FM Nirmala faces tight-rope walk as allies,Viksit Bharat weigh on this Union Budget

For AP CM Chandrababu Naidu, the current key role in the national politics is an unexpected bonus. So, it’s no surprise that Naidu is seeking additional funds from the central government for Greenfield capital city Amaravati, his pet project, and also for other projects including Polavaram, a multipurpose irrigation project. So is Bihar Chief Minister Nitish Kumar, another key ally of BJP. Amid these, the Modi government should also focus on fiscal consolidation.

Nirmala Sitharaman, who retained her Finance Ministry portfolio in the Modi 3.0 government, will present her seventh consecutive Union Budget on July 23. To be precise, this will be her sixth full budget as she had presented an interim budget on February 1 this year before the country headed to the 2024 General Elections in which the Bharatiya Janata Party (BJP) that she represents, returned to power.

But this Union Budget will be the most-challenging one for the Finance Minister. Earlier, BJP enjoyed a full majority in the Lok Sabha, so the saffron party was in complete command. As its tally is now down to 240, much lower than the halfway mark of 272 required to form the government, the Modi 3.0 government is relying on the Nara Chandrababu Naidu-led Telugu Desam Party (TDP) which stormed to power in Andhra Pradesh with a brute majority, Janata Dal (United) led by Nitish Kumar in Bihar and a few others. Obviously, she will have to accommodate demands from both the parties and other constituents of the BJP-led National Democratic Alliance (NDA) as their support is crucial for Modi 3.0. Cumulatively, TDP and JD (U) hold 9.5 per cent of the total NDA MPs.

For Naidu, who lost power to a younger YS Jagan Mohan Reddy of YSR Congress Party in 2019, the current key role in national politics is an unexpected bonus. In the run-up to the 2024 polls, he was just hoping for a comeback in AP as Jagan won the 2019 polls with a massive majority. But the 73-year-old Naidu had not only secured a massive mandate in the Assembly polls, but also won 16 Lok Sabha seats, which came in handy for BJP in forming the government at the Centre. So, it’s no surprise that Naidu is now seeking additional funds from the central government for Greenfield capital city Amaravati, his pet project, and also for other projects including Polavaram multipurpose irrigation project. It is said that Naidu has sought funds to the tune of over Rs one lakh crore, including a massive Rs 50,000 crore for the new capital. Polavaram has already been declared as a national irrigation project. So, it is the responsibility of the central government to complete this major irrigation project with its funds. Naidu obviously wants to expedite the process.

On his part, Nitish Kumar is also seeking his pound of flesh. With its 12 Lok Sabha MP seats, JD(U) is the third largest constituent of the NDA after BJP and TDP. So, he wants airports, liberal funds for the development of infrastructure in his State and a lot more which in total is estimated to require more than Rs 30,000 crore this year itself. Moreover, the demand for Special Category Status (SCS) to the backward State is long-pending, but the chances of the Modi government yielding to such a demand are remote.

Besides TDP and JD(U), there are 34 other parties in NDA though many of them don’t have much muscle to flex. It is to be seen how the Modi government will respond to the demands of its allies in the Budget.

In addition, the Finance Minister has to focus on the goal of making India a high-income country by 2047 when the country celebrates its centenary year of Independence. That means that the first budgetary exercise of Modi 3.0 should roll out a roadmap for Viksit Bharat (Developed India) if the Prime Minister is serious about his ambitious goal.

Further, the country should immediately start making some efforts towards that milestone. So, the upcoming Union Budget should also give details as to what the government will do on this front over the next five years. For India, which is home to over 1.4 billion people, achieving the developed nation status is a Herculean task. As per the parameters set by the World Bank in 2023, a country with a per capita income of $14,005 or more is considered as a high-income country or developed nation. India’s per capita income is around $2,500 now. That means the per capita income should jump six-fold over the next 23 years for India to become a high-income nation by 2047. That’s a tall order, though not impossible.

Amid all these, fiscal consolidation is another challenging task for the Finance Minister and the Modi government. The current dispensation has set a target to bring down the fiscal deficit to 4.5 per cent by FY26. It stood at 5.63 per cent in FY24. This target can only be achieved if the Centre cuts government debt, expenditure and subsidies. Moreover, there are numerous demands for tax cuts, freebies and what not. The Budget should also focus on employment generation. So, the Finance Minister has her task cut out when it comes to the full Union Budget 2024-25.

Further, this may sound strange, but it’s true. Her husband Parakala Prabhakar is a bitter critic of Modi, his governance and his government. Prabhakar even wrote a book titled ‘The Crooked Timber of New India: Essays on a Republic in Crisis’. In this book, he lashed out at Modi. He hates the Prime Minister and his government so much that he had even predicted doom for the saffron party in the recent elections. He went on to say that the Indian democracy would be in peril if Modi was re-elected. Of course, his forecast went horribly wrong.

Despite all this, Modi retained Nirmala as Finance Minister. Sitharaman convinced Modi with her abilities, but she could not convince her husband about the capabilities of the Modi government! Will she be able to do that with this budgetary exercise? Either way, the Finance Minister faces a tight-rope walk for this Budget. Let’s see how it pans out and what signals it emits for the immediate future.