The Union Budget for 2016 is ideological, not financial
The Union Budget for 2016-17 has been questioned as being everything from a course correction, to a tactical move undertaken by a pragmatist, and even a conscious ideological shift to the left. Ironically, each of the questions that were posed featured prominently in the post-budget deliberations on television and print, despite none of them being primarily economic in nature. That these were the main talking points around the single most significant annual economic policy of the country is indicative of just how uninspiring the economic content of budget is: this budget is not the result of Finance Minister Arun Jaitley’s intent, but that of Prime Minister Narendra Modi’s desire.
But this revelation aside, each of these questions reflects a bitter truth—the Modi story that was integral to the political narrative of the 2014 elections is well and truly over, and has been so for quite some time. The death knell for this narrative rang well before the electoral rout in Bihar. This budget highlights the hollowness of Modi’s rhetoric, which was the primary tool with which he politically enticed the so-called “Great Indian Middle Class.” The budget’s emphasis on the social sector including strengthening schemes such the Mahatma Gandhi National Rural Employment Guarantee (MGNREGA)—which were publicly criticised by Modi and his ministers just a year ago—and its rural development thrust demonstrates the current government’s hypocrisy. When political parties display such duality and accommodates diverse views, it underscores the belief that the party is essentially an ideological coalition. This is what the Congress used to be back when it was dubbed a “rainbow coalition” (with space for different ideologies ranging from Nehru’s left-of-centre posture to pronounced right-wing views of Rajendra Prasad and eventually the group that parted ways with Indira Gandhi in 1969), before it became a hegemony of a few. But when a political leader displays multiplicity of policy, the obvious conclusion is that they are donning a mask, or mukhauta, the word that has been Bharatiya Janata Party’s (BJP) bugbear ever since it was first used for Atal Bihari Vajpayee almost two decades ago. The budget and Modi’s recent utterances on economic issues—the emphasis on the rural sector over structural reforms—show that on this matter, he has no primary position from where he will not budge. Instead, a different stance is adopted depending on political suitability.
In 1980, when the BJP was formed and Modi was still in the Rashtriya Swayamsevak Sangh (RSS), the founding leaders attempted to partially break free from the legacy of the Bharatiya Jana Sangh—the RSS’s political arm that had merged with other parties just three years to form the BJP’s predecessor, the Janata Party. The BJP wished to cast its net wider, to attract leaders from outside the RSS fold. This demarcation was achieved by terming the economic vision of the new party Gandhian Socialism. While what this title construed remained a mystery for the entire six years it existed before it was somewhat jettisoned after LK Advani assumed leadership of the party in 1986, it underscored that the new party could not abandon the fascination for Gandhian way of life as an ideal in India. Secondly, the use of socialism in its economic credo emphasised that the party accepted that, to have a future, there had to be some commitment to ameliorate the social and economic conditions of India’s poor.
Yet after becoming the chief minister of Gujarat in 2001, and much after the political mainstreaming of the BJP’s vision of Hindutva, Modi did not immediately look at improving the condition of the state’s poor. At the time of taking charge of the state, what was needed, at first, was to galvanise the tardy pace of rehabilitation and rebuilding required after the Bhuj earthquake totalled the state. He therefore settled into a groove of treating the state as a corporation that had to be modernised and made efficient, and this spirit became his hallmark. The 2002 Godhra carnage, where 59 people were killed when a train was set on fire, triggering anti-muslim riots, occurred less than five months after he assumed charge. On the economic side, it gave a pro-corporate tilt to his economic policy. Since halting the flight of capital from the state and attracting fresh investment was a major challenge, Modi embarked on hosting headline-grabbing investor summits and easing the impediments to doing business in the state. This meant easing norms for industry and making land acquisition easier. To secure this, he lobbied with the Federation of Indian Chambers of Commerce and Industry, the Confederation of Indian Industry, and the South Gujarat Chamber of Commerce. The much-vaunted single-window clearance-system, which in essence ensured centralisation of power when it came to clearing business proposals, was also introduced at this stage. Restoring Gujarat’s gaurav (pride) had been integral to Modi’s political campaign in the state elections, which were held after the Godhra riots in 2002, and consequentially the primary focus of his economic policies was the state’s entrepreneurial and business community. Once the capital began flowing again, Modi moved to other areas including social sector schemes, addressing the needs of the agricultural sector, and rural Gujarat. Much later, a few months after a renewed mandate in 2007, when Modi began nurturing political ambitions beyond Gujarat, he embarked on repositioning himself from Hindu Hriday Samrat—the emperor of Hindu Hearts—to Vikas Purush, the man of development. Facilitating Tata Motors to set up the Nano plant in early 2008 was only the first step in this direction. The rest, as they say is history—people voted for him in the 2014 elections in hope that their states too would resemble Gujarat in development.
