Welcome to the Political Fix by Rohan Venkataramakrishnan, a weekly newsletter to help guide you through India’s complex political landscape. Today we look at unhappy reactions from Narendra Modi’s supporters to the first Budget of his second term.
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The Big Story: Deja vu
Indira is Modi, Modi is India.
Forgive me for paraphrasing DK Barooah (who in 1974, a year before former Prime Minister Indira Gandhi declared the Emergency, declared, “Indira is India, India is Indira”). But this seems to be the refrain from a section of Modi supporters in the aftermath of the first Budget of his second term.
Finance Minister Nirmala Sitharaman, incidentally the first woman to deliver the Budget speech since Indira Gandhi held that portfolio in addition to the prime ministership, offered up a vision of the Indian economy getting to $5 trillion by 2024, up from $2.7 trillion currently. In case you want a quick recap with a little analysis about this year’s Budget, read my piece here.
Unfortunately for one section of Modi’s base, Sitharaman’s budget envisioned achieving those numbers by increasing taxes on the super-rich and redistributing some of those dividends to the poor. A much-discussed inheritance tax was not announced, but the government did propose to add additional surcharges on income tax, taking the top tax rate for those earning more than Rs 5 crore annual, to 42.74% – breaching the 40% figure for the first time since 1992.
There were also no changes to the other income tax slabs, and little in the way of fresh provisions for the middle-class, other than a proposed new exemption for interest on affordable housing loans. Meanwhile, petrol and diesel prices are likely to go up after the excise duty and cess on them was singled out for an increase. The Budget also proposed raising duties on a host of other products, from gold to vehicle parts to tobacco and even imported books.
This combination of higher taxes for people in the top brackets and “import substitution”, a policy that believes raising duties will benefit local manufacturers, prompted much unhappiness from the section of Modi’s supporters who believe India needs to move away from a tax-and-spend economy to one that is better at encouraging private enterprise.
The initial reaction came in the way of memes about middle-class unhappiness over the Budget. It’s worth noting here that in India, middle class – especially those who are commenting on social media in English – usually means “rich”. But not all of it was humour. There were some pointed reactions too.
Indeed, the narrative that the middle class was losing out because of the Budget was strong enough that the government felt the need to address it. Union Minister of State Babul Supriyo didn’t exactly help by saying that the tax surcharge was for those who “don’t get time for charity of social service”.
NITI Aayog chief Rajiv Kumar said that he is not sure “whether every Budget should have something for the middle class”.
The finance minister herself made the argument that the Budget, in listing out higher investment in infrastructure as an attempt to make life better for the middle class, albeit indirectly. She also pushed back against the idea that the government was becoming protectionist.
“Not at all,” she said, according to the Hindu. “We wanted to support Make in India, and therefore, where capacities exist within India for products that can be usefully bought by Indian procurers, we want to extend that help by deterring imports.”
These arguments will hardly convince the critics. Some of these supporters – we called them the “give-Modi-a-chance” contingent – have actually moved away from the Bharatiya Janata Party over the last few years, saying that though they were willing to overlook the cultural warfare of the Right, they could not countenance left-wing economics.
But that was a small contingent. For most, Modi remains the only option, even though his government is moving further to the left on economics. The Print’s Shekhar Gupta argues that Modi has spent the last five years transferring wealth from the middle to the bottom, claiming that it has the space to do this because the middle class are firmly in his camp and unlikely to go anywhere else.
An important reminder from the first term might be the Land Acquisition reform Modi attempted to carry out in his first year in power. The move galvanised significant pushback from farmers and the poor, and allowed the Congress to get a small foothold as they accused him of running a “suit-boot sarkar”, a government for the rich.
Since then, as Gautam Mehta argues in this paper, Modi has moved away from some of the more enterprise-focused policies he followed in Gujarat and instead moved closer to the Rashtriya Swayamsevak Sangh’s protectionist thinking.
The thinking seems to be this: the middle-class is not going to ditch Modi, but he has to keep serving the poor. The question though, is whether these policies can also arrest the slowdown in the economy that has been apparent for several quarters now?
Is Narendra Modi the new Indira Gandhi? Write to firstname.lastname@example.org
Rahul Gandhi put out a public letter confirming that he is resigning as Congress President. We wrote about this in a mid-week Political Fix. Since then, more Congress leaders have resigned, to express support and to be prepared for the eventual rejigging of the party set-up.
The Congress-Janata Dal (Secular) government in Karnataka is on the verge of dissolving. Eleven MLAs have asked to resign, though the Speaker has yet to accept their demands. If that number goes to 14, the coalition won’t have a majority.
The Bharatiya Janata Party won the two Gujarat Rajya Sabha seats up for election. The party got more than the required number of votes, after cross-voting by the Congress and the Nationalist Congress Party.
The Lok Sabha passed amendments to the Aadhaar Act, allowing private firms to use it. The law still has to make its way through the Rajya Sabha, and will probably face a legal challenge too afterwards.
DMK chief Stalin appointed his son Udhayanidhi as the party’s youth secretary. Stalin himself held the post for 35 years, as heir apparent to M Karunanidhi.
Reports, analysis & opinions
One of the key questions about the Budget is the fiscal assumptions it makes and the smaller-than-usual expenditure slated for this year. Suyash Rai in the Print takes a look at some of the numbers, as does Rathin Roy in the Business Standard. I also have a thread of some other interesting op-eds on the Budget.
Why is Nusrat Jahan going to a Rath Yatra considered secularism but Mamata Banerjee hosting an iftar party appeasement? Shoaib Daniyal on Scroll.in looks at how the public sphere has become almost exclusively Hindu, at least as the default.
The Economic Survey advocates merging schools to save money, but Jharkhand’s attempted to do this has wreaked havoc in the lives of students. Abhinash Dash Choudhary reports for Frontline on the difficulty it creates for children in remote areas.
The BJP’s popularity is increasing at a very fast rate in Kerala. PK Yasser Arafath writes in the Hindu that it might even be able to garner a significant portion of the electorate in the state in the next 10 years.
Did we miss any good reports or Op-eds? Please send them in to email@example.com