Will this year’s Union Budget be populist, as many political pundits, and even some business honchos are speculating about? Here are some reasons why we should not read too much into this so-called budget-elections correlation:

Government, irrespective of elections or not, has to be responsible in handling the newer COVID wave, its related additional costs to the exchequer in public healthcare, COVID vaccination drive, etc. In addition, the budget exercise will have to factor a safety-net of stabilising the economy in case of severer impact of COVID wave -- probably there may have to be another round of fiscal stimulus of sorts to hand-hold the economic sectors. We have seen that the stimulus package did have positive benefits, as we recently saw in a SBI research report on MSME.

With fears of how badly the COVID wave could impact supply chains, the concerns of higher supply side inflation lurk around. To this effect, the RBI has been working to sweep up liquidity, and consequently the long-term bond yields have inched upwards. GoI is an active borrower on the domestic debt markets and any action or inaction on its part, has consequences, for itself and the larger economy.

We don’t have much manoeuvre area in the already tighter fiscal space, as we are in the third wave of COVID. Fiscal deficit pressures would be back of mind for all those involved in the budget exercise. The worry about many states overstretched in their debt exposure and their ability to control their debt limits will continue. Sadly, we forget the fact that any extension of debt lines to states comes at a cost as well.

When posed the question if the Union Budget would be an intrusion to the electoral process’s FairPlay, the CEC commented, “The Election Commission would not like to interfere in the presentation of the Budget because that is for the whole country and not limited to these five states only”.

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A rational expectation from the Union Budget for 2022-23 would be that of announcements of governmental front-loaded investments into infrastructure, and policies that can enhance entrepreneurship and fast-track job-creation. These by any stretch cannot be termed as ‘populist’ or as limited to specific states.

There cannot be any debate on any spends (measurable for impact analysis) that offer infrastructure for citizens daily-living and livelihood. We need to learn that citizenry-welfare-spending is every government’s role & right, and cannot be termed populous. In fact, if not adequately done, it would be even dereliction of duty for an elected government.

While in the past many decades, only the budget event day was used to announce policy initiatives; over the past few years, we have seen that policy pivots are announced anytime in the year. If the government had wanted populist measures, they would have done so many months ago. After all, it is common knowledge as to when those states were due for elections!

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On a serious note, why is a Union Budget having so much prominence as a media-event ? It is the democratic duty of the government to present it on a set-date every year. After all, it’s simply a projection of the statement of accounts of the Government of India for the year ahead!