The new Indian government's first major budget represents a statement of strategic intent, but has, expectedly, been scrutinised through the prism of investor reactions, household polls and headline statistics.
Contemporary budget commentary often converges on sectional interest; businesses, farmers, and householders are viewed as individual, disconnected silos. This budget transcends such compendia, and instead sanctifies a far more important objective: nation-building.
India's post-liberalisation dialectic is also faithful to a largely Western - or more specifically, an Anglo-Saxon approach to economic analysis; the first major post-Modi budget, however, is borne of the multi-dimensional rationality of artha, which is alien to contemporary economic syllogism.
The dovetailing of nation-building framed through an expressly arthik paradigm is therefore at the core of this budget: democratising grassroots economic participation, the primacy of water systems, collectively institutionalised but privately sustained community welfare and low-tax fiscal policy.
These constructs were foundational to India's historical socio-economic pre-eminence, and are amply manifest in a budget attuned to 21st-century India:
1. Welfare Wisdom & Prior Planning for an Ageing India
During the post-war era, much of the newly developed world precipitously lavished taxpayer-funded pension and welfare schemes, and is now facing severe budgetary constraints in sustaining them as their respective societies age. India, unlike Europe, Japan and China, is not afflicted by an ageing society, and for the foreseeable future, will benefit from the unmatched demographic dividend of a giant, young and potentially employable population.
"This budget resists short-term populism to endow India with a future-proof system of financially sustainable pensions, healthcare and welfare, institutionalised beyond the political reach of potentially populist successor governments."
This budget resists short-term populism to endow India with a future-proof system of financially sustainable pensions, healthcare and welfare, institutionalised beyond the political reach of potentially populist successor governments. In a prospectively prosperous and ageing mid-century India, pensioners will become arguably the largest new 'vote bank', as they already are in much of the West; the nation's treasury and tomorrow's taxpayers have been intelligently insulated from taxpayer-funded political bribery through the new publicly managed but privately sustained Universal Social Security System.
Whilst the scheme's subscribers - who will become tomorrow's pensioners - receive initial incentives to join en masse, the viability of the scheme is derived from the economies of scale and scope afforded by India's vast population; policies will cost less than one rupee per day. If this scheme successfully embeds itself within Indian society, these astute, pre-emptive steps will lay the foundation for a welfare society--as opposed to a welfare state.
2. Institutionalising a Stronger Rupee
Many analysts have viewed the budget's gold schemes at face value, overlooking their role in underpinning the Prime Minister's predilection for a strong rupee, the pursuit of which he views as vital to India's evolution into a mature economy.
With this budget, the government has laid the foundations for the conversion of India's rapacious demand for gold into a rupee-denominated trading system via three principle mechanisms: a sovereign gold bond, a gold convertibility and monetisation scheme, and a new Indian gold coin. The direct currency linkages to these schemes, the creation of an internal gold market, as well as the prevention of leakage of Indian wealth to foreign gold sellers will be a game-changer not only for the rupee, but also for the Indian economy, which, according to the State Bank of India, may conservatively leverage up to $100 billion - 5% of India's GDP - through gold deposits alone.
"Most headlines do not explain that 'tax cuts for the super-rich' are balanced by enhanced wealth and corporate surcharges, stricter compliance and a broader wealthy taxpayer base, with the net effect that national coffers are projected to accrue nine times more revenue."
The government's proposed raising of Indian bonds markets to the world-class levels of Indian equity markets will also serve to structurally embed a stronger Rupee.
3. Revitalizing India's Legendary Small Business
The beating heart of sustainable socio-economic success is the vitality of medium, small and micro businesses; as the world is now abundantly aware, economic capacity concentrated within oligopolistic centres of power can often be counter-productive to the quality of life of citizens, and the progress of nations.
During her extensive pre-colonial history as one of the world's largest economies, India's success was sustained by boundless networks of smaller enterprises and cooperatives; this budget's focus on helping small businesses access dedicated (and cheaper) finance, seed capital, incubation, and streamlined, e-enabled regulatory approvals should revolutionise a section of the Indian economy that is bristling with latent potential, and provide a more level playing field vis-a-vis European and American start-ups.
4. The Economic Centrality of Water
India's historical economic success, food security and social stability have been directly linked to her intimate relationship with water; ingenious water management has in fact been India's lifeblood, and for as long as her millions of linked rivers, canals, and intricate waterways flourished, her rural economy - and therefore India's masses - prospered.
Over the past decade, Gujarat's comprehensive revitalisation of river, canal and micro-waterway management has not only helped resuscitate India's dormant water wisdom, but has also reversed the national (and global) trend of depleting water tables.
