Narendra Modi’s budget, in policy shift, expected to focus on rural India


New Delhi: Prime Minister Narendra Modi wants the budget unveiled on Monday to appeal to India’s rural poor, officials familiar with his thinking said, in a strategy shift that could boost his ruling party in coming state elections but disappoint investors.

His government is expected to increase spending on agriculture, health and social sectors, a change from its focus on infrastructure spending and market reforms, they said.

“We will have to reform the agriculture markets, invest more resources to deal with the agrarian crisis – all of this could be an integral part of this year’s budget,” said Ramesh Chand, a member of the planning body Niti Aayog that gave the finance ministry inputs.

“The budget could provide resources to expand the coverage and effectiveness of schemes such as crop insurance, food and fertilizer subsidy, and irrigation,” Chand told Reuters.

On Sunday, a finance ministry spokesman could not be reached for comment on the budget themes.

Modi’s landslide election in 2014 raised hopes he would draw a line under India’s socialist past, cut welfare and reduce the government’s role in business.

In its first two years in power, the government splurged on roads and railways at the expense of welfare programmes in the hope of creating economic stimulus.

Modi’s gamble was that infrastructure investment would eventually generate dividends for the poor and the rural community, which makes up most of India’s 1.3 billion population.


Back-to-back droughts

But rising rural distress after back-to-back droughts and a recent heavy election defeat in a largely agricultural state have upset that calculus.

It has also left the government open to attacks by the opposition, who use a Hindi phrase to deride Modi’s administration as a “suit and boot” government that only works in the interest of the rich. “He is starting all over again,” an official familiar with Modi’s thinking said. “The image of Modi as a supporter of big business has been damaging. This budget will change that narrative.”

The budget is expected to counter criticism ahead of key elections in heartland farming states such as West Bengal this year and Uttar Pradesh next year.

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