India’s parliament will begin its budget session today, starting with an address by President Ram Nath Kovind of the ruling
India’s parliament will begin its budget session today, starting with an address by President Ram Nath Kovind of the ruling Bharatiya Janata Party (BJP).
The IMF expects India’s economy to contract 8% in the 2021 fiscal year due to the COVID-19 pandemic. The government’s agenda heading into the session includes expenditure increases, specifically in infrastructure and healthcare, to reinvigorate an economy where the recovery has thus far been fueled by household spending.
The government will also have to contend with protests sparked by the 2020 Indian agriculture acts, which are designed to reform and deregulate agriculture. Distrust of the government by farmers and New Delhi’s unwillingness to make law the minimum support price (MSP) price control mechanism threaten to erode the BJP’s voter base.
As it presents its agenda, expect the BJP not to bow to opposition calls to concede to farmers’ demands or make the MSP law; instead, it will rely on its verbal promise that MSP will continue. Making it law would prove costly as spending ramps up in response to the pandemic’s myriad complications. To placate farmers, expect increased expenditure in agricultural infrastructure. In response, the opposition will likely seize on farmers’ grievances in the 2021 election cycle, which includes India’s upper house, the Rajya Sabha.
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