“The error that Modi needed to guard against after becoming prime minister,” said a retired senior official who worked with him in Gujarat between 2002 and 2006 and who asked not to be named, was to not try “to repeat the Gujarat model because there was none. It was just response to situation and necessity of the time when a particular policy was initiated.” In 1991, the Sangh pracharak and then BJP leader KN Govindacharya discussed his party’s prospects with a small group of journalists of whom I was a part, and began calculating how many seats it would win from various states. When his tally crossed 100, one scribe asked him if he imagined that his party would eventually replace the Congress. “Why replace, we will be the next Congress,” he replied.
While Vajpayee stuck mostly to the middle-path of the Congress, the mistake Modi initially made was trying to reverse the social sector programmes of the UPA regime. Along with the voters, Modi, too, started believing in his own myth, and this became disastrous. The RSS cadre which was greatly instrumental in converting the sentiment of support into votes in 2014 became disillusioned, partly due to his individualistic style, and partly because of his supposed intent to embark on promised economic reforms. In the absence of this support, the BJP was wiped out in Delhi wining just three seats out of the 70 at stake. For a man who secured the first parliamentary majority in India in three decades, Modi turned out to be surprisingly unsure of his own capacity. Losing the Delhi elections to the Aam Aadmi Party should have been a warning, as both the RSS cadre and the previous voters abandoned him. After his refusal to correct the course during the budget Session last year and insistence on passing the Land Acquisition Bill, the tag of “suit-boot ki sarkar” stuck, and his party was routed in Bihar.
On being elected prime minister, Modi made statements to provide for the man on the street. Yet, his assertions did not convince the people he was trying to assuage as they were rarely backed by policy. On the contrary, the government promised to live up to the pre-poll expectation that this government would be a rollback regime, erasing the gains made by social sector initiatives of the UPA—especially MGNREGA and food security.
But Modi’s words worried India’s financial sector players since early 2015 as they anticipated the direction this government was heading because the quick reforms they were expecting were not forthcoming. For instance, an Ambit Capital report that I co-authored, by the financial research group Institutional Equities from February 2015 stated that “We expect Modi to temper his reforms with populism. We thus expect the Centre to de-prioritise game-changing land reforms and potentially labour reforms as well.” The first sign that Modi had completed a near turnaround in his economic outlook was in January 2016, at the Global Business Summit hosted by the newspaper The Economic Times. As he defended his right to continue subsidising the poor, his words served as a rude jolt. In probably the most categorical declaration that he would continue with important subsidies for the poor, Modi said:
Modi pledged that his “aim is not to eliminate subsidies but to rationalise and target them.” The budget is a further expansion of the vision unveiled at this summit, and reveals an attempt at trying to regain lost political ground. Yet Modi’s rural-centric tactic is a bold gamble as he risks alienating urban middle-classes, which provided the bulwark of his vote bank in 2014.
To offset the likely disenchantment of the urban voters, especially the youth, Modi will likely aggressively pursue a more expanded form of majoritarian politics. After his election in 2014, Modi has never once been apologetic about the so-called fringe forces. The reorientation of his economic visions has not been accompanied by reducing the volume of the clamour that the extremist forces within the Sangh Parivar make. If any doubt remained regarding Modi’s intent of remaining firm on his Hindutva agenda, it was reaffirmed by the aggressive stance the party and its affiliates in Sangh Parivar adopted in the wake of events in Jawaharlal Nehru University (JNU).
In one stroke, the BJP painted all adversity in one hue—liberals, social democrats, communists, left-wing extremists and “terrorists”. Those disagreeing with the Sangh Parivar’s interpretation of nationalism were “anti-nationals.” Urban India—which has incubated Modi’s politics more than rural India—is more liable to accept the “one people, one culture, one nation,” one party, and one leader principle of the BJP. Following the arrest of three JNU students on the charges of sedition and Smriti Irani’s scorching histrionics, this “oneness” of “Bharat Mata” (Mother India) also includes one universal goddess (read Durga) for the entire nation and all its inhabitants, regardless of sect of belief.
To set his political course right, Modi has begun evolving a new type of bonding glue for his supporters. This would entail staying firm on the economic path on which he has now embarked, while fusing it with an aggressive form of ultra-nationalism. It would enable him to retain his hold in both rural and urban India. This strategy of the BJP, to simultaneously work with two diverse vote banks, portends a dangerous future. If this comes unstuck, it will strengthen forces of democracy. But if it becomes a success, India will be one step closer to becoming a totalitarian state, this time on the foundation of a new ideological concept: Hindu Samajwad, or Hindu Socialism.