A budget with Modi’s non-populist stamp
I am relatively poor in understanding economics. Therefore, I did not spend much time this morning in reading my daily quota of nine newspapers, which were full of the details of the budget proposals that Union Finance Minister Arun Jaitley presented to the Parliament yesterday for the year 2017-18. But one thing I could easily discern. And that was the inability of these newspapers to find major faults with Jaitley’s proposals. For the Modi government, this is not a mean achievement, given the hostility that India’s mainstream media has for it otherwise. A leading newspaper grudgingly accepted the budget to be reflecting “clever politics and sound economics”.
Even an acknowledged critic of the Modi government, the Left-inclined Hindu newspaper, carried an editorial comment, titled “A fine balance”. It said, “Coming within three months of the Central government’s purge of high-value currency notes that has dampened economic activity, particularly in the informal sector, it was imperative that Union Finance Minister Arun Jaitley soothed frayed nerves with Budget 2017-18. It was equally critical that he provided a glimpse of a larger plan to prevent regeneration of black money, the original intent behind the demonetisation of Rs.500 and Rs. 1,000 notes. He has managed to do both to a fair degree, without resorting to the easy options of blatant populism or spending his way out of trouble in a slowing economy.”
The budget, the theme of our cover story this week, is said to be growth oriented. It has provisions for the creation of infrastructure. It has gone in the direction of “ease of doing business”. It has lessened the tax burdens of the honest tax payers. It has a lot of focus on the agricultural sector and the rural economy. It has empowered the small and medium scale industries as never before, realising its worth as the real creator of jobs, including for those who are unemployed and underemployed in the highly saturated agriculture sector. And above all, the budget takes the country on the path towards digital economy, an appropriate measure to fight the evils of corruption and black money. As a part of this strategy, the budget has the revolutionary proposal to reform the system of funding political parties; it has drastically brought down the cash contribution of Rs. 20000 by an individual to a political party to Rs. 2000.
While attempting all this, the Modi government has ensured that the budget does not contain populist proposals or policies, the real bane of the Indian economy over the years. It has tried to strengthen the “empowering measures” rather than going on the traditionally easy road of announcing more but unaffordable “entitlements”, even though in the process Modi has invited flak from all the opposition leaders.
In fact, pundits say that this year’s budget has the typical stamp of Modi. Modi is arguably the rarest political leader of the country who does not believe in populist politics. As he had told the PTI news agency in the year 2015, after completing one year in office as the Prime Minister, he consciously avoided choosing a “populist course” and had instead opted for a “more difficult path” of correcting the defective government machinery.
“One option was to do things methodically to mobilise the government machinery, correct the many defects and ills which had crept into the system, so as to provide long term benefits to the country in the form of clean, efficient and fair governance.
“The other option was to use the mandate to announce new populist schemes and bombard the media with announcements to keep the people fooled. The latter course is easier and people are used to it.
“However, I did not choose this and instead chose the more difficult path of correcting the defective government machinery in a quiet and methodical way. If I had chosen the populist course, it would have been a breach of the trust placed in me by the people,” Modi told PTI.
But then, it must be noted that Modi did not develop his aversion towards populist politics all of a sudden after becoming the Prime Minister. He had displayed the same throughout his tenure as the Chief Minister of Gujarat. For instance, in the 2002 Assembly polls, one heard during the electioneering a prosperous diamond merchant in Surat telling a television journalist — “what is the use in having electricity if people are forced to pay for its consumption. Earlier we never paid for electricity. We never cleared our bills, but nobody cut our connections. But under Modi, not only are our connections cut, we are also being forced to go to courts to face legal charges against us”, he added, while vowing that he would campaign for Modi’s ouster.
In other words, detractors of Modi said that there was nothing wrong in stealing electricity. So much so that the rival Congress Party had promised to write off the unpaid electricity bills if voted to power. And worse, the Party had promised to supply free electricity to the farmers in the villages. Moreover, so “appealing” was this Congress plank that senior BJP leaders in Gujarat had almost decided to copy this in their manifesto, but Modi was not impressed. He ultimately prevailed and the State BJP leaders were told not to be defensive about cutting electricity to the defaulters and punish them on charges of theft.
In my opinion, condoning power-theft is populism at its worst. In order to get votes, political parties encourage people to defy rules, regulations and laws. Let it be made clear that here one is not talking of the subsidies that the Government provides to the disadvantaged sections of the society on various items, though one can legitimately argue that the subsidy regime is simply not working in India. Here, one is talking of the middle class people — the diamond merchant certainly belongs to this class — being averse to pay for the facilities provided by the Government.
They do not want to pay their electricity bills, water charges and even income taxes. They violate all the rules and regulations — we see how in cities like Delhi and Mumbai they encroach on the public properties, add unauthorised constructions in their residences and commercial establishments and so on. And yet, if the law tries to catch them, politicians come to the forefront in not only protecting them but also in justifying their actions! But, Narendra Modi is not one of these populist politicians. He believes in delivering goods to the people provided people pay accordingly for those goods. No wonder that he is disliked by India’s traditional political class and that includes many in his own BJP, too.
Ironically, “populism” is not a wrong concept if one goes by its true meaning. At its core, populism stands in stark contrast to elitism and, therefore, by definition a populist would be against all forms of elitism: social, political and economic. It means being against corporatism. It means fighting those who corrupt to retain their elite status. A true populist relates to the common person because he or she by virtue of their entire background is more of a common person than an elitist. Populists are not part of the establishment; they are fundamentally and aggressively anti-establishment.
The Encyclopedia Britannica provides this useful view of populism: “Political programme or movement that champions the common person, usually by favourable contrast with an elite. Populism usually combines elements of the left and right, opposing large business and financial interests but also frequently being hostile to established socialist and labour parties”.
But if in India or in any developing country, populism has assumed wrong connotations, it is precisely because of the fact that the populist leaders here are essentially statusquoists and pro-establishment — they do not want change; they want captive vote banks, which is possible when the people remain poor and poverty is glorified.
You cannot give free electricity knowing pretty well that it is not sustainable and once the state coffers get emptied by such policies, you do not have funds for growth, development and even for social justice that India’s populist politicians promise. In fact, one may give enough examples of how the populism of the Indian brand actually sustains and help the rich more than the poor.
Ralf Dahrendorf, a member of the British House of Lords once decried successful populists worldwide, saying: “It does not take long for voters to discover that the promises of populists were empty. Once in power, they simply make for bad Government. Populist episodes are signs of an underlying instability that neither serves national progress nor contributes to international order.” One cannot agree with him more. In any case, when one talks of growth and development in this age of globalisation, one cannot progress without rules of law. Nobody will invest in developmental projects and infrastructural developments if one is not assured safety of his investments and returns.
Coming back to Narendra Modi, he is definitely not a typical populist politician. The latest union budget is a glowing example of that. Of course, one is not sure whether his non-populist image will help him in winning the coming round of Assembly elections, something he had proved successfully in every election he had fought as Gujarat’s Chief Minister.
by Prakash Nanda