PM Modi’s 50-minute televised speech had something to offer everyone
Prime minister Narendra Modi turned Santa Claus on New Year's eve, unveiling a pro-poor mini budget, just before the election code of conduct in five states. In the give-and-take relationship between politicians in the government and the electorate, PM Modi’s demonetisation move has taken a lot out of people, now absorbed, it was time to give. So, a host of goodies as compensation for most that bore the brunt of demonetisation and a painfully slow remonetisation process.
Modi had something to offer for everybody. His thanksgiving speech turned out to be a delight for aam aadmi minus tax proposals with sops translating into expanding BJP’s support base, showing how the PM has migrated to the centre of political vector. The jibe —suit boot ki sarkar — is a distant dream. From bearing expenses of pregnant women up to Rs 6000, eight per cent interest to senior citizens’ deposits with ten-year lock-in, to providing 60-day interest concession to farmers, Modi’s articulation is targeted at deriving rich dividends in polls for five legislative assemblies in Uttar Pradesh, Punjab, Goa, Manipur and Uttarkhand.
While political appeal was loud and clear, two major housing schemes for both urban and rural poor with huge interest subventions to revive demand in real estate sector, hit in a big way. These will not only help the party expand base but boost bank credit off-take that slumped to 6 per cent in December 2016. Modi’s move to double the credit guarantee limit to Rs 2 crore will help the ruling party win back the small and medium businesses that were seriously battered due to demonetisation. Modi seems to have cleverly crafted the incentives for SMEs and businesses — traditional vote base of BJP — by enhancing working capital expenses to 25 per cent from 20 per cent of total investment. The rider that enhanced expenses limit can be availed only by moving to digital payment is significant in the government scheme of reforms. He reserved the biggest of sops for the farm community that faced maximum disruption during the rabi sowing period. Apart from bearing the interest cost for two months, Modi’s offer of more loans through cooperative banks and credit societies will help the rural economy limp back to normalcy. The Rs 20,000 crore set aside from black money accruals is in addition to the Rs 23,000 crore already sanctioned last month to be disbursed to farmers via the much tainted cooperative banks and Nabard will alleviate the rural woes. It would not only help ease liquidity crunch but routing disbursals through coop banks. Converting three crore kisan credit cards into Rupay will nudge farmers going digital. A back of the envelope calculation puts cost of these goodies over Rs 50,000 crore, while most of it is due to interest subvention on housing and farm loans. He warned errant banks and officials involved in jiggery pokery of dire action.
Modi admirably made the demonetisation campaign as a raging war between honest and dishonest corporates and individuals, while giving an all-Hindu touch by terming it as “shuddi Yagna” (cleansing ritual) that appeals to the largely Hindu base of Sangh Parivar. However, no specific step was announced to cleanse black money peddled by political parties. He did not elaborate on actual black money unearthed. Perhaps, he has reserved some of his plans for budget on February 1. However, this is best left to RBI. And they will provide the answers shortly.