There are two ways in which the Budget presented on Saturday can be interpreted, broadly speaking. The first is that it is a cautious and conservative exercise. This is sensible. Those opposed to the government picked out what seem to be its weaknesses, particularly lack of clarity on the numbers. However, the consensus is that it was not particularly damaging and not particularly ambitious.
This is not necessarily a bad thing and might not be seen askance in an ordinary year. But 2019-20 was not an ordinary year. It was the worst we have had in the last decade in terms of growth, and further we don’t know either what the cause of the present downturn is or even whether it is cyclical or structural. What we do know is that the trend-line for five quarters has been negative, that unemployment is at generational highs, and that animal spirits are subdued, if not extinguished.
Given all that is known, one would have imagined that the government would have put its weight behind recovery and done that through strong signalling. This did not seem to be the case. At the press conference afterwards, the finance minister was asked why it was that she had not announced anything for the auto sector that was flat on its back. Her response was that she hadn’t announced anything for many other sectors also. Hardly the sort of thing one would say to assuage those troubled by the incoming data or to inspire confidence.
The second way of looking at it is that Prime Minister Narendra Modi appears to have deprioritised the economy. Just like with foreign affairs, it is not a secret that the finance ministry is one which the PM takes a keen interest in. But the Budget seemed to me to lack any of the flashiness that we have associated with the prime minister’s style. It lacked the freshly minted acronyms (the sure sign that he has taken an interest in a particular scheme) that one is used to from him. Though it was long — apparently the longest Budget speech ever — it was not memorable and there is not much that one can pick out as being a new or original idea.
Mr Modi himself spoke after the Budget was presented, towards late afternoon, but he made very brief and quite terse remarks in which he repeated some of the points the finance minister had earlier made. He was not lyrical as is his wont and, truth be told, he was not his usual optimistic self.
That leads us to the question: Why? It seems to be the case that the Budget is not lacklustre because it is cautious and conservative in a time of turbulence but it is boring because of lack of interest from him.
That is troubling. With all that is going on around the country now, one would have imagined that the PM would try and hose down those fires to focus on the thing that he needs to focus on. A deliberate deprioritising by him of the economy would be quite damaging in the short and medium term. Not only because we are going through an awful patch economically but also because there is social unrest on a scale we haven’t seen in decades.
At a time like this, it becomes obligatory on the PM to bring a sense of purpose and stability to the whole polity of which the economy is the largest part. The markets felt there had not been enough positive signalling and crashed. While the FM brushed that off, it will require some specific and careful moves, especially from the prime minister, who is the only person with the credibility to do so, from the government to begin bringing India back to the path of robust growth.