Narendra Modi’s government will unveil India’s budget for the 2019/20 fiscal year today, just three months out from a general election.
Custom dictates that pre-election budgets do not contain tax changes nor any substantial spending programs—a move designed to allow a post-election government free rein over its economic policies.
While a reported corporate tax cut is unlikely to materialise, Interim Finance Minister Piyush Goyal is expected to announce spending measures designed to appease rural voters. These include a farm relief package worth $14 billion and $25 billion in food subsidies.
PM Modi’s ruling BJP has lost control of Chhattisgarh, Madhya Pradesh and Rajisthan in state elections since November as disillusioned rural voters desert the Hindu nationalist party. Winning them back will be key for Mr Modi’s electoral prospects come May. Meanwhile, the opposition Congress party announced on Monday that it would launch a universal basic income for India’s poor in a bid to push home its advantage among farmers and low-income voters, who have been hit by rising costs and low agricultural prices.
Ultimately, today’s budget is unlikely to have significant economic implications; the deficit will remain at 3.5% and growth is forecast to clock in at 7.5% in 2019, maintaining India’s position as the world’s fastest growing major economy. The real impact will be felt when voters head to the polls in April and May. For that test, Mr Modi remains the favourite.
Wake up smarter with an assessment of the stories that will make headlines in the next 24 hours. Download The Daily Brief.
Simon is the founder of Foreign Brief who served as managing director from 2015 to 2021. A lawyer by training, Simon has worked as an analyst and adviser in the private sector and government. Simon’s desire to help clients understand global developments in a contextualised way underpinned the establishment of Foreign Brief. This aspiration remains the organisation’s driving principle.