Politics
No ‘Khatakhat’ This Time: Three Possible Reasons We Didn’t See Any Mega Handout Schemes In Budget 2024
- There were enough reasons to go in for ‘khatakhat’ in this budget. But the government didn't go down that road.
PM Modi is not a fan of "khatakhat" programmes
Everyone expected it, but the ‘khatakhat’ never came. The Finance Minister instead went for what can be described as incremental changes at best.
The supporters of the government were looking at Budget 2024 as a political opportunity. The government, it turns out, treated it as a purely fiscal exercise.
So, why was there no ‘khatakhat’ announcement in Nirmala Sitharaman’s speech today? Here are three possible answers:
1. Moved ahead to Budget 2028, 2029
The recency effect is a powerful phenomenon, especially on a large scale. The policymakers inside the government may have decided that they would get more bang for the buck if freebie announcements, if any, were made in 2028 as compared to 2024.
In 2028-2029, the next Lok Sabha election will only be a few months away. Today, the next election is still five years in the future. Any ‘khatakhat’ announcement today is unlikely to have an effect on voting choices five years later, in 2029.
If you have to be accused of being fiscally irresponsible, you might as well get the political rewards for it.
However, there is a counter-argument to this idea: assembly elections in Haryana, Jharkhand, and Maharashtra later this year.
A Bharatiya Janata Party (BJP) loss in Haryana would likely provide a boost to the forces that organise themselves in the garb of ‘farmers’ organisations’. A ‘farmers’ protest’ 2.0 was prevented from reaching New Delhi in 2023 by the Haryana government. If the government in Haryana changes, there will be costs to pay on that front.
Maharashtra is inarguably the most important state in India economically and perhaps the most important politically. Narendra Modi and Amit Shah have spent a lot of their political capital in Maharashtra over the last five years. A potential loss in the state later this year would make for a graver setback than assumed at the moment.
Of the three, Jharkhand is the only state where the BJP is challenging the incumbent INDI Alliance government. A loss in Jharkhand would indicate that the electorate is beginning to conclusively prefer the governance of the Congress over the model of the BJP.
Given such high stakes, the Finance Minister had enough reasons to go in for ‘khatakhat’ right in this budget itself.
There are enough indications that Narendra Modi has a principled opposition to programmes that can be termed ‘freebies’.
In the run-up to the Lok Sabha election 2024, and even after Rahul Gandhi-led Congress had promised a slew of handouts, the BJP did not take that route.
Even today, it was largely expected that the amount for PM Kisan Samman Nidhi would be increased. That did not happen.
There were reports during the Chhattisgarh assembly election 2023 that the state BJP unit wanted to roll out a grand manifesto of handouts. They were checked in their path, reportedly by the Prime Minister himself.
Whatever ‘khatakhat’ we see from Modi, like Kisan Samman Nidhi or the free ration scheme, it may be that he sees it as necessary social support and is not willing to raise it to a level where they become raw freebies.
Already, the free ration scheme, along with some others, is facing charges of having affected the rural labour market adversely.
3. Alternatives are the answer
It may be that Modi believes the pressing issues are dealt with adequately by the current announcements.
The most highlighted issue in the current discourse is the demand for jobs, which on closer look reveals itself to be a demand for stable and/or white-collar jobs. It might be that PM Modi believes that the solution to that problem is not ‘khatakhat’, but a consistent push for formalisation of the economy, which would automatically lead to more formal jobs.
For example, the Economic Survey released on 22 July revealed that only about half of the graduates in India are deemed employable. Perhaps PM Modi believes that this problem will not be solved by handouts, but by the apprenticeship and skilling programmes that his government has announced in the budget.
The anxiety of his supporters is understandable. The cost of Modi not giving into ‘khatakhat’ could well be that he is replaced by Rahul Gandhi in 2029, who would then go in for ‘khatakhat’ dialled up to 11.
Macroeconomics is just another branch of politics. But perhaps for PM Modi, all politics is an extension of his long-held principles.