The Prime Minister's obsession with the tangible benefits of micro-irrigation and waterway-linking is reflected in both of the government's successive budgets, as is the objective of making India the world's organic farming hub. The country is already home to the world's largest number of certified organic farmers, but this is still only the prelude of the government's endeavour to affect a new, pesticide and urea-neutral green revolution.
"Advocating a simple, low-tax regime reflects economic rationality long embedded within Indian statecraft, as exemplified by Kautilya over 2000 years ago."
The genesis of a 'rural soil-health economy' linking village laboratories, rural youth employment, organic produce, farmer education, micro-finance and a technology-enabled agriculture market has also been amply alluded to in this budget. It is not only an innovative solution to the challenge of empowering the nation's hinterlands and negating the classical modern dilemma of uncontrolled urbanisation, but also a contemporary manifestation of India's timeless rural ecosystem.
5. Low Tax Fiscal Policy
The shabby and sometimes intellectually dishonest news analysis of the budget's fiscal proposition conveys a very different impression to the reality of the proposed changes. Whilst headlines scream 'Tax Bonanza for Businesses' - as if lower taxes were somehow detrimental to millions of small firms - the phased elimination of complicated exemptions, the subsequent negation of commensurate (and costly) tax disputes and discretion-derived corruption, and receipts from an expanded taxpayer base will actually significantly increase treasury receipts.
Similarly distortionary headlines do not explain that 'tax cuts for the super-rich' are balanced by enhanced wealth and corporate surcharges, stricter compliance and a broader wealthy taxpayer base, with the net effect that national coffers are projected to accrue nine times more revenue, whilst the tax burden of middle and lower income groups is further reduced.
Advocating a simple, low-tax regime reflects economic rationality long embedded within Indian statecraft, as exemplified by Kautilya, Prime Minister of Mauryan India, over 2000 years ago. Kautilya's prescient Arthashastra, an instructive touchstone for many BJP leaders, was a pioneering champion of a 'broad base - low rate - high yield' direct tax regime, coupled with a 'high trade - universal base - minimal levy' indirect tax regime, both underwritten by uncomplicated, non-discretionary compliance systems designed to minimise corruption.
"This was an expressly nation-builder's budget, borne of philosophical wavelengths that transcend the consciousnesses of contemporary economic or political commentary, and which judiciously reconciles tomorrow's India with that of today's."
6. A Cashless Society
The Pradhan Mantri Jan Dhan Yojana, a scheme providing bank accounts to hundreds of millions of financially excluded Indians, also lays the groundwork for PM Modi's vision of a 'cashless society' - a goal that even Kautilya would extol.
This budget's emphasis on mobile, net-banking and RuPay card usage, further reduced cash transaction limits, and broader suggestions that higher denomination currency notes may eventually be withdrawn from circulation, indicate incremental steps towards a potentially revolutionary system of a near-cashless economy.
This paper-trailed ecosystem would virtually eradicate corruption, facilitate sweeping political funding reform, co-opt India's mammoth 'informal' economy, and in doing so, slingshot India towards its expected re-emergence at the helm of the global economy.
7. A Severely Punitive Corruption Regime
To partially circumvent various international treaties that constrain the retrieval of 'black money', the budget proposes a new law - one of the strictest in the world - which includes up to 10 years rigorous imprisonment, and 300% tax penalties. These new rules, coupled with the pursuit of a cashless society and tax simplification; the broad-based espousal of e-governance and removal of discretionary human contact for public services, licenses, and permissions; and even the installation of face recognition CCTV cameras in government complexes, attests to a sincere commitment to attenuate graft, and mirrors Kautilya's pre-emptive anti-corruption punctiliousness.
8. Universally Accessible Higher Education
The government has also wisely resisted the unsustainable avenue of taxpayer funded university education; instead, via web-accessed soft loans, a system that is universally accessible at the point of use will democratise higher education in India, simultaneously safeguard the public exchequer, and furnish youth with what has been, since Independence, an inaccessible luxury for many.
The budget presents a panoply of further innovate solutions to long-term challenges, including a much-needed focus on the socio-economic inclusion of the world's largest disabled population, the new MUDRA Bank's additional focus on mass financing women-led enterprises, a tectonic shift from insidious 'reservation politics' to actual empowerment, and the revitalisation of traditional, localised textiles manufacturing - another bedrock of pre-colonial India.
This was an expressly nation-builder's budget, borne of philosophical wavelengths that transcend the consciousnesses of contemporary economic or political commentary, and which judiciously reconciles tomorrow's India with that of today's.
Just as post-Independence planners could not rationalise Mahatma Gandhi's call for the reassertion of the Upanishadic Trivarga or Chaturvarga in contemporary statecraft, or that water is not an isolated agricultural concern, but central to India's socio-economic subsistence, it appears that the conscientious institution-building and taxpayer guardianship inherent in this deceptively radical budget, may also not have wholly sunk in.