Budget 2018 – Attempt to appease voters

It was Arun Jaitley’s fifth and last budget in the current term of the Narendra Modi government; though the news oozing in from Rajasthan was disheartening for the Bharatiya Janata Party. Gujarat too was another shocker for the ruling party as the win was not so easy for Modi. The Budget that Jaitley presented with increased allocations for agriculture, rural infrastructure and for the poor — is likely to add to this speculation. Events in the next few weeks, including the results of the Karnataka assembly polls, scheduled for April-May 2018, would tell us whether the Modi government might indeed advance Lok Sabha elections. Motivated by the success of various schemes to check black money, government has assured to take more such initiatives in the future to deal with the menace. The budget was fairly good on optics, reasonable on guidelines, sensible on specifics and overall not too individualistic. With this last Budget, before the general elections, party manages the fine line. And the Modi government has adopted a new buzzword for this year — “Ease of Living”. And formalisation of the Indian economy seems to be the big theme that underlines the Budget.

The focus on 18,000 km doubling of tracks, the highest ever for a year, 5,000 km of gauge conversion and elimination of unmanned level crossings, some 4,200 of them in two years, will continue. By building third and fourth lines in already choked routes, the vision is to expand capacity and efficiency of operations.

Ever since taking over, Railway Minister Piyush Goyal has emphasised on two other fronts: track renewal and electrification. With safety being major focus areas, Jaitley mentioned 3,600 km of track renewal will take place by the end of this fiscal while a similar number is planned for the next. At the same time, 4,000 km of electrification next year will take the rail system closer to its goal of total electrification in about three-four years.

Mumbai local train network will see 90 km of doubling of tracks and increasing the capacity to run more trains with better efficiency. The total outlay for the project is Rs 11,000 crore. By deciding to expand the choked suburban networks in Mumbai — where the system is bursting in seams — and in Bengaluru, Railways has renewed its focus on what is called the life line of the cities, at least in Mumbai. Similarly, by deciding to expand the suburban network in Bengaluru, in poll-bound Karnataka, by 160 km, and pumping in Rs 17,000 crore for that, the government appears to be signaling a reboot of the development of the loss-making suburban services, whose ticket prices are highly subsidised and the clientele is so price-sensitive that any hint of a fare hike has always been considered a political self-goal.

Modi government has burnt its fingers once in 2014 when it had to roll back a proposed hike in local train fares following protests from Mumbai politicians. Recently, the all-AC local train with higher fares has received heavy patronage, giving Indian Railways the signal that maybe the suburban commuters don’t mind paying if there is a definite upgrade to the archaic system. The Budget’s roadmap to invest and expand cum upgrade this system therefore needs to be seen in that context.

The move to spread the web of WiFi and CCTV in all trains and stations progressively is a bold announcement. While the key word here is “progressively”, this would make India the only railway system with end-to-end WiFi coverage for its passengers. Countries like China generally offer this facility to premium products like high-speed trains. Similarly, Railways has in the past, argued that WiFi in a moving train is an expensive proposition and considering most trains are running on sub-optimal tariffs, the value added cannot be justified financially, at least for most trains. The Budget announcement, therefore, means in Modi’s long-term Digital India scheme of things, Wi-Fi in trains is not an optional value add but part of the standard service. Railways under Goyal recently changed its metric of classifying stations. Instead of annuals earnings, stations are now categorised in terms of footfalls. Therefore, the announcement that all stations with over 25,000 footfalls to have escalators, translates into a mammoth project, this could mean most of the 8,000-odd stations will get escalators.

In one of the most important initiatives for the rural economy, Jaitley has announced that as a principle, the minimum support price for agricultural crops will be at 1.5 times their production cost. “NITI Aayog, in consultation with Central and State Governments, will put in place a fool-proof mechanism so that farmers will get adequate price for their produce. The government in the last two financial years, on account of anti-evasion measures, collected an excess amount of about Rs 90,000 crore. MSP of 1.5 times cost of production was Modi’s 2014 election slogan. He needs to tell the public how much is this 1.5 times means. Or a farmer has to fill 13 pages on NET to explain a cost of production of his produce?

In his Budget speech, the FM said that the emphasis of the government would be on generating higher income for farmers. He said that the government was committed to give 50 per cent more than cost of crop production to farmers. Jaitley said that the government will ensure farmers get MSP if prices fall and the NITI Aayog will discuss with the state governments for mechanism to ensure farmers get better prices. Increase the number of women provided cooking gas connections under the Ujjwala scheme from the earlier target of 50 million to 80 million.

Expansion and upgrade are the hallmarks of the Budget announced for the country’s age-old railway system. Finance Minister Arun Jaitley pegged the capital expenditure target of Rs 1,48,528 crore for Railways, the highest ever. But more significantly, only about a third of this money is to be funded from the general exchequer’s coffers. The remaining will be funded through borrowings and monetisation of assets in various forms and shapes.

Over all the budget was people-friendly and PM Modi’s speech was very much convincing too.

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