The best clue about the politics of this Budget? The acronym is in the background Nirmala Sitharaman‘s post-Budget presser. The first letters of the ten different ‘priorities’ make up the acronym – EMPLOYMENT.
Fresh from an where the BJP lost its single-party majority as many voters resented the lack of decent pay. projectFM wrote that the political lesson to his Budget, through a raft of incentives for industry, both large and small, to employ more people.
In a country where the youth is the largest population group, the disaffected youth is a political handicap. Even more so, when millions of people are college educated and therefore relatively immune to the promise of welfare plans. So, Sitharaman is putting his concerns front and center, to win back the votes that in 2014 and 2019 played a key role in giving the BJP an impressive majority.
What will be of interest is how the unconventional budget approach to job creation, both in terms of real and political projects. FM has bet on incentives for private sector employers. If companies respond – and that is definitely ‘if’ – there will be jobs in the formal sector.
There is a rider here. What happens if companies don’t respond to the push given by GOI in terms of hiring more people? Will the nudge get stronger?
The main question is ‘how many jobs’. Since politically, the budget made a considerable difference to the perception that the Modi government was ignoring unemployment, many new jobs remained to be offered by the private sector. This question is more clearly political when it comes to internship programs. After a year, will the new apprentice get a job? Or will the unemployed youth with job experience? If most of the interns are in the latter category, the BJP’s political difficulties on the job question may not be reduced.
This would be true even if the BJP’s own argument – that it doesn’t get enough credit to create an environment where jobs can be created in sectors like the gig economy – remains true.
Budget takes previous efforts on skill by announcing new plans. GOI’s skill programs have had a poor record so far. If this Budget changes, many young voters will have a better chance of earning a decent livelihood. That has a clear positive political impact.
The catch, of course, is whether this Budget will do this job more skillfully than the previous one.
There is a clear political plan in the budget’s UMKM approach as well. First, because labor-intensive SMEs, now aided by a friendlier credit regime, are reliable job creators. Second, because MSME promoters contain a large subset of small entrepreneurs who are generally considered sympathetic to the BJP.
Allied management has always been a priority for the coalition government’s budget. In this regard, Sitharaman’s politics are better than many other FM government coalitions. Instead of giving big bucks to Nitish and Naidu, the budget allocates capex to specific projects, to ensure aid to allies aligns with the larger focus on building infrastructure, and also tries to ensure that whatever is allocated is better. Roads, bridges in Bihar and large irrigation projects in Andhra can generate political and economic returns. Moreover, it is also fiscally wise.
Hence, the Congress’s allegation that this is a ‘government rescue’ scheme must be qualified.
Women, who vote in greater numbers in each successive election, are another large political constituency. The budget allocated Rs 3 lakh crore for schemes for women and girls. This is likely to be implemented through self-help groups. The scheme aims to double the success of labharti and lakhpati didi initiatives. The 2024 elections show that women voters can be a counter in areas where other groups of voters are dissatisfied with the BJP.
The investment class will not be very happy about the Budget, what with the capital tax burden rising. The urban middle class, too, will grumble about the small tax benefits they get from the income tax tweaks. But this is not a voting class. Now, the BJP wants to win back its lost votes – which is, in essence, the politics of this budget.
Fresh from an where the BJP lost its single-party majority as many voters resented the lack of decent pay. projectFM wrote that the political lesson to his Budget, through a raft of incentives for industry, both large and small, to employ more people.
In a country where the youth is the largest population group, the disaffected youth is a political handicap. Even more so, when millions of people are college educated and therefore relatively immune to the promise of welfare plans. So, Sitharaman is putting his concerns front and center, to win back the votes that in 2014 and 2019 played a key role in giving the BJP an impressive majority.
What will be of interest is how the unconventional budget approach to job creation, both in terms of real and political projects. FM has bet on incentives for private sector employers. If companies respond – and that is definitely ‘if’ – there will be jobs in the formal sector.
There is a rider here. What happens if companies don’t respond to the push given by GOI in terms of hiring more people? Will the nudge get stronger?
The main question is ‘how many jobs’. Since politically, the budget made a considerable difference to the perception that the Modi government was ignoring unemployment, many new jobs remained to be offered by the private sector. This question is more clearly political when it comes to internship programs. After a year, will the new apprentice get a job? Or will the unemployed youth with job experience? If most of the interns are in the latter category, the BJP’s political difficulties on the job question may not be reduced.
This would be true even if the BJP’s own argument – that it doesn’t get enough credit to create an environment where jobs can be created in sectors like the gig economy – remains true.
Budget takes previous efforts on skill by announcing new plans. GOI’s skill programs have had a poor record so far. If this Budget changes, many young voters will have a better chance of earning a decent livelihood. That has a clear positive political impact.
The catch, of course, is whether this Budget will do this job more skillfully than the previous one.
There is a clear political plan in the budget’s UMKM approach as well. First, because labor-intensive SMEs, now aided by a friendlier credit regime, are reliable job creators. Second, because MSME promoters contain a large subset of small entrepreneurs who are generally considered sympathetic to the BJP.
Allied management has always been a priority for the coalition government’s budget. In this regard, Sitharaman’s politics are better than many other FM government coalitions. Instead of giving big bucks to Nitish and Naidu, the budget allocates capex to specific projects, to ensure aid to allies aligns with the larger focus on building infrastructure, and also tries to ensure that whatever is allocated is better. Roads, bridges in Bihar and large irrigation projects in Andhra can generate political and economic returns. Moreover, it is also fiscally wise.
Hence, the Congress’s allegation that this is a ‘government rescue’ scheme must be qualified.
Women, who vote in greater numbers in each successive election, are another large political constituency. The budget allocated Rs 3 lakh crore for schemes for women and girls. This is likely to be implemented through self-help groups. The scheme aims to double the success of labharti and lakhpati didi initiatives. The 2024 elections show that women voters can be a counter in areas where other groups of voters are dissatisfied with the BJP.
The investment class will not be very happy about the Budget, what with the capital tax burden rising. The urban middle class, too, will grumble about the small tax benefits they get from the income tax tweaks. But this is not a voting class. Now, the BJP wants to win back its lost votes – which is, in essence, the politics of this budget.
