In many ways, a watershed budget

By R Gopalakrishnan

Budget 2018 reminds me of a mysterious incident from 1846 at the Vienna General Hospital. Many mothers died during childbirth due to puerperal fever, but curiously, only in one of the hospital’s two maternity clinics. A Hungarian, Ignaz Semmelweis, intuitively felt that infection was carried through the hands of doctors, who also trained at an adjacent cadaver section before attending the maternity section. He persuaded the doctors to wash their hands with soap before delivering babies. The doctors cooperated reluctantly, they thought him to be crazy and unscientific. However the problem did reduce, and later vanished. Semmelweis did not know of the connection between unwashed hands and maternity deaths. The experiments and science emerged later.

The emphasis on health is a huge shift. It is a big step in enhancing social capital, and it will take a lot of will and time to execute; an attempt on such a scale has not been proposed for decades. It is like Aadhar, GST and Swachh Bharat. Overselling the benefits to gain political capital will be suicidal.

Compared to the budgets of the last 70 years, the 2018 Budget has a pointed emphasis on agriculture, education, health and infrastructure. It strikes me as a Semmelweis moment in Indian budgeting – why, how, when, who? Why so many years to do the rational? Was it not Keynes who said that man will do the rational after trying all other alternatives?

Rating of budgets on a 10-point scale is a dangerous exercise. A 7 plus rater is thought to be a chamcha of the government; 3 minus is termed a cynic. A 4-6 rater is a cholic, on-the-fence. Even the critics say that the ideas of this budget are great, but criticise for absence of implementation, math and plans. As French mathematician and scholar Pierre-Simon Laplace had said, “The weight of evidence must be proportional to its strangeness.” The weight of evidence of how this budget will be achieved is not palpable! But there are significant trajectory shifts.

  • The emphasis on health is a huge shift. It is a big step in enhancing social capital, and it will take a lot of will and time to execute; an attempt on such a scale has not been proposed for decades. It is like Aadhar, GST and Swachh Bharat. Overselling the benefits to gain political capital will be suicidal. The finish to this stroke may happen at the hands of NDA or some other government, who knows? The shift is a huge plus point.
  • The change of agriculture trajectory is significant. Now the emphasis is on output marketing rather than on increasing production—for example, MSP increase (though there is uncertainty on cost basis), credit expansion, irrigation, and digitization.
  • In earlier budgets, the majority of proposals were in central or concurrent subjects like industrial production, power, financial services and higher education. If there was a State subject, it was made clear through branding and implementation that it was a Central project with the State support—for example, the Indira Gandhi Awaas Yojana. For the first time, major proposals are exclusively in the State domain. Implementation requires far greater collaboration between the Centre and the States.
  • Political, fiscal, economic and executional vectors are falling into some alignment. Three decades ago, Rajiv Gandhi opened the cracks of decentralisation through constitutional amendments to devolve power to Panchayats, a  political move. A fiscal move occurred through the 9th Finance Commission to share resources between the Centre and the State. An economic shift was achieved by all parties through GST.
  • In the coming decade—NDA or UPA—the laurels will go to the government which is able to forge new ways of working between Centre and State. This is so crucial, and the Indian people are suffering because of fractious politics. 

Political, fiscal, economic and executional vectors are falling into some alignment. Three decades ago, Rajiv Gandhi opened the cracks of decentralisation through constitutional amendments to devolve power to Panchayats, a  political move. A fiscal move occurred through the 9th Finance Commission to share resources between the Centre and the State. An economic shift was achieved by all parties through GST.

Great leaders taught the world how to carry diverse views into a mass movement. In the 1830s, Abraham Lincoln’s political rival, Edward Bates, had said of America, “The country is poised at a dangerous crossroad between sectional disruption and unbounded prosperity…the nation needs voices of moderation and compromise, for only by statesmanlike concession could problems be solved so that the nation could move on to material greatness.” (Team of Rivals, Doris Kearns Goodwin). Gandhiji wrote in Young Indian in 1921, “We glibly charge Englishmen with insolence and haughtiness. Before we cast a stone at them, let us free ourselves from liability to reproach.”

More recently, Nelson Mandela illustrated how to promote collaborative working for the larger public good despite fierce differences of opinion. In his book, The long march to freedom, he writes about his release from decades of incarceration. Should he collaborate and, if so, how could he collaborate with the Afrikaaners who had treated him and his comrades so harshly for so long? “I never sought to undermine Mr. de Klerk, for the practical reason that the weaker he was, the weaker the negotiation process. To make peace with an enemy, one must work with that enemy, and that enemy becomes your partner.”

The Prime Minister now faces a Modi moment. India needs leadership to reach out and honestly attempt a rainbow effect of people policies, irrespective of political parties. To achieve this, we need inclusiveness and accommodation, which can come out of actions as well as body language. The fruits of this budget cannot be realised if the atmosphere is vituperative.

The political leadership must evolve a Mandela approach to create an Indian economic rainbow. Otherwise their political position can become unstable. On 21st December 2002, former Prime Minister Atal Behari Vajpayee wrote the foreword to the 2002-2007 plan document. At that time, India was experiencing declining growth, banks were weighed down by a credit bubble, inflation had come down but still volatile, and new investment activity had tapered off. It feels remarkably similar to 2018. And the ‘India Shining’ campaign brought tectonic consequences. Grandstanding and self-promotion by this government will be counter-productive. Sic transit gloria mundi—and so passes all earthly glory!