President Pranab Mukherjee broke his silence last week and aired his views for the first time on the fallout of the Modi government’s unprecedented decision to invalidate 86% of India’s currency. The president’s intervention was somewhat nuanced and parts of it could be read as a warning that the economic slowdown caused in the short-to-medium-term would impact vulnerable sections of the population that are very poor and may not be able to wait for the long-term gains that will percolate as a result of “cleaner growth” or from special programmes that will empower the people.
In a way the president has hit a right note because Prime Minister Narendra Modi has so far not said a word about the massive unemployment in the informal sector caused by deep cuts in small scale manufacturing hubs across the country. Added to this is the big slowdown, post-demonetisation, in the construction sector which may have rendered millions jobless. Media reports are replete with stories of mass migration back to villages accompanied by a sudden rise in demand for rural employment as guaranteed under the MGNREGA law. It is just as well that the president spoke about the current crisis and obliquely suggested that it must be addressed with a sense of urgency as the very poor don’t have staying power and can’t wait for long.
Although Pranab Mukherjee has broadly endorsed the objectives of demonetisation, his emphasis on the need to provide immediate succour to the poor may well be seized by Modi to argue the case that his government was justified in advancing the budget presentation to February 1. This advanced budget comes just before the start of the assembly elections in five states, including the most crucial one in Uttar Pradesh.
The NDA’s reasoning for advancing the budget is that it wants to kick start the government spending cycle right after March 31, as the new financial year begins. Currently, the government argues, the budget gets passed at the very end of the Parliament session when the new financial year is already underway. This is particularly true for the farm sector for which expenditure programmes must kick in well before farmers start planning their kharif crops. However, the opposition sees this just as a ploy by the government to announce pro-poor welfare programmes ahead of elections in UP.
Opposition parties have formally complained to the Election Commission, and have made a strong plea that there was no case for advancing the budget which is normally presented on 28 February. Former Chief Election Commissioner S. Y. Quraishi told The Wire, “If the government were to follow the letter and spirit of the model code of conduct then it must not announce tax cuts or other welfare sops just before so many state elections covering 1/5th of the population”.
“If such sops are announced, the opposition parties will have every right to challenge it in a court of law”, he added.
Meanwhile, the president may have inadvertently handed Modi the necessary legitimacy for advancing the budget by suggesting that the very poor are vulnerable and have far less capacity to withstand hardship. So far Prime Minister Narendra Modi seems determined to stay the course. If anything, demonetisation has helped to create an extraordinary situation and Modi is now cleverly using the ensuing disruption to pose all kinds of dilemmas before several institutions such as the Election Commission, Parliament, President’s office and who knows some of these controversial questions may even be examined by the highest judiciary in due course. The ruling party and the opposition are clearly on a collision course over the advancement of the budget.
Politically, Modi seems to have an upper hand as the Opposition is so far merely reacting to the unorthodox moves by the Centre. Actually there is really no reason why the budget should not be presented on 28 February by which time the bulk of the polling would be over. That would be fairest thing to do. But the Centre seems to be deliberately provoking the Opposition to keep it in constantly reactive mode.
There is wide speculation that this year’s budget might come up with some radical ideas such as a ‘minimum basic income’ for large sections of the poor as a compensation for their suffering after the demonetisation. Indeed, such a scheme would very much address Pranab Mukherjee’s concern that the needs of the very poor must be addressed urgently. If one assumes the Centre does announce such a scheme, opposition parties will hardly be in a position to either oppose it in Parliament or even go to court over the legality of the move in the context of the model code of conduct. Clearly, Narendra Modi is a mind at work as he has made a habit of playing with institutional conventions and practices in a manner that is worsening democratic discourse.