Union Budget: Signs of Modi accepting his govt policies need urgent course correction

Admitting administrative and policy failures has always been anathema to Narendra Modi but it is equally true that the Prime Minister’s political ingenuity also lies in his ability to respond to altered electoral dynamics without appearing to cave in to his critics.

On Tuesday (July 23), Union Finance Minister Nirmala Sitharaman presented the first Union Budget of the newly remodelled NDA government – no longer Modi ki Sarkar. With the Budget came the first signs of Modi accepting, even if grudgingly, that a course correction of his government’s policies, if not yet his politics, was urgently needed to keep his BJP electorally buoyant and his prime ministerial chair secure.

Keeping Nitish, Naidu happy

Over the past decade of his rule, as unemployment, farmer unrest and retail inflation steadily spiked, the Prime Minister and his cheerleaders, both in and out of his government, brusquely rejected all criticism of his policies that augmented these crises. That was a period when the BJP was still electorally buoyant; having won the 2019 Lok Sabha polls in a landslide and wrested control, by means fair and unfair, of nearly a dozen and half state Assemblies.

The 2024 Lok Sabha polls, however, showed that turning a Nelson’s Eye to the spiralling multi-dimensional socio-economic crises had only allowed an otherwise rudderless Opposition to coalesce and chip away at the BJP’s brute Lok Sabha majority. The general election’s hung verdict that humbled Modi just enough to return as PM on the unreliable crutches of JD (U) chief Nitish Kumar and TDP supremo N. Chandrababu Naidu may have, in its early days, indicated that the BJP mascot wasn’t willing yet to shun his Ostrich ways.

The formation of his Union council of ministers, his decision to retain all major portfolios for his party colleagues while sparing only scraps to alliance partners and his ballistic tirades against the Opposition in Parliament all hinted at a Modi who refused to acknowledge the Lok Sabha verdict for what it was – a rejection of his politics and policies.

Sitharaman’s Budget, however, hints that within two months of the Lok Sabha results the Modi government has recalibrated its priorities, at least partially, drawing lessons both from the poll verdict and the changed political equations within the NDA coalition.

The Budget’s disproportionately high focus on Bihar and Andhra Pradesh, much to the chagrin of leaders of other states, exemplifies Modi’s realisation of the pressing need to keep Nitish and Naidu in good humour. There are, however, other indicators in the Budget that, arguably, are of greater political significance; for they indicate not Modi’s unprecedented need to lean on allies to keep his post secure but an unwitting – and undeclared – admission of his government’s failure of the past in addressing issues of job creation, tax reforms and agrarian crisis.

FM's extensive reference to 'priorities'

It is par for the course after every Union Budget for the Opposition to slam the Centre for missed opportunities. On this count, there was no deviation on Tuesday too. The Congress and all other Opposition parties were unanimous in decrying Sitharaman’s Budget as nothing more than an exercise to secure the stability of the Modi government by appeasing Nitish and Naidu with financial grants and projects for their respective states. There were also ample swipes of the usual kind regarding the Budget having nothing to stem rising inflation, bridge economic inequity and of meting out a step-motherly treatment to states ruled by Opposition parties.

Irrespective of whether such criticism was accurate, off the mark or exaggerated, what stood out in the Union Budget was the extensive reference Sitharaman made to the “priorities” of employment, next generation reforms, manufacturing and also tax reforms.

The finance minister’s 85-minute long Budget speech gave the Opposition, particularly the Congress party, ample reason to claim that the government was, albeit belatedly, acknowledging its failures on each of these fronts. A glaring omission in Sitharaman’s speech, of course, was her failure to explain what the government proposed to do to bring down rising retail inflation and also her refusal to address the prickly demand of farmers for granting MSP a legal sanctity even though the Budget recognised “productivity and resilience in agriculture” as its first priority.

Copy-pasting Congress's proposals

For the Congress, relentlessly pilloried by Modi and his supporters for having done nothing for the country during its long years in power, Sitharaman’s Budget was a sweet vindication of much that Lok Sabha’s Leader of Opposition Rahul Gandhi has accused the government of in past years. Even more significantly, the finance minister gave the Congress an unprecedented opportunity to boast that the Modi regime had not only read the Congress poll manifesto but was also copy-pasting its proposals in the Budget.

To many, the most consequential announcements in Sitharaman’s Budget speech were the government’s decision to abolish Angel Tax, grant various sops for the MSME sector and launch employment-linked incentives as well as internship schemes in the private sector to augment job creation. The Congress’s conditional praise for these moves notwithstanding, the decisions must have brought Rahul and his party much cheer; for, ironically, each of these were practically lifted from the Congress’s 2024 poll manifesto, modified and added to Sitharaman’s Budget speech.

More importantly, the considerable time that Sitharaman devoted to each of these “priorities”; particularly employment generation as well as sprucing up the MSME sector with added credit guarantees, can only be taken as an admission by the government – no matter how unwilling – of its past failures on these fronts.

Congress leaders, from party chief Mallikarjun Kharge and former finance minister P. Chidambaram to the party’s communications chief Jairam Ramesh, could barely hide their excitement at the “copy-paste” job by mandarins of the finance ministry who “lifted our manifesto proposals but could not even copy them properly”. Congress MP Manickam Tagore told The Federal that Sitharaman’s extensive references to the need for helping the MSME sector was a “vindication of what Rahul Gandhi has been saying for the last three years... that MSME is the backbone of manufacturing and job creation and the government needs to help them instead of destroying them”.

INDIA bloc's demand for legal guarantee for MSP

Samajwadi Party MP Pushpendra Saroj described the Union Budget as a “maafinama” (letter of apology) of the Modi government, asserting that the finance minister had “practically conceded that past claims of the government about job creation, strengthening MSMEs and the soundness of the GST and new income tax regimes were all false”. “Everything that the Opposition had been criticising the government for over the past few years has come true. Today, the finance minister has belatedly taken half-hearted steps for job creation, simplifying the GST regime and new income tax regimes. All this could have been done in a proper way earlier if the government had listened to the Opposition. Even now, their announcements are half-baked but at least there is an acknowledgement of the crises in these areas and we can only hope that the government will listen to the constructive criticism by the Opposition in the interest of the country,” Saroj said.

Opposition sources said the INDIA bloc leaders will continue to demand legal guarantee for MSP, scrapping of the Agnipath scheme, further simplification of the GST regime, better formulation of employment generation schemes and a more even-handed approach towards “all states, including Opposition-ruled states” in allocating financial assistance and projects, besides raising other “people’s issues” in the remainder of the Budget session.