It’s All About Political Messaging

IT IS NOT OFTEN that a finance minister of a democratic country gets the opportunity to present the national Budget for the seventh consecutive occasion. When she inherited the mantle from the formidable Arun Jaitley five years ago, the punditry of Lutyens’ Delhi which is always prone to combine superciliousness with a self-image of infallibility, dismissed Nirmala Sitharaman as a passing show. It was an impression that stemmed from a colossal misreading of her self-effacing public demeanour. Sitharaman had the ability to hold her own in any gathering of the political and bureaucratic heavyweights of Delhi, but mindful of her limitations as a mass politician, she often chose to take a backseat, playing down the formidable array of experience she has accumulated since she was chosen to be a part of Narendra Modi’s ministerial team in 2014.

In presenting the Union Budget for 2024, there were some special challenges before Sitharaman. When she presented the Vote on Account to Lok Sabha on February 1 this year, the finance minister appeared combative and battle-ready. The actual Budget speech last Tuesday, July 23, was more business-like. It was delivered entirely in English and lacked the rhetorical flourishes (not to mention the incursions into the realms of poetry) that India has come to expect of its finance ministers.

The reason for this shift of gear is obvious. Last February, both the Treasury and the Opposition benches expected the Narendra Modi government to be returned to power for a third time, perhaps with an even greater majority. Sitharaman’s Vote on Account speech reflected the mood of the times.

To say that the prevailing mood in Parliament is different is an understatement. The Modi government has returned to power for the third consecutive term with an adequate working majority. However, the inability of the Bharatiya Janata Party (BJP) to secure a majority on its own has transformed the mood quite dramatically. It may sound an exaggeration, but there is a prevailing impression that Congress with 99 seats is the winner and BJP with 240 seats the loser. Certainly, Congress is irrationally trium­phalist and BJP excessively despondent.

This bizarre situation has arisen on two counts.

First, BJP set its election target a bit too high. Although 400 seats were the target of the slogans, the party would have been equally elated had it returned anything above 325 MPs to Lok Sabha. That it fell well short of that number has resulted in the party being subjected to taunts, including the fact that the prime minister’s majority in Varanasi fell sharply and the party was defeated in Faizabad, a constituency that incorporates the temple town of Ayodhya. Both these setbacks were in Uttar Pradesh (UP), but there were other significant reverses in Maharashtra.

Secondly, while BJP put on a brave face after the results and quietly celebrated the Modi government’s return to power, there were subterranean concerns about what went wrong. The media and Opposition parties were inclined to attribute BJP’s setbacks to economic distress, particularly the phenomenon of job­less growth that had left BJP’s supporters among the youth disappointed. There were also suggestions that the party’s traditional middle-class base was not overtly enthused by the government’s performance and did not turn up to vote in large numbers.

Without discounting the significance of these assessments, it can also be said that the reverses suffered by BJP had little or nothing to do with the performance of the Modi government. For a start, the I.N.D.I.A. bloc did succeed in bringing together most of the anti-BJP votes under one roof. That made a significant difference in many constituencies. In Maharashtra, there was a backlash of sorts against the overbear­ing attitude of BJP in decimating the Opposition. At the same time, the inclusion of many Opposition stalwarts, particularly from Congress and the Nationalist Congress Party (NCP), in the National Democratic Alliance (NDA), was not appreciated by BJP’s voter base. Finally, in UP, the slogan of ‘400 paar’ was deftly manipulated by I.N.D.I.A. into implying that BJP was planning a big constitutional modification that would lead to the dilution of all reservation for Scheduled Castes. This led to the unlikely alliance of Dalits, Yadavs and Muslims against BJP.

When the results of the 2024 General Election are disaggregated, they indicate that the causes of the BJP setback can be traced to political and campaign management. Their connection with any perceived dissatisfaction or even anger at the Modi government’s management of the economy is very tenuous.

When electoral performance does not go along the expected route, there is a natural inclination to pin the responsibility on eco­nomic mismanagement, notably rising prices and steep unemploy­ment. The underlying belief is that voters tend to express their anger on bread-and-butter issues. The record of an electorate driven by econo­mism is rather mixed. Lalu Prasad, for example, prevailed in Bihar for much of the 1990s despite a grim track record of near-zero economic progress. The same can be held to be true of Mamata Banerjee in neigh­bouring West Bengal. She has won three consecutive elections even though the state’s only real growth industry is providing an unending supply of migrant labour to the economically more vibrant parts of the country.

