Budget Watch: What path will the finance minister take in Budget 2024?

It will be interesting to see the path the FM opts for in the Budget and how she strikes a balance between the govt's political compulsions and economy's medium-term needs

In his first Budget speech in July 2014, Arun Jaitley, the then finance minister, referred to the word poor on four occasions.

In the next Budget speech on February 28, 2015 -- and after Congress leader Rahul Gandhi criticised the government for being a 'suit boot ki sarkar', Jaitley mentioned the word poor on a dozen occasions.

Jaitley said all government "schemes should focus on and centre" on "the poor". He said the government's commitment to the 'Daridra Narayan' was steadfast.

By 2016, the government jettisoned its reform agenda, a plank on which the Narendra Modi-led Bharatiya Janata Party (BJP) was elected to power. It shelved the land acquisition act and embraced 'garib kalyan', the welfare of the poor.

 

In Jaitley's last Budget speech on February 1, 2018, the world poor found 21 mentions. If Jaitley mentioned the word farmer eight times in the 2015 Budget speech, he referred to it on 32 occasions in his subsequent Budget speech in 2016.

In the interim Budget of 2019-20 in February 2019, the then Finance Minister Piyush Goyal introduced the PM Kisan Nidhi scheme, which provided for ~6,000 annual allowance to small and marginal farmers.

The scheme was launched weeks after the BJP lost in Chhattisgarh, Madhya Pradesh and Rajasthan.

Post-poll surveys attributed the defeats primarily to farmers' anger over farm distress. The government withdrew the three contentious farm laws in November 2021, months before the Assembly polls in Uttar Pradesh.

Presenting her interim Budget in February 2024, Finance Minister Nirmala Sitharaman said, "As our prime minister firmly believes, we need to focus on four major castes. They are 'Garib' (Poor), 'Mahilayen' (Women), 'Yuva' (Youth) and 'Annadata' (Farmer)."

Unlike the 2019 interim Budget, the 2024 interim Budget did not announce any new welfare schemes. The BJP-led NDA, as Prime Minister Narendra Modi said in the House then, was confident of 'abki baar 400 paar'.

However, the BJP fell 32 seats short of a majority and lost seats primarily in Maharashtra, Haryana, Rajasthan, and Uttar Pradesh because of agrarian distress and livelihood issues.

Post-poll surveys have suggested rural voters in these states voted against the BJP and its allies.

The Assembly polls in Haryana and Maharashtra are scheduled for October, and it is crucial for the BJP that it performs well after its poor performances in these two states in the Lok Sabha polls.

It is in this political backdrop that Finance Minister Sitharaman will present the full Budget for 2024-25 on July 23.

The government's discourse in the run up to the presentation of the Budget has two distinct trends, which reflects the tough choices the Centre faces. While it would need to continue with its welfare schemes, it would also need to deliver on jobs and carry out reforms.

In her address to the joint sitting of Parliament on June 27, President Droupadi Murmu said that the forthcoming Budget of the NDA government, the first of its third term in office, will see "historic steps" along with "major economic and social decisions".

She said the government will further accelerate the pace of reforms.

Murmu said the government hopes to foster healthy competition among the states to attract investors from all over the world in the "true spirit" of competitive cooperative federalism.

"We will continue to move ahead with the belief that the development of the country lies in the development of the states," she said. The word reform featured on 16 occasions in the President's 51 -minute speech.

In his reply to the President's speech in the Rajya Sabha on July 3, Prime Minister Modi urged the states to embrace the spirit of competition to attract foreign investments. He said reform is not a bad word and that the state governments should neither shy away from undertaking reforms nor fear it could cost them their perch on the seat of power.

However, the state governments that the BJP and its allies run have taken a distinct turn towards reaching out to the poor, women, farmers and youth in their decisions announced since June 4, the day the Lok Sabha results were declared.

Presenting the state Budget on June 29, Maharashtra's Finance Minister, Ajit Pawar, unveiled a slew of welfare measures in a bid to sway the electorate ahead of the Assembly polls. Among the highlights were Rs 1,500 monthly allowance for women and three free cooking gas cylinders for poor households.

A few days later in Bhopal, Madhya Pradesh's finance minister, Jagdish Devda, introduced a Budget that promised a 15 per cent increase in spending on agriculture and allied activities and a 56 per cent in allocation for child and women development and health sector.

These announcements follow the June 4 Lok Sabha election results, with state governments, either run by the BJP or its allies, making significant welfare promises, such as welfare schemes for women and the poor, greater assistance to the agrarian sector, curb on examination paper leaks, and filling vacancies in government departments.

Rajasthan's BJP government has upped the annual PM-KISAN (Pradhan Mantri Kisan Samman Nidhi) disbursement to Rs 8,000, benefiting nearly 7 million farmers.

In Haryana, the Nayab Singh Saini-led BJP government has announced free bus rides to the poor, plots for backward communities, and special drives to recruit youths in government.

A recent post-poll survey by Lokniti-CSDS highlighted the BJP's lost ground among women and farmers in key states. In Madhya Pradesh, Chief Minister Mohan Yadav has repeatedly dismissed any suggestion that his government may discontinue or reduce the funding for the immensely popular 'Ladli Behna Yojana'.

The Yadav government's first Budget reflected a strong focus on women and child development and health which received 56 per cent more allocation than the previous year. The Budget announced a 15 per cent increase in agricultural expenditure, including Rs 125 per quintal bonus for wheat over the Centre-fixed MSP for the 2024-25 season.

In Rajasthan, the state government has reduced VAT (value-added tax) on petrol and diesel by 2 per cent, making fuel cheaper for consumers.

In Uttar Pradesh, where the BJP lost 29 seats in 2024 over its tally in 2019, the Yogi Adityanath government plans to provide free power to irrigation pumps, with certain conditions.

In Maharashtra, the welfare schemes for women, youth, farmers and the poor, announced in the state Budget, shall cost an additional Rs 80,000 crore.

It would be interesting to see the path Finance Minister Sitharaman opts to pursue in the Budget and how she strikes a balance between the immediate political compulsions of the government and the medium-term needs of the economy.