Abu Dhabi, UAESunday 18 August 2019

Sops for Indian farmers and middle class in election year budget

National cow board also announced in an attempt to woo country's Hindu majority

Piyush Goyal, India's interim finance minister, waves as he heads to parliament to deliver an interim budget for 2019-20 fiscal year in New Delhi on February 1, 2019. Bloomberg
Piyush Goyal, India's interim finance minister, waves as he heads to parliament to deliver an interim budget for 2019-20 fiscal year in New Delhi on February 1, 2019. Bloomberg

India's government unveiled on Friday a raft of budget sweeteners for farmers, the middle class and also cows, as Prime Minister Narendra Modi seeks to shore up support with elections looming.

Thousands of farmers hit by low produce prices, crippling debt and volatile weather have killed themselves in recent years. The plight of farmers and rising unemployment have hit Mr Modi's popularity.

The announcement of a new national cow board to look after bovine welfare and boost dairy production meanwhile was seen as a sop to India's majority Hindus – Mr Modi's base – who believe the animals are sacred.

"This government will never shy away from honouring our mother cow," Piyush Goyal, the interim finance minister, told a raucous parliament as he unveiled the interim budget.

The budget was the last before the country of 1.25 billion people, Asia's third-largest economy and the world's biggest democracy, goes to the polls in elections due by May.

The opposition has been emboldened by a series of state election victories late last year, including in the "cow belt" region of northern India that propelled Mr Modi to power in a landslide in 2014.

Mr Modi and his Hindu nationalist Bharatiya Janata Party (BJP) promised to create millions of jobs and to help India's urban middle classes, who are traditional supporters of his right-wing BJP.

But a crisis in Indian agriculture, rising joblessness and difficulties for the middle class have dented Mr Modi's image.

On Thursday the Business Standard published what it said was an official report buried by Mr Modi's government showing unemployment at 6.1 per cent, the highest since 1972-3.

The government dismissed report, saying the data had not been finalised yet.

Mr Goyal said that 120 million "small and marginal" farmers will receive direct annual handouts of about 6,000 rupees (Dh310), costing the government the equivalent of around $10.5 billion (Dh38.6bn).

The measure was immediately dismissed as insult by the Rahul Gandhi leader of the opposition Congress party, who accused Mr Modi in a tweet of destroying farmers' lives through "arrogance and incompetence".

Other budget measures include a full tax rebate for those earning up to 500,000 rupees a year, providing a tax benefit of about $2.6bn to an estimated 30 million people in the middle class, and a pension scheme for workers in the informal sector who earn less than 15,000 rupees a year.

"Under the visionary leadership of honourable Prime Minister Shri Narendra Modi, we have given the most decisive, stable and clean government and have undertaken transformational structural reforms," Mr Goyal said.

"I can proudly say that India is solidly back on track and marching towards growth and prosperity. We have prepared the foundation for sustainable growth, progress and better quality of life for all our people."

He also predicted that India's $2.3 trillion economy would more than double in size in the next five years.

"We are moving towards realising a new India by 2022," Mr Goyal said.

"We are poised to become a $5 trillion economy in the next five years and we aspire to become a $10 trillion economy in the next eight years."

Mr Goyal said India was expected to expand 7.2 per cent this fiscal year, keeping its slot as one of the world's fastest growing major economies.

Updated: February 1, 2019 02:31 PM

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