Sops for youth, I-T relief: How Modi plans to change the note ban narrative

Prime Minister Narendra Modi (Photo: PTI)
The Narendra Modi government and Bharatiya Janata Party (BJP) have planned a blitzkrieg of initiatives to recast the political narrative at the expiry of the “50 days of pain” because of note ban, particularly before the Assembly polls in five states, including Uttar Pradesh, in February-March.

Senior BJP leaders and ministers claim Modi’s rally on January 2 in Lucknow is set to be a game-changer in the note ban discourse. This would also be an opportunity for the Modi government to announce such measures before the Election Commission of India (ECI)’s model code of conduct kicks in after the announcement of poll dates for five states, likely in the first week of January.

According to sources, the Prime Minister (PM) could announce a number of relief measures for the rural population, agrarian sector, and small and medium enterprises ahead of the Union Budget 2017-18. The Budget, likely to be presented by Finance Minister Arun Jaitley on February 1, is expected to announce income tax relief for professionals and greater outlay for primary education and health. 

While the Opposition parties are likely to cry foul at the budgetary announcements as a violation of the model code, finance ministry sources said the Budget was a constitutional exercise and didn’t come under the purview of the code.

The 2012-13 Budget was postponed in view of the elections in five states — Manipur, Goa, Uttarakhand, Punjab and Uttar Pradesh. 

The elections were held in February-March and the Budget session of Parliament, which usually begins in the last week of February, began on March 12 after the polls.

The PM and senior leaders like party chief Amit Shah and Finance Minister Arun Jaitley will also get an opportunity to reach out to party cadres at the BJP National Executive in the national capital. 

Another rally of the PM is likely in Delhi on January 6 and 7. Party sources, however, said the national executive will be devoted to strategising about how the government’s message should reach the public at large.

Since Monday, the government has made efforts to reach out to BJP’s traditional and new support base, comprising traders and farmers. 

On Monday, the government announced a two per cent rebate for small traders and businesses accepting digital payments.

It also instructed the Income Tax Department not to harass small traders for bank deposits below a certain threshold. On Tuesday, the government gave 60 more days to farmers for loan repayments.

Apart from the PM’s announcements, the Budget could provide substantially higher allocations for rural-focused schemes, infrastructure, health care and job creation. Senior bureaucrats say the government has planned a ‘feel-good’ Budget after the ‘pain’ of demonetisation. According to a source in the human resource development ministry, since the PM has taken the ownership of the note ban decision, he is likely to announce the ‘gains’ himself.

“We believe this phase of economic slowdown will last barely two to three quarters. We have the political resilience to withstand this period. Once the economy starts improving, the gains will show,” BJP national secretary Sidharth Nath Singh said, pointing at BJP’s victory in the civic polls, including Chandigarh, on Tuedsay, as evidence that the people were with the PM. 

Singh said economists who criticised the note ban were losing sight of the long-term economic gains from the decision, particularly a wider indirect and direct tax base and lesser printing of currency notes in the future.

Senior BJP leaders estimated the economy would not only recover but also start growing by seven to eight per cent by mid-to-end 2018, a healthy situation for the Modi government to go into the 2019 Lok Sabha elections.

PM’s message for Jaitley
When asked if a number of sops could be announced before February 1, the expected Budget day, an official, aware of the Budget preparations, said: “There is no rule which stops the government to announce measures outside the Budget. The Budget is a fiscal document which presents the Centre’s expected revenue and expenditure. It is up to the political leadership to decide which announcements will be made in the Budget and which will be made outside of it.”

Tax announcements, a part of the Finance Bill, would be announced in the Budget.

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel