Markets may cheer but as farm laws show, test is street & House

RIGHT in the middle of a protracted stand-off over farm laws, the Budget Monday proposed a series of radical measures that could set the stage for the next round of political pushback — both on the street and in the corridors of power.

How the Centre does its preparatory groundwork with stakeholders — and the Opposition — holds the key.

More so when it has offered to pause the farm laws for 18 months in the wake of protests and the apex court has waded in as well. Raising the FDI limit in insurance to 74 per cent, LIC going public and privatisation of two public sector banks (PSBs) will need legislative measures and will bring the confrontation to Parliament.

Others like asset monetisation across sectors, privatisation of an insurance company and disinvestment in non-strategic and strategic sectors could also set off protests by employees and unions.

The Centre’s signal Monday is that despite the farm protests, it has taken a call to push reforms that have traditionally been a political hardsell. That’s why this is, arguably, one of the boldest Budgets of the Modi regime.

Sure, the government has the numbers to secure Parliamentary approval for these but, as it has learnt with the farm laws, numbers aren’t enough. Deft political management will be needed for their rollout.

The task is cut out.

Indeed, as the Sensex cheered the Budget, Opposition leaders alleged the Government was selling the family silver via privatisation and asset monetization. The aggressive disinvestment targets, privatisation and monetization of public assets programme were criticized as an attempt to benefit the rich and corporates.

“Forget putting cash in the hands of people, Modi Govt plans to handover India’s assets to his crony capitalist friends,” former Congress president Rahul Gandhi tweeted. Similar was the refrain from Opposition leaders Arvind Kejriwal (AAP), Tejashwi Yadav (RJD) and Derek O’Brien (TMC) among others.

Incidentally, allegations that corporates have been favoured has been a refrain of the farm protests. Significantly, a similar discourse, allegations that the Modi government’s land acquisition reforms of 2014 favoured corporates, had prompted a political standoff and forced the government to eventually abandon the plan in 2015.

Even the RSS-affiliated Bharatiya Mazdoor Sangh (BMS) demanded the government reconsider some of Monday’s proposals.

“Mixing the beautiful concept of Atmanirbhar Bharath with FDI and disinvestment in the Union Budget is disappointing for employees. Government’s proposals to amend Insurance Act to increase FDI in insurance sector from 49% to 74% as well as relaxation of foreign investments in infrastructure sector will increase foreign dependence and should be reconsidered,” the BMS said.

It criticized “aggressive disinvestment” plans like “divesting two Public Sector Banks (PSBs) and one general insurance company, bringing public offer (IPO) of LIC” among others.

Former Finance Minister P Chidambaram raised doubts over the “intent” of the move on public sector banks and cautioned the government.

“A meagre sum of Rs 20,000 crore has been set apart for recapitalization of Public Sector Banks when the requirement is several times more. At the same time, the government intends to privatize two PSBs. The intent of the government is clear: let the PSBs bleed slowly so that they can all be privatized in the short term. Let us see the reaction of the public to this unconcealed desire to sell off all public sector banks,” Chidambaram said in a statement at the Congress party headquarters today.

Likewise for the insurance sector, a promising industry given India’s demographics and the vast number of uninsured, Chidambaram underlined how the BJP had opposed even a modest FDI limit proposal during I K Gujral’s term as Prime Minister.

That’s why the announcement of these proposals provides an opportunity for the government to do the necessary groundwork with stakeholders before they are rolled out and frame them in the context of growth and jobs and opportunities.

For the Opposition, snubbed in Parliament on the farm laws and witness to how street protests forced the Centre to put them on hold for 18 months, this is also a fresh opportunity to corner the government.

One thing is certain: the proposals that got a 5-per-cent thumbs up from the markets have drawn the battlelines of political confrontation — on the street and the floor of House this year.