Annual Budgets and Annual Reactions!

In the days following the Annual budget last week, I saw a clip going viral on WhatsApp which had Uddhav Thackeray, the Shiv Sena Chief and Chief Minister of Maharashtra speaking in a CNBC function to felicitate Finance Minister Nirmala Sitharaman. This clip (watch here) must be couple of years old. In the clip, Thackeray in a very self-deprecating manner, talks about his tryst with giving budget reactions. He says that for few years he tried to understand what’s in a budget but by the time he could do so, it was time for the next budget! But, since as the party chief he had to give some reaction to the budget, he developed a template response which was “This is a budget which will make poor poorer and rich richer” and more often this response for every budget landed well with his constituency. You would notice that even today, this response has a lot of owners among politicians! In today’s article in the Times of India, columnist and now a MP Swapan Das Gupta has mentioned that Vajpayee while in opposition had a stock reaction to any budget which was “Garib ke pet lat” (Kick in the stomach for the poor)!

If there are Annual budgets, there are equal and opposite Annual reactions! It’s therefore clear that one cannot go by the reactions of politicians on the budget to conclude how the budget has been. If leaders of parties and politicians cannot figure out what’s there in the budget how can we expect the common man to understand how it is going to impact him? While we all know that provisions in the budget have a huge impact on the livelihood of millions of people in the country who remain below the poverty line, during the budget week what we hear is only responses of people to whom budgets don’t matter. Those who are impacted by the budget are not in a position to comment because it is beyond their comprehension.

Here’s where I feel that the Budget presentation and the speech needs to be simplified if we want the common man to fully appreciate the implications of announcements being made by the FM on behalf of the government of the day. And here is my wish list on some of the changes I would like to see in my lifetime (I might have articulated some of this before also):

  • Articulation of what matters: In the run up to this year’s budget, the buzz was on jobs. We all know that in the last two years of the pandemic jobs got hit badly. In a double whammy, the pandemic led to a cut in existing jobs and slow addition of new jobs. Human/Contact facing service industry faced the worst hit. So, the expectation was that there will be clear actions to revive the job market. However in the budget speech, there was no explicit mention of job creation. In the post budget interactions, the FM and her team took pains to explain that the government has taken the route of propping up growth by spending which will lead to job creation. For example, they said that the huge 35% increase in outlay towards infrastructure and capital expenditure is a step towards reviving consumption in sectors like steel, cement etc. and jobs. This is logical.  Yet commentators continue to mention about the lack of focus on jobs in the budget.  And Aam Admi obviously feels the same.
    • Now considering that there was an overall anxiety and expectations about jobs among common people particularly those below the poverty line, what if the speech mentioned the estimated number of jobs that would be created due to the outlay? For example, “National Highways network to be expanded by 25000 km in 22-23 resulting in an estimated number of “X” jobs during the year”! 100 PM Gati Shakti Cargo terminals for multimodal logistics facilities which is expected to create “Y” number of jobs!
    • The same outlay but with a clear articulation of what matters like “jobs” this year, I think would generate a lot of confidence and comfort to the people for whom these announcements matter.
  • Putting out Outcomes of last year outlay before announcement of new outlays: During the entire budget speech the FM keeps announcing crores and lakhs of Rupees as outlays for different initiatives much to the loud cheers of the party MPs. But as public, we don’t get to know what was achieved with previous year outlays for the same initiatives to appreciate the new outlay.
    • For example, the health sector has been allocated a 16% higher outlay of Rs. 86200 Crore in this budget compared to last year outlay of Rs. 72931 crores. Now we don’t get to understand details of how the outlay of RS 72931 crores was spent and what was achieved. Another example – During the UPA regime, after the horrific Nirbhaya incident, an announcement was made of a “Nirbhaya fund”. I have no idea if that fund still exists and how the same is being put to use.
    • If we understand that, then we will be in a better position to appreciate the increased outlay for the next year.
  • Articulation of what went wrong: In the budget speech we never get to hear of anything that went wrong on the outlays or the outcomes in the previous year.
    • For example, the targets for disinvestment have been missed for few years now. But we don’t get to understand what went wrong and why those numbers were missed. It could be the procedural delays or timing issues (Bull Vs Bear market) or it could be pandemic related delays. This could be a very utopian thought but if the government of the day articulates the reasons for the miss, it will go in a long way building credibility in the budget process.
  • Articulation of how taxes work: Present a summary of how the taxes that have been collected have been put to use in the current year.
    • Many years ago, on a trip to Colombo, I saw at the heart of the city, some major repair work was going on with the roads and traffic was diverted. There I saw a board which said “Take Diversion. Your Tax money at work”! This was in the early 90’s. The fact that I still remember it and recall it here says about the impact of such earnest disclosures from the government side. What if at the beginning of the speech the FM says, “With the taxes collected last year, we could lay X kms. of roads, build Y number of new hospitals, open Z number of Colleges and schools and so on just focussing on the physical assets created with the taxes this year? Don’t you think that this kind of commentary will once for all remove the clamour for income tax reduction or slab changes or rants for paying taxes year after year?
    • I firmly believe that the common people who earn and can afford to pay the taxes must be co-opted in the nation building process. Such small gestures of earnest disclosures, I believe will go a long way in this.
  • Keep the jargons for The Economic Survey: The speech and announcements are supposed to pick up threads from the Annual Economic Survey. My suggestion is that Economic Survey being a reference document prepared by economists can and should use jargons like “Crowding in”, “Virtuous cycle”, “Animal Spirits of the economy” and “JAM Trinity” etc. while the budget speech should be left simple free of lofty jargons and acronyms.

