Economic
Highlights
New Delhi, 11 February 2019
Budget Hits
Opposition
CAN TURN TO UNUSUAL
ASPECTS
By Shivaji Sarkar
Indian political economy is at test. The Interim
Budget has caused discomfort in the Opposition. It has taken away the wind out
of their sail as the Government proposes income guarantee and welfare of the
most populous communities -- farmers, labourers, working class, the
low-earners, and indicates more sops after the polls.
Income guarantee is a masterstroke as it
keeps farmers out of the ambit of WTO. Has it turned the Opposition jittery? Is
it not the reason for upping their ante? Perhaps. More so as the figures of
total subsidies from food, urea, LPG, cotton procurement, North-East industries
and Jammu and Kashmir, interest subventions are continuously rising from Rs
224,428 crore in 2017-18 to Rs 334,234 crore in 2018-19.
The allocation for Scheduled Castes’ welfare
has also jumped to Rs 76,800 crore from Rs 49,177 crore in 2017-18 -- Rs 27,623
hike. This is at a time when the Government claims that it has been reducing
subsidies. The Railways for long were used for populist purposes. The Modi
government has carefully showcased it through the Train 18 – semi superfast.
The budgetary figures indicate that the
railways are being given special attention. Its capital outlay has seen a whopping
rise of Rs 72,407 crore from Rs 152,255crore in 2017-18 to Rs 224,662 crore.
The total outlay increases by over Rs 115,810 crore. It means a lot and it
touches almost all corners of the country. The ruling NDA can carefully use it
for electoral campaign. The Opposition has to work overtime to negate these
figures.
A careful rejig of e-tail (electronic retail)
rules is to help Indian businesses -- a plus during the poll time. The new
policy puts a series of curbs on how the world’s giant retailers Amazon India
and Flipcart operate -- restricting discounts, now ownership in sellers on the
market place platform and disallowing exclusive product launches -- forcing
them to restructure operation and take a hit on sales.
The grand swadeshi move has led to $50
billion market value loss in the global equity market for the US giants, Walmart
and Amazon, which owns 77 per cent stake in India’s online retailer Flipkart. A
quiet Indian move that saw the two giants committing less investment in the
Indian market as their business saw a slower growth.
The figures are spread to various heads and
the ruling combine is likely to make a kill during the campaign. The Opposition
has reason to feel jittery.
So is there nothing for bashing the NDA?
There are many, but the recent offers of sops would not make it easy to counter
these. Jobs are definitely one. Unemployment in 2017-18 was a 45-year high of
6.1 per cent, says the labour survey of the National Sample Survey Office
against 2.2 per cent in 2011-12. It was higher in urban areas at 7.8 per cent.
That is the BJP’s major support base. In rural areas it is 5.3 per cent.
A major job crisis is reflected as over 6 per
cent more people have been found to be displaced from jobs since 2011-12 and 10
per cent since 2004, the NDA-I. This shows that the proportion of people in the
16-64 age group have less chance of having a job, technically signified as fall
in labour force participation. In 2004, the labour force was 43 per cent, in
2011 shrunk to 39.5 per cent and in 2017 to 36.9 per cent.
The Centre for Monitoring the Indian Economy
(CMIE) shows job deterioration throughout 2018, when 11 million jobs were lost --
7.4 per cent unemployment -- till December 2018. The figures suggest that job
crisis has persisted during the UPA and despite promises NDA could not check
it.
The overall investment rate has also come
down. Bank credit growth is slow. Employment is falling. The stark question is
how India would be able to maintain 7 per cent growth? Plus, the GST has
created a pan-India market. It looks good but it has also hit many small
businesses that could survive on tax avoidance.
Demonetisation also caused loss of jobs and
slowing down. But the subsequent poll results right from UP in 2017 to MP in
2018 does not show much loss of votes for the BJP. While this should not make
the BJP complacent, it has also little logic for the Opposition to be buoyant
unless it plays deftly.
What can hit the BJP are some non-traditional
aspects that nobody has taken note of. In the rural areas, major criticism of
the party is not so much on job losses but imposing of various cess from
petrol, tolls on roads, city entries, junking of ten-year-old vehicles as per
NGT orders and post-demonetisation “scrutiny” by the income-tax department
(I-T).
Despite income guarantee now, farmers are not
getting remunerative prices. The LPG price increases has hit the rural hearth.
The slowdown of the real estate sector has hit many supportive industries like
brick kilns. Even NGO work has been hit by imposition of GST on their
donations. These are raising discontent at the minutest levels.
The issues could be cashed by the opponents.
The people are wondering why the government did not take note of these issues.
Income Tax can become a major issue as there is six-fold increase in scrutiny, from
the 20,088 cases in 2017-18 to 134,574 cases as per Finance Ministry data.
Majority of these are for I-T returns of 2015-16. It has hit many marginal
farmers. Separately, 2,99,937 notices were sent by the department during
2017-18 to those who deposited large sums during demonetisation but did not
file income tax returns,
There is a cry that rent-seeking has
increased. A progressive society lets the people move freely. But tax shackles
are causing harassment. The Modi government has done well in freeing those
earning upto Rs 5 lakh from the I-T net. It needs to consider I-T abolition in
its manifesto. It would save the people from tax terror as also increase
essential money flow into the economy.
The path to the elections is interesting. It
is a major social churning. The emerging Mahagathbandhan
and NDA are poised to woo the voters with easing of the economy. Brain wracking
for a new economy would continue.---INFA
(Copyright,
India News & Feature Alliance)
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