people in the run-up to next year’s Lok Sabha polls continues to dominate; so, what could not be done through the two Budgets — mainly the Union Budget — will be implemented through other means in the months ahead. What those other means will be is difficult to say just now, the focus perhaps not being solely on economics.

Social divisions and votes

The deep divisions in Indian society cannot be papered over. It is more than likely that, along with cleverly dressed-up economic sops, the efforts of the UPA Government will be directed at wooing those sections of society which are swaying towards the Opposition.

The fact remains that social divisions have to be exploited to get votes, which ultimately has the effect of deepening the divisions — and, in doing so, weakening the fabric of Indian society.