In the Preface to this year’s Economic Survey, it is stated: “The Indian economy is on a strong wicket and stable footing, demonstrating resilience in the face of geo-political chal­lenges. The Indian economy has consolidated its post-Covid recovery with policymakers—fiscal and monetary— ensuring economic and financial stability… High economic growth in FY24 came on the heels of growth rates of 9.7 per cent and 7.0 per cent respectively, in the previous two finan­cial years. The headline inflation rate is largely under con­trol… The trade deficit was lower in FY24 than in FY23, and the current account deficit for the year is around 0.7 per cent of GDP. In fact, the current account registered a surplus in the last quarter of the financial year. Foreign exchange reserves are ample.”

Although expressed in staccato style, the Economic Survey was not merely drumbeating for the government. The economy that the Modi government bequeathed to the country at the beginning of its third term may not have been perfect. However, few countries in the world can boast of such a record as India, even though the rate of growth of non-financial private-sector capital formation was slow. In everyday language this means that the growth of manufac­turing industry in the private sector was still disappointing. The Economic Survey prescribed an eight million new job creation target until 2036.

What has given confidence to the ability of the Indian economy to scale even greater heights is that the fiscal deficit is expected to be 4.9 per cent this year and, if the government is purposeful, could come down to 4.5 per cent by 2025-26. The macro-economic significance of a well-regulated fiscal deficit, whose management has a direct impact on controlling inflation, can hardly be overstated. It is entirely possible that if the nominal GDP reaches the Budget estimate of 10.5 per cent, without the burden of high inflation, India’s journey to Viksit Bharat will be assured.

THE MODI GOVERNMENT fought the 2024 elections with the promise of Viksit Bharat by 2047. As a concept, Viksit Bharat holds out enormous attractions for those who are sick of India being described as a country of unrealised potential, and which is constantly burdened by the physical and emotional consequences of underdevelopment. In concrete terms, what was mocked as the Hindu rate of growth, meant low expectations, institutionalised incompetence and sloth, and lots of third-world jugar. To break out of this mindset, Modi had posited the idea of Viksit Bharat—an idea that involved India becoming a land of 21st-century infrastructure and a mental conditioning to go along with it. It meant moving out of the pace of the mail train and embracing the rapidity of Vande Bharat and even bullet trains.

The problem Modi encoun­tered was that Viksit Bharat as an idea was not translated into an electoral slogan. Ideally, an incumbent government combines its record of actual performance with promises of what it will set out to do in the next five years. What the Modi government had successfully achieved in the past 10 years, including work-in-progress, was well known—although it needed occasional reminding—to the voters. What remained very hazy was what the government planned to do in the next five years. All that was promised was continuity and persever­ance along the road to a Viksit Bharat.

In the aftermath of Sitharaman’s Budget on July 23, Congress leaders are having a field day telling people that the architecture of the elaborate apprentice scheme unveiled by the government was outlined in the Congress election manifesto. The borrowing of an idea from an Opposition party’s manifesto is no heinous crime. What this incident, however, very succinctly demonstrates is that BJP was remarkably casual in presenting and in fleshing out its economic blueprint for Viksit Bharat. It is conceivable that the BJP experience with the New Pension Scheme in the Assembly election in Himachal Pradesh may have played a part in the ultimate decision to go short on detail and bank disproportionately on Modi’s charisma. The overall political message that seems to come through is that BJP is seen to be guilty of viewing youth unemployment as an afterthought.

The larger point is one of political messaging. In the aftermath of the Lok Sabha elections, BJP has found itself on the backfoot. Its claim that nothing resembling a reversal hap­pened in the polls isn’t believed, not even by its supporters. The real political problem that must be addressed concerns the organisation of the party and the overall demeanour of a section of its leadership that appears to have lost its popular connect. However, by some convoluted media logic, a large amount of political blame has got transferred to the government’s management of the economy. Hence the constant references to the finance minister’s so-called ‘course correction’, an expression that devalues the exemplary work done by the Modi government over the past 10 years in transforming India into an economic powerhouse.

In just seven months, Nirmala Sitharaman will present yet another Budget. By then, the stability of the new NDA govern­ment where BJP is a whisker short of an outright majority will have been settled. BJP would hopefully have regained control of the larger political narrative and given the finance minister the necessary elbow room to not only ensure that the India story is on track but is also seen to be on track. India’s eco­nomic success story has depended in a big measure on both political stability and the judicious application of political will. It should remain that way.

Budget 2024good economicsNarendra ModiOpenomics 2024populismUnion Finance Minister Nirmala Sitharaman