The Narendra Modi government begins its second term by opening up its kitty for the newly- emerging rural farm sector supporters and traders even as the Economic Affairs Department has painted not so rosy a picture.
The now seamless PM Kisan Samman Nidhi (KSN) extends benefits to all farmers without ceiling of land holding. It would cause an additional burden of Rs 87,000 crore. Pension for all of them and traders is yet another socialistic benefit with a view to sustaining the people who contribute to the nation but do not get government support. The new scheme will cover 5 crore farmers and 1.5 crore traders and self-employed. If it is implemented efficiently then over 15 crore farmers would be benefited across the country.
The Rs 6,000 a year KSN has been a great electoral success and washed out the Congress’ campaign of Rs 72,000 a year. In States such as Rajasthan, Madhya Pradesh and Chhattisgarh, where the Congress won the December 2018 Assembly polls, this time round it suffered a setback as it couldn’t fulfill the promise of waiving farm loans. Minister for Information and Environment Prakash Javadekar says the Congress’ failure turned the wave in favour of the Modi government.
A national livestock vaccination programme, for 30 crore cows, buffaloes and bulls; 20 crore sheep and goats and one crore pigs would now reduce expenses of the farmers for cattle health care. For this the Centre would need to bear expenses of Rs 13,343 crore. The Government is also unfolding schemes to create jobs in rural India, says Minister for Food Processing Harsimrat Kaur Badal.
The Modi government is working with a focus to consolidate itself among the masses with a socialistic integral humanism propounded by late thinker Deen Dayal Upadhyay. The cost is heavy, but the ruling BJP believes that the deprived farming and small business classes need official support to add to the overall growth. The concept – ‘kisan sukhi desh sukhi (happy farmer makes country happy) would in all probability change the contours of economy.
For making the targets sharper, a new Ministry of Animal Husbandry, Dairying and Fisheries to be headed by Giriraj Singh, has been created. Equal importance is being given to manage water shortage through Jal Shakti Ministry under Gajendra Singh Shekhavat. The purpose is to take care of criticalities and global warming.
While the Government is aiming at making the State more muscular for national security under new Home Minister Amit Shah, it also has plans to create synergies between Home and External Affairs with former MEA secretary S Jaishankar as the country’s Foreign Minister. Security would now be a coordinated affair, particularly in the wake of the recent serial blasts in Sri Lanka. Other than enhancing sub-continental security this will give a boost to safety at home.
However, each of the new activities would require additional funds. Preparing the budget in the limited resources would not be an easy task. Plus, the nation now has global aspirations, with Prime Minister Modi creating a niche in the international comity. He is, as is being seen, keen on a key role in the UN Security Council.
The ambition of a blue water navy, partly achieved through critical rescue missions in West Asia and other parts of the world, is yet another move to influence the neighbourhood and beyond. In all, the tasks set out are not easy to achieve. These require maneuvering, diplomacy, soft and hard skills. Having a vision is not difficult, but implementing it requires international networking, backroom channel support and the most important, critical financial backing.
In the long run, the country is aiming at creating an international market for its agro products as well as to improve manufacturing and industrial activities. And, while the new Government is confident of taking the nation forward, the leadership must realize that it would have to face and overcome difficulties.
Even as the Government was taking oath, economic indicators have reasons to cause anxiety. The country’s GDP grew at 5.8 per cent in January-March 2019 quarter. It drags down the full year growth to five-year low of 6.8 per cent. Joblessness rose to 45-year high of 6.1 per cent in 2017-18, as per data of the National Statistical Office (NSO).
Contraction of farm output causes the slowdown. So the stress on the farming classes is a corrective step. Infrastructure sectors — coal, crude oil, natural gas, refinery products, fertilizers, steel, cement and electricity — also slowed down to 2.6 per cent in April. Even ONGC’s production fell by 32 per cent.
The slowdown, as per Finance Secretary SC Garg, is due to temporary factors such as stress in the Non Banking Financial Company sector (NBFC), affecting consumption of finance. The NBFCs are facing cash crunch after the collapse of IL&FS making banks reluctant to lend them. The Serious Fraud Investigation Office (SFIO) files charge-sheet against IL&FS as it found the company had overvalued Tata Teleservices shares.
These affected the Mumbai stock sensex too which saw wild swings and closed with losses of 700 points. The NSE’s Nifty also lost 200 points. The rupee is also on a roll. And apparently, the market is on a cautious mode.
There are clear reasons as well. In a few days, the preparation for the Union Budget has to begin. There will be a need for several rope tricks as the overall revenue is under stress. Chopping off a sizeable section of up to Rs 5-lakh earning population in the Interim budget would see sizeable revenue loss, though the Government would also have savings.
Another aspect is that overall debt of the Government has also risen to Rs 83.4 lakh crore up from Rs 82.03 lakh crore. Increase of sovereign debt has ramifications. More so owing to GST and possible further adjustment in income tax, the scope for direct revenue generation is reduced.
Literally it would be a tough task to tailor the Budget. Chances are that the Government may have to increase taxes and levies. This causes rumblings as has the recent increase in gas, petrol prices and highway tolls done.
The Government faces the problem of whether it should raise taxes or service costs. Both become inflationary. This also increases governance cost. Food prices are also slowly increasing and may cross the RBI tolerance limit. In such a scenario, if it reduces bank rates, it may have deleterious effect. Worse, the international scenario is also not benign.
Realistically speaking, people should be prepared for some small sops but a tough budgetary approach. The Government is cautious not to turn the sweet mood to a sour one, but the path is certainly not going to be easy.—INFA