Governments, going by past examples, have in the election years presented either an interim budget or a vote-on-account.
Days before handing over the finance ministry charge to Piyush Goyal, Arun Jaitley had indicated that the government could break convention and make the February 1 exercise more significant than a vote-on-account. Speaking at an event on January 17, Jaitley had said the larger interest of the economy always dictates what goes into the budget, including addressing some of the challenges.
“The convention has always been that the election year budget normally is an interim budget and ordinarily there should be no reason why we should move away from that convention. But then the larger interest of the economy always dictates what goes into the interim budget and that’s something which cannot be discussed or disclosed at this stage,” Jaitley had said at the CNBC-TV18 Indian Business Leader Awards, appearing via video-conferencing.
Amid speculation that the government may go ahead with a full budget, former finance minister Yashwant Sinha had on Monday said it would be “entirely improper and unconstitutional” if the Modi government presents a full budget ahead of the Lok Sabha polls, as he asked it to stick to the convention of outgoing dispensations presenting an interim budget.
A strong critic of the Modi government, Sinha also accused it of “dressing up” economic figures despite the country facing an “unprecedented” agrarian distress, employment not picking up and the huge non-performing asset (NPA) problem being not tackled the way it should have been.
Meanwhile, Jaitley had earlier also hinted that a farm relief package for distressed farmers may be a part of the budget.
Referring to talk about a relief package for farmers, Jaitley said that the farm sector has been facing challenges, and the markets will tend to understand if an approach is rational and not populist.
“Markets will never understand if you act for the sake of populism. But if it’s in the larger interest because of a compelling situation that develops, that’s a logical thing that markets tend to understand,” Jaitley said.
Jaitley, however, did not give any other details regarding the relief package. “Without getting into the specifics, because that would be disclosing the mind in which we are working, (I can say that) you cannot opt to wait on some of the challenges. Therefore, obviously, there will be a necessity to address them. It has happened in the past. So we intend to work within the parameters of the conventions as they exist,” said Jaitley, who is now a minister without a portfolio.
On January 17, Agriculture Minister Radha Mohan Singh had also indicated an announcement of major measures in the coming weeks to address farm distress across the country, a move that will come ahead of Lok Sabha elections.
The agriculture ministry has prepared a Cabinet note on “addressing income deficit syndrome of small and marginal farmers” proposing various steps, including a financial package and interest waiver for timely crop loan repayers, PTI quoted sources as saying.
India’s fiscal deficit may widen by 70 basis points in the fiscal year 2019-20 if the government decides to roll out a relief package for small and marginal farmers, according to a report by India Ratings and Research (Ind-Ra).
“In case the government decides to pay Rs 10,000 per acre annually to small and marginal farmers, under ceteris paribus condition, this will push the Centre’s fiscal deficit by 72 bps in FY20. Though not an easy option, if opted, it will delay the rate cut process,” India Ratings said.
The news comes in a time when there is a mounting pressure on the ruling BJP to announce a package for the farm sector owing to farmers’ protests. The move may play a key role in the upcoming Lok Sabha elections 2019.
Catch the Biggest Newsmakers and the Biggest Newsbreaks on CNN-News18, your favourite English TV news channel. Keep watching CNN-News18 at just 50 Paise per Month. Contact your cable /DTH operator Now!
*Rental / capacity fee of Rs.130/- as charged by cable / DTH operator may apply. **GST extra.