That India is now a $2.5 trillion economy is a reality. Not only is Pakistan’s economy ($300 billion) much smaller than India’s, its growth rate is lower than its neighbour’s. Moreover, the fiscal deficit and balance of payment woes are more pronounced in Islamabad than in New Delhi. The question, therefore, is whether or not there can be a fair comparison between the economies of the two nuclear-armed rivals who understandably have different needs and different histories.
Be that as it may, India on Thursday announced its annual budget 2018/19. Some of the salient features of the document show that the country expects its economic growth to surge above 8 percent. The budget allocates billions of dollars in infrastructure spending and introduces a health insurance programme for around 500 million poor. Massive spending on creation of rural infrastructure seems to have been made to win voters in the countryside where two-thirds of India’s 1.3 billion people live. In his budget speech, finance minister Arun Jaitley, inter alia, stated: “While making the proposals in this year’s budget, we have been guided by our mission to especially strengthen agriculture, rural development, health, education, employment, MSME (micro, small and medium enterprises) and infrastructure.” In other words, after New Delhi’s massive jump in “Ease of Doing Business’ index rankings, it seems to be now focusing on “Ease of Living” challenge as well.
Keeping in view the pressures of 2019 general elections, the rural appeasement strategy of Bharatiya Janata Party (BJP)-led NDA coalition government is clearly aimed at retaining power in the centre after the end of its current five-year tenure. It also shows that this government has drawn a lesson from its 2004 defeat that it suffered mainly due to the fact that its economic policies were found to be strongly skewed in favour of urban parts of India. In other words, its “Shining India” slogan had made inroads only in urban centres while the majority of voters residing in rural parts of the country positively responded to Congress and other parties who later formed the Congress-led UPA coalition. Moreover, the performance of BJP in recent state elections of Gujarat, the home state of prime minister Narendra Modi, has been found to be lacklustre despite its victory. The rural Gujarat state voted massively in support of Congress and other opposition parties or groups.
That ‘rural appeasement’ dominates the Modi government’s policymaking imperatives is a fact that has found its best expression from the presentation of budget speech by finance minister Arun Jaitley in “Hinglish”, a mix of Hindi and English, in an attempt to reach out to the BJP’s core constituency in India’s northern states.
Last but not least, Pakistan’s policymakers may draw some valuable lessons from India’s budget for the fiscal year starting on April 1. In this regard, Indian budget-makers’ approach to key areas or challenges such as growth, fiscal deficit, expenditure, taxation, borrowing, banking/finance, stake sale/consolidation, gold, health/population throws up some guidelines for our policymakers. India’s defence budget, for example, has been increased by almost 8 percent as the country poses military threats to both Pakistan and China. In the health sector, the BJP government has decided to provide 500,000 rupees per family annually for medical reimbursement under National Health Protection Scheme, which will be world’s largest public health scheme. The sale of stake may also be of interest to our policymakers. It is an area where the PML-N government has miserably failed to deliver so far. India’s budget, in this regard, targets to get 800 billion rupees through stake sale in 2018/19 after exceeding its 2017/18 target, to get 1 trillion rupees. India has already begun process of strategic sale in 24 state-run companies, including privatisation of state-run Air India airline. Will we ever take a similar decision about our white elephant Pakistan International Airlines and other mega Public-Sector Enterprises (PSEs), including the Pakistan Steel Mills?
