The best clue to the politics of this Budget? The acronym emblazoned on the backdrop of Nirmala Sitharaman‘s post-Budget presser. First letters of ten different ‘priorities’ made up that acronym – EMPLOYMENT.
Fresh from an where BJP lost its single party majority in part because many voters were unhappy with the lack of decent paying jobs, FM wrote that political lesson into her Budget, via a raft of incentives for industry, both big and small, to employ more people.
In a country where the young are the largest population cohort, disaffected young people are a political handicap. More so, when millions of them are college-educated and therefore relatively immune to the promise of welfare schemes. So, Sitharaman put their concerns front and centre, to win back votes that in 2014 and 2019 had played a pivotal role in giving BJP impressive majorities.
What will be interesting is how the Budget’s unconventional approach to job creation pans out, both in terms of actual jobs created and politically. FM has bet on incentives for private sector employers. If companies respond – and that’s a definite ‘if’ – there will be job creation in the formal sector.
There’s a rider here. What happens if companies don’t respond to the nudges GOI has given on taking on more people? Will the nudge become something stronger?
The key question is ‘how many jobs’. Because politically, for the Budget to make an appreciable difference to the perception that Modi govt ignored unemployment, a substantial number of new, steady jobs will have to be offered by the private sector. This question is even sharper politically when it comes to the internship programme. After one year, will the new interns get jobs? Or will they be unemployed young people with job experience? If most interns end up in the latter category, BJP’s political difficulty over the jobs question may not lessen dramatically.
This will be true even if BJP’s own argument – that it didn’t get enough credit for creating an enabling environment for creating jobs in sectors like the gig economy – remains valid.
The Budget takes forward previous attempts on skilling by announcing new schemes. GOI’s skilling programmes have had a patchy record so far. If this Budget changes that, many young voters will have a better shot at earning a decent livelihood. That has an obvious positive political impact.
The catch, of course, is whether this Budget will do this job more skilfully than previous ones.
There’s a clear political plan in the Budget’s MSME approach, too. First, because labour-intensive MSMEs, now helped by a friendlier credit regime, are reliable job-creators. Second, because MSME promoters contain a large subset of small businessmen generally thought to be sympathetic to BJP.
Ally management was always going to be a priority for a coalition govt’s budget. On this, Sitharaman’s politics is better than that of many other coalition govt FMs. Instead of giving big bags of money to Nitish and Naidu, the budget allocates capex for specific projects, ensuring the help to allies is in tune with the larger focus of building infra, and also trying to ensure that whatever’s allocated is spent better. Roads, bridges in Bihar and big irrigation projects in Andhra can deliver both politically and economically. Plus, it’s also fiscally prudent.
To that extent, therefore, Congress’s charge that this was a ‘save the govt” scheme needs to be qualified.
Women, who are voting in larger numbers in every successive election, are another big political constituency. The Budget allocates Rs 3 lakh crore for schemes for women and girls. These are likely to be implemented through self-help groups. These schemes aim to double down on the success of both labharti and lakhpati didi initiatives. 2024 elections showed that women vote can act as a counter in regions where other voter groups are dissatisfied with BJP.
The investing classes won’t be too happy about the Budget, what with capital gains tax burden going up. Urban middle classes, too, will grumble about the smallish tax benefits accruing from tweaks in income taxes. But these are not the voting classes. Right now, BJP wants to get back the votes it lost – that’s, basically, the politics of this budget.
Fresh from an where BJP lost its single party majority in part because many voters were unhappy with the lack of decent paying jobs, FM wrote that political lesson into her Budget, via a raft of incentives for industry, both big and small, to employ more people.
In a country where the young are the largest population cohort, disaffected young people are a political handicap. More so, when millions of them are college-educated and therefore relatively immune to the promise of welfare schemes. So, Sitharaman put their concerns front and centre, to win back votes that in 2014 and 2019 had played a pivotal role in giving BJP impressive majorities.
What will be interesting is how the Budget’s unconventional approach to job creation pans out, both in terms of actual jobs created and politically. FM has bet on incentives for private sector employers. If companies respond – and that’s a definite ‘if’ – there will be job creation in the formal sector.
There’s a rider here. What happens if companies don’t respond to the nudges GOI has given on taking on more people? Will the nudge become something stronger?
The key question is ‘how many jobs’. Because politically, for the Budget to make an appreciable difference to the perception that Modi govt ignored unemployment, a substantial number of new, steady jobs will have to be offered by the private sector. This question is even sharper politically when it comes to the internship programme. After one year, will the new interns get jobs? Or will they be unemployed young people with job experience? If most interns end up in the latter category, BJP’s political difficulty over the jobs question may not lessen dramatically.
This will be true even if BJP’s own argument – that it didn’t get enough credit for creating an enabling environment for creating jobs in sectors like the gig economy – remains valid.
The Budget takes forward previous attempts on skilling by announcing new schemes. GOI’s skilling programmes have had a patchy record so far. If this Budget changes that, many young voters will have a better shot at earning a decent livelihood. That has an obvious positive political impact.
The catch, of course, is whether this Budget will do this job more skilfully than previous ones.
There’s a clear political plan in the Budget’s MSME approach, too. First, because labour-intensive MSMEs, now helped by a friendlier credit regime, are reliable job-creators. Second, because MSME promoters contain a large subset of small businessmen generally thought to be sympathetic to BJP.
Ally management was always going to be a priority for a coalition govt’s budget. On this, Sitharaman’s politics is better than that of many other coalition govt FMs. Instead of giving big bags of money to Nitish and Naidu, the budget allocates capex for specific projects, ensuring the help to allies is in tune with the larger focus of building infra, and also trying to ensure that whatever’s allocated is spent better. Roads, bridges in Bihar and big irrigation projects in Andhra can deliver both politically and economically. Plus, it’s also fiscally prudent.
To that extent, therefore, Congress’s charge that this was a ‘save the govt” scheme needs to be qualified.
Women, who are voting in larger numbers in every successive election, are another big political constituency. The Budget allocates Rs 3 lakh crore for schemes for women and girls. These are likely to be implemented through self-help groups. These schemes aim to double down on the success of both labharti and lakhpati didi initiatives. 2024 elections showed that women vote can act as a counter in regions where other voter groups are dissatisfied with BJP.
The investing classes won’t be too happy about the Budget, what with capital gains tax burden going up. Urban middle classes, too, will grumble about the smallish tax benefits accruing from tweaks in income taxes. But these are not the voting classes. Right now, BJP wants to get back the votes it lost – that’s, basically, the politics of this budget.