If you've got it, flaunt it

For nearly 50 years after Independence, well-heeled Indians harboured a certain shame-faced, Gandhian attitude about money: if you had it, you hid it.
And the rich got used to referring to themselves as the ‘middle class’. Finance minister Jaswant Singh’s pre-election mini-budget shows that his party, the BJP, hopes that finally, the ‘middle class’ has shed this diffidence.
The budget is a cornucopia of give-aways for the well-heeled, for “all the Fair and Lovely characters who populate the government’s India Shining ad campaign�, laughs Jairam Ramesh, who heads the opposition Congress’ economic cell. Among other things, taxes and tariffs have been slashed on air travel, VCDs, washing machines, cellphones, laptops, cooking ranges:
if you haven’t got it yet, the FM’s giving you a
discount voucher to go shopping.
Actually, most of this was expected — pre-election budgets are normally generous, finance ministers suddenly become expansive with handouts and tax breaks. What has surprised talking heads and policy wonks is the timing of the mini-budget. Most people expected the announcement to come later this month, pointing towards elections in late April or early May. With Mr Singh blowing off early, the BJP might dissolve the Lok Sabha and ask for elections as early as March-end. That’s one political message in the mini-budget.
The other message is that the NDA’s campaign will revolve around economics, the so-called ‘feel-good factor’ that everybody from deputy Prime Minister Advani to BJP president Venkaiah Naidu has been proclaiming from every available pulpit.
The BJP attributed its early December victory in Chattisgarh, Madhya Pradesh and Rajasthan to the politics of bijli-sadak-pani (BSP) — power, roads and water. Actually, in all three states other things, including caste conflict, anti-incumbency and electoral strategy influenced the outcome. Ironically, the only state where development was the real issue was Delhi, India’s richest state, where incumbent Sheila Dikshit won on the back of reforms. But in any case, the BSP slogan shows that the NDA is willing to take a positive economic agenda as a poll plank.
That’s a novelty for India, where Indira Gandhi’s one-year-long ‘garibi hatao’ campaign before polls in 1972 was perhaps the only other time in recent history that an economic agenda — not caste, religion or regionalism — figured in a political campaign.
Sadak-building is already on, funded by fuel cesses and there’s little that Mr Singh could have done about pani, a state subject. But he’s scrapped all central taxes on water supply projects. Throughout India, bijli is a scarce commodity. So, the mini-budget tries to do its bit for the electricity sector, which is undergoing some sort of revival after years of stagnation.
The poster state for power reform is Delhi, where private players — Reliance Energy and Tata Power — have started retailing electricity, cracking down on theft and providing quality and uninterrupted supply to customers. The same companies had lobbied with the government to remove fiscal distortions that hobbled transmission and distribution (T&D). Mr Singh has obliged — partially — by cutting taxes on T&D gear.
Without a proper parliamentary budget, Mr Singh’s hands were tied on direct taxes: you can’t play with those rates without legislative sanction. Nevertheless, within a short time, hurried along by the relentless push of early elections, the finance minister has attempted a please-all budget laced with heady handouts. Will the feel-good cocktail get voters all pumped up to vote for his party?
Well, Indira Gandhi famously won her 1972 mandate, but most people believe that her military victory over Pakistan in the December 1971 Bangladesh war was the real reason for victory. Rajiv Gandhi, the first prime minister to try to turn India around from socialism, lost the huge majority he had to VP Singh’s divisive caste campaign.
PV Narasimha Rao, who led the reforms of the early 1990s, didn’t even dare make economic liberalisation a campaign issue. He lost. If the past is any indicator, economic feel-good campaigns don’t stand much chance. To push the happy-happy feeling, the NDA has to believe that there has been a fundamental shift in the mindset of Indian voters.
The trouble is, issues have a remarkably short shelf life in India.
Today’s feel-good India Shining stuff can get overtaken by tomorrow’s Bollywood blockbuster or a cricket match or a natural calamity; turn into a cliché or a butt of jokes in a few weeks or months. If the NDA wants to capitalise on the soaring sensex, bloated reserves and the warm afterglow of the mini-budget, it has to go on the poll roadshow right away. After all, whatever the final outcome, nobody can blame Jaswant Singh for stinting on the goodies.