Bihar debacle may weigh on economic policy

After the BJP’s debacle in Bihar and the setback to the reforms in Parliament, the Union government is set to tweak its economic policy. The Union Budget 2016, to be presented in February, will focus on farmers and unorganised workers, traditionally not the BJP’s constituencies.

A highly placed official told The Hindu that the budget-makers are finalising a social security net for India’s 400 million unorganised workers who will access the scheme through smart cards, something that has been in the works for long. There are also plans to enhance funds for irrigation and to roll out a new improved crop insurance scheme — unlike last year’s Budget that focussed on public investments in roads and highways and railways.

“With two successive years of drought, rural distress, especially in the farm sector, will have to be addressed. The unorganised sector workers, too, have to be brought under the social security net as part of the universal security net that the government is working on…,” the official said. He said this expenditure would help to counter the economic slowdown by creating demand.

Another official source, however, said the decision to focus on farmers and unorganised workers was based on the political feedback after the BJP’s rout in Bihar. “The government wants to show that it is pro-farmer and pro-poor, too,… not just working to improve the ease of doing business… and wants to move as far away as possible from the ‘suit-boot-ki-sarkar’ perception,” the source said.

The 2015 Budget belied expectations of big-ticket reforms because of the anti-reforms voices within the BJP and the government after the BJP’s loss to the Aam Aadmi Party in the Delhi Assembly elections. In fact, after the Delhi debacle, the government withheld its plans for even those reforms that Union Finance Minister Arun Jaitley had announced in his maiden Budget in July 2014. These measures, including decontrol of urea prices and withdrawal of kerosene from the PDS, are still on the back burner.

The Finance Ministry on Monday said the Budget-related quarantine would start on January 4.