For once, it was not content so much as form that made news from a Budget speech. Finance Minister Arun Jaitley on Thursday primarily delivered the speech in English but, for possibly the first time, he read out large portions of it in Hindi too. The move was unusual, with Jaitley evidently stumbling over unfamiliar words while reading his speech out in the Lok Sabha. But the intention was clear. The government wants its announcements to make their way to the masses, which, when you look at the primary constituency of the Bharatiya Janata Party, are mostly Hindi-speaking residents of the so-called cow belt.
The speech too seemed directed at addressing the belief that the government has not done enough to keep rural markets happy. Jaitley said from the very start of his budget discussions that agriculture would be the focus of this year’s policies. In the speech too, after going through a laundry list of what his government has achieved, Jaitley spoke of directing these benefits to “farmers, poor and other vulnerable sections” and “particularly focus on strengthening agriculture and rural economy.”
Jaitley’s first big announcement also stuck to this line. After reminding people of the government’s commitment to doubling farmer incomes by 2022, an effort that has failed to see much movement so far, the finance minister explained how he is going to try and make this a reality.
“In our party’s manifesto it has been stated that the farmers should realise at least 50% more than the cost of their produce, in other words, one and a half times of the cost of their production,” Jaitley said. “I am pleased to announce that as per pre-determined principle, Government has decided to keep MSP [Minimum Support Price] for the all unannounced crops of kharif at least at one and half times of their production cost. I am confident that this historic decision will prove an important step towards doubling the income of our farmers.”
Ground realities on this might turn out to be less rosy than this announcement. In the past minimum support prices for other crops have also been declared at 1.5 times their production cost, but that has not led to actual gains for farmers. Jaitley in his speech admitted that increasing MSP is not enough, and said that the Centre will work with the Niti Aayog to figure out a “fool-proof” mechanism for farmers to get adequate prices for their produce. Naturally, one can expect that this consultation with Niti Aayog will not conclude anytime soon.
Jaitley’s other major announcement is already being referred to by same as “ModiCare”. Officially the Ayshman Bharat scheme, the finance minister said that the government is launching a National Health Protection Scheme, which will cover more than 10 crore poor and vulnerable families. He claimed these families, counting in approximately 50 crore beneficiaries, would get up to Rs 5 lakh per family per year for secondary and tertiary care hospitalisation. Jaitley called this “the world’s largest government-funded healthcare programme.”
As with the MSP announcement, what actually transpires on the ground might turn out to be different. The very fact that this provision of healthcare is through insurance rather than directly at government institutions, raises concerns about whether the system will be gamed by private organisations simply to mop up money under the scheme. The other question is how much will actually be allocated and disbursed. But the phrase – the world’s largest government-funded healthcare programme – is likely to form the centre-piece of the BJP’s messaging around its budget.
The other two significant announcements from the budget might actually be seen as negative by some, but again they might come as a positive for rural India. One is the re-introduction of the Long Term Capital Gains tax, which taxes any gains made from instruments like stocks beyond a certain threshold. The move will be criticised by the middle-class and the rich, but it will not have much of an effect on the rural economy, other than possibly giving the government more money to work with.
Finally, Jaitley said that his government is going to slip from its fiscal targets. In his budget speech last year, he had laid out a commitment to keeping the fiscal deficit – the difference between government revenue and expenditure – to 3.2% of the budget. Jaitley said that the number will actually be 3.5% this year, and he hoped to bring it down to 3.3%. This is troubling for credit and will see bond yields going up, but it implies that the government is trying to spend its way out of bad economic conditions. Although the budget documents will have to be carefully fisked to see if that money is actually going to make its way to the rural economy, the messaging suggests government intends for it to.
Why such a focus on agriculture and healthcare for the poor? The broad belief, reinforced by the results in the Gujarat elections, is that urban centers continue to support the BJP, but rural areas have drifted away from the party, especially after the economic hit they took following demonetisation. General election are due in India in 2019, and there has been plenty of buzz that the government might considering advancing it to later this year. A budget with big announcements for the rural economy is an attempt to address this, although the fine print – and actual implementation – will tell us if it will be enough to address concerns in the countryside.