Every Union budget is shaped by the backdrop in which it is conceived; this year more so than others.

On the one hand, you have a fragile global economy with an unreliable US as its nucleus; domestically, India is still measuring the aftershocks of demonetisation even as corporate India continues to struggle with its funk, precluding new investments. On the other hand, this budget, to be presented on 1 February, comes just three days ahead of the latest round of elections, which includes the biggest prize—Uttar Pradesh. Clearly, the stakes are higher than normal.

So what will finance minister Arun Jaitley opt for in what will be his fourth budget? Good economics, good politics or the perfect score—a mix of both?

Whatever the answer, it will shape the remaining tenure of the government (which crossed its midpoint in December) led by Prime Minister Narendra Modi. Any which way we look, this undoubtedly will be a defining budget; and this is the metric with which it will eventually be measured.

The first two budgets of Jaitley were panned by critics, pining for big-ticket reform commitments (like his predecessors were often wont to do, though never delivering on it—an example being the promise of rolling out the goods and services tax). The third budget, however, seemed to have drawn grudging praise; not sure how much of it was because it was well crafted/presented and how much because his critics finally got the message.

For this year’s budget to deliver the perfect score, it will have to address the obvious challenges facing the Indian economy—and this is not just about investment; it is essentially delivering jobs-friendly economic growth. It is very unlikely, as feared by those lobbying for its delay, that the budget will devote itself to addressing the coming elections through a burst of populist initiatives.

For one, it will be too little too late; Goa and Punjab vote three days after the budget is presented and the other three states will be in the throes of hyper campaigning—the noise from which will drown out benefits accruing from any complicated policy manoeuvres. In any case budget euphoria is always short-lived. Second, it will fly in the face of the defining ideology—empowerment over entitlement—of the Modi-led government. Third, Modi has so far demonstrated, as with demonetisation, his willingness to gamble his hard-earned social capital on unpopular decisions.

Instead, it is very likely that the Modi-Jaitley combine will accelerate the massive re-plumbing (demonetisation would be an example) and rebalancing exercise between India and Bharat (which some mistakenly view as robbing Peter to pay Paul and hence a redistribution of income). In that case, one can safely expect a fresh raft of measures to spur financial inclusion, the shift towards a digital economy, strengthening of the social safety net and so on. And if they are to stay true to their commitment to empowerment then expect several measures towards rebuilding Bharat, as defined by Mint’s budget tag line, ‘Rebuilding Bharat’. Bharat is still defined by agriculture (accounting for 48% employed) and the pathetic socio-economic statistics, something which cannot be fixed overnight—but a blueprint to fix the problem will be a welcome first step.

A boost to agriculture (which by the way is no longer just a foodgrain economy) will not only help alleviate the pressures of a prolonged period of rural distress but also be a short-term palliative. But more enduring will be steps ensuring development programmes survive the last mile and reach the intended beneficiary. The buzz is that the budget is likely to see a radical recast of public spending to fix this problem by introducing a social registry. The ecosystem today—largely because the 14th Finance Commission made states equal stakeholders—is far more receptive to this recast.

For the salaried middle class, no doubt bruised by demonetisation even while it was dealing with a post-boom economy, the FM would have something, just like corporate India can look forward to further ease of doing business and some tax relief. But in all likelihood the FM will finely balance these with other development measures to manage the optics to avoid being dubbed a “suit-boot sarkar" (a government for the rich); but then only to be accused by critics of being populist. You can’t win them all.

Clearly, content alone won’t matter; the crafting of the speech will be equally important. The suspense will be over in a little over two weeks from today.

Anil Padmanabhan is executive editor of Mint and writes every week on the intersection of politics and economics.

His Twitter handle is @capitalcalculus

Comments are welcome at anil.p@livemint.com

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