This is the ace cartoonist R.K.Laxman’s cartoon way back in 1989 post the budget!

This could very well play out the same way even today. The only way to change the same is to simplify the budget speech and ensure that the common people are co-opted into the budget comprehension process.

Nationalistic Congress Sena!

Indian politics in the past seven decades has seen bizarre things. But nothing more bizarre than this. It must be the first time that a pre-poll alliance, after emerging victorious with a clear majority is not forming the government in a show of one-upmanship! When the wrangling between Bharatiya Janata Party (BJP) and Shiv Sena was going on a week ago over the Chief Minister’s post essentially, there was a post which was going viral on social media which said that it is Shiv Sena’s “Grim Trigger Strategy” at play. As per that post, this concept is explained as a special case of non-cooperative strategy in Game Theory, in which co-operation will leave everyone better off and non-cooperation will leave everyone worse off.  Back in 2014 after the Maharashtra state elections, I had alluded to Game theory at play again between BJP and Shiv Sena in my post titled “The Maha Gam(e)ble”! (read here).

The bottom line is, one of the oldest allies in the NDA namely the BJP and Shiv Sena, in the past 6 years, have contested together and stayed together (2014 LS polls), have contested separately but formed government together in a post poll alliance (2014 State polls) and have contested together and not forming the government together (2019 State polls)! This clearly indicates the fragile nature of the relationship between the two allies! Even while being an ally of the BJP, Shiv Sena has been the most non-cooperative and virulent critic of the Modi government since 2014!

It is not clear what the understanding was between the two parties when they sat together and decided to contest the Lok Sabha and then later the state elections together. Notwithstanding the same, having gone to the electorate and sought votes in an alliance and now not honouring the mandate, after the winning a fairly clear verdict in favour of the alliance is a mockery of the elections! It is taking the voters who voted in favour of the alliance for a wonderful ride.

If one looks back at the performance of Shiv Sena in the past many years, it is obvious that the Sena is on a slide. It terms of vote share, in the recently concluded elections, it is back to the 16.4% levels which it had way back in 1995!  On the contrary, BJP’s vote share has grown to 25.75 % levels from under 13% in the same period. Even in the last BMC elections, BJP stormed the citadel of Shiv Sena and got almost the same number of seats as Shiv Sena.  This explains the nervousness in its belly!

As per me, the performance of BJP in the BMC polls should have rung the warning bells for Shiv Sena.   Between BJP and Shiv Sena, there is a clear overlap of the vote bank. In the past, BJP was more concerned about the centre and hence was okay to accede more space to Shiv Sena in the state polls while pitching for a larger space in the Lok Sabha polls. While BJP has been growing its presence in the centre, the problem is, Shiv Sena did not do much to improve its presence within the state in the last 10 years! This is where the crux of the problem lies for Shiv Sena.

Here, ideally the Sena could have taken a leaf out of the books of a similar regional parties like the DMK or ADMK. These parties would always strike alliances with parties in the centre for the Lok Sabha polls essentially based on their strength within the state. While remaining in an alliance, they never let the so called “National party” grow beyond them in the state at any point in time. This means that the National parties, whether it is the Congress or the BJP had to play subservient to the regional parties in the alliance.

In the case of Shiv Sena, due to its own follies, it never grew its presence beyond its conventional vote bank. And in that, it let the BJP erode its core base as well!  When Shiv Sena got their first opportunity to form a government way back in 1994 in alliance with the BJP, it messed it up royally. The Chief Minister was openly dubbed as a puppet in the hands of the then Shiv Sena Chief Bal Thackeray, who took glee in letting everybody know that the remote was always in his hands. The Chief Minister was changed interim and it was not long before that the government was thrown out of power. The backlash was so high that even during the emergence of the NDA and Vajpayee at the Centre could not help the NDA in Maharashtra!

In the past, when parties after having fought against during the elections came together to form the government in a post poll alliance, I have called it a blot on democracy. And we found such similar instances very often in the last 5 years when both BJP, Congress and regional parties were all involved in such post poll alliance arrangements just to be in power! As we saw in Jammu and Kashmir first and later in Karnataka such opportunistic tie-ups remained such and never lasted too long. At the end of the day, the contrasting world views, ideologies, pulls and pressures among these parties cut short the life of such governments. The voters have been repeatedly left high and dry with Maximum filibuster and Minimum Governance in such spells!

It is extremely unfortunate for the voters of Maharashtra who were presented with a pre-poll alliance and voted for the same. I don’t think that this act of betrayal by Shiv Sena will go un-noticed and un-punished by the electorate in the future.  As we speak, Shiv Sena is in extensive talks with the NCP and the Congress to cobble together an alliance. One can imagine the machinations which will be at play in those meeting rooms!

It is funny to see the Shiv Sena Chief Uddhav Thackeray citing the example of BJP and PDP who are ideologically poles apart coming together.  That the experiment failed miserably is there for all to see! Why would one take so much pains to emulate a failed experiment??? Similarly, it is also funny hearing some experts citing the instance of Bal Thackeray supporting Indira Gandhi’s emergency to justify this coming together of the Sena and the Congress! That happened way back in 1977 almost 40 years ago!

Coming back to Game theory and the players involved, BJP has emerged with its stature and image enhanced. It would rue the day it decided to go along with Shiv Sena in the Lok Sabha and state polls!   Shiv Sena is now being seen as a party which would do anything to just have its Chief Minister! As of now, it seems that it may not be a Sena Chief Minister but a Nationalistic Congress Sena Chief Minister! Irony just put its head into a Tiger’s mouth!