Otherwise back to the old Congress ways to get votes; so much for truly vibrant economic opportunities for foreigners:
India’s budget puts off needed reforms in favour of votes
India’s Finance Minister Arun Jaitley this week unveiled his government’s budget, a document widely praised as pro-poor and pro-farmer, after two years of criticism that Indian Prime Minister Narendra Modi had abandoned his promise to bring development to the masses. But will the budget bring to India the lasting change Mr. Modi campaigned on in the 2014 general elections, in which he trounced the rival Indian National Congress? Not likely.
The budget can largely be understood as an attempt by Mr. Modi’s Bharatiya Janata Party (BJP) to gain popularity in the impoverished Indian hinterland, ahead of several important state-level elections in the next two years. The right-leaning Hindu nationalist BJP has delivered a budget remarkably similar to those that the left-leaning, secular Congress party reliably pumped out year after year, as they dominated post-independence parliaments. In other words, budgets that poured billions of dollars into unproductive rural job schemes, as well as costly fertilizer and electricity subsidies, that fostered dependency and kept many locked in poverty – rather than lifting people out of it.
There are, of course, several sensible policies in Mr. Jaitley’s budget. The government has proposed a health insurance scheme for poor households, pledged to ensure electricity is available universally in the next two years (better late than never), and said it wants to provide all families below the poverty line with cooking gas – instead of having them cook on smoky indoor fires that lead to respiratory diseases. There are also big – and desperately necessary – infrastructure spending plans, including about $40-billion (U.S.) for roads, highways and rail development…
Mr. Jaitley has also proposed raising the foreign investment threshold in state-run companies, with the exception of banks, to 49 per cent from 24 per cent. This is in line with Mr. Jaitley’s previous budgets, when he raised foreign investment limits in the defence sector, for example [see “PM Modi Tries to Motivate Indian Defence Industry“], but it is difficult to imagine foreign companies signing up for what would amount to minority control. There have been no big-ticket investments in defence, and it is hard to see how these changes will stir the animal spirits in foreign investors [meanwhile India has been the world’s largest arms importer].
India’s farmers, inarguably, need help. Two years of drought have been terrible for many poor farmers, as well as day labourers, but it is hard to see these measures advancing Mr. Modi’s core priorities. This flood of cash, more likely, is a sop to rural voters ahead of important state-level elections this year and next, and not long after the BJP was trounced in important state elections in poor, rural Bihar (population: 100 million) late last year – a defeat that was widely seen as a referendum on Mr. Modi’s rule.
…it is difficult to square Mr. Modi’s barnyard budget with his high-profile “Make in India” push to boost India’s almost non-existent manufacturing sector [see from 2011: “Little Known Fact About the Indian Tiger“]…
Instead of taking bold measures, Mr. Modi, it seems, is once again putting off politically risky, big-ticket reforms in favour of policies that will win short-term popularity with voters.
Some other Indian realities to keep in mind: