“Hai muscular. Hai popular… But Pappu can’t dance, saala!” Modi prefers a slow, steady jog to a vigorous break‐dance. The budget was a clear sign of continuity with incremental change. This newspaper called it a Chidambaram budget with a dash of saffron lipstick. It accepted all the budget projections and future fiscal targets of Chidambaram that BJP had flayed as unrealistic before coming to power. It stuck with retrospective taxation, the old tax structure and old subsidies.
The Railway budget was a diluted version of Congress’ interim rail budget.
Modi has proposed incremental changes but no radical reforms in labour laws, land acquisition, anti inflation strategy, fiscal strategy, subsidies or privatization.
Like Congress, he embraces financial inclusion, public sector bank dominance, public‐private partnerships in infrastructure, higher spending on health and sanitation, food security and Aadhaar. He has built on Congress’ approaches to a BRICS bank and WTO rules on farm subsidies.
His one big change has been abolition of the Planning Commission, but that has few policy implications. Modi has tweaked old Congress ideas, proposing two bank accounts per family rather than one, plus an overdraft of Rs 5,000 per family (shades of the Congress’ old loan melas). MNREGA will be tweaked to create more durable assets.
Analysts say Modi is avoiding radical change till the Maharashtra elections are over. That’s very unlike Thatcher, and more like traditional Congress dithering. Yet incrementalism plus firm, decisive administration is clearly achieving significant gains (just as it did in 12 years of Modi’s rule in Gujarat).
Gone is the administrative paralysis and business gloom of the UPA era. He has disciplined Cabinet members seeking foreign junkets and favours for pals. Files are moving, stock markets are booming, and businessmen are raising record sums for investment.
Environmental rules have been diluted to expedite projects.
Around 15 million tonnes of grain will be dumped on markets to cool prices. Animal spirits have soared. This has not yet created an economic boom. Industrial and trade growth are improving, but slowly. Inflation remains high and bank lending subdued.
The poor monsoon has been a dampening factor, offset by the fall in Brent crude price from $115 to $102 per barrel.
GDP growth could rise to 5.5% this year and 6.5% next year. Incrementalism is unexciting, but can yield steady gains if governance keeps improving.