What does one expect of a budget that comes in the backdrop of an earnest appeal by the Prime Minister Narendra Modi at Davos inviting CEOs to make in India? The budget also comes after a hard fought election in Gujarat, social indicators struggling to improve, increasing unease in the rural sector and oil prices trending upwards. For the international community, India has always been difficult to understand, usually perceived as a mystic and exotic subcontinent. But now the paradoxes are emerging clearly and threatening its position in the international arena of business and politics. Democracy and dictatorship, Rule of law and interference in the judicial, fast paced economic growth and abject poverty, self sufficiency in food grains with widely prevalent malnutrition are some contradictions that baffle all interested parties.

India is still an inward looking protectionist economy with import barriers on various goods and services ironically arguing against protectionism. It is a large and young middle class market going on to become the biggest by 2025. However, the quality of the workforce, health indicators and educational attainment are abysmal. We have a diverse country that performs very poorly on the inclusion test. In the World Economic Forum’s 2018 index, that measures progress on individual pillars -- growth and development; inclusion; and inter-generational equity, India was ranked 60th among 79 developing economies last year, much lower than China at the 15th and Pakistan at the 52nd position.

Given this situation, what do we expect the Finance Minister Arun Jaitley to do when he presents the Union budget on the 1st of February? There are a number of challenges he must address starting with an upturn in oil prices exacerbated by a rupee value that refuses to improve beyond Rs 63.80 to a dollar. If the rupee falls, the import bill goes up further after it has already taken a hit because of rising crude prices. Also, while India had been receiving foreign money, Investment flows are going to be diverted and lowered as the big economies change their tax and interest rate policies.

Let us discuss a select five expectations from the budget. Firstly, health and education must occupy centre space and the outlay for both these should go up significantly. At the moment the total expenditure on health is below 4% of the GDP while the government expenditure is below 1% of GDP. The New Health Policy promises to increase this to 2.5. On education again, the government expenditure is below 4% of GDP and must go up to 6.5% quickly. Given fiscal pressures. There is nothing more important that the budget can do, but this expectation might just turn out to be wishful thinking in a difficult year with fiscal pressure and tepid economic growth.

Secondly, a focus on the rural and the farm sectors that have been ravaged by demonetization. Informal and unorganized, these sectors that employ more than 400 million of our workforce were forced to cut jobs, slash prices and dump inventory to handle the situation they were faced when cash disappeared from the system. Do we expect populist measures like hikes in Minimum Support prices, additional farm loan waivers and an hefty increase in MNREGA (Mahatma Gandhi National Rural Employment Guarantee Act) wages? Or will we see additional funds going into building rural roads, warehouses, mandis and refrigerated cold chains?

Thirdly, on the fiscal front there is an expectation yet again that direct tax rates for the middle class will get reduced. The incidence of tax will go down in two ways, by way of a lowering of the tax rate and by way of an increase in exemption limits. However, this measure will be fraught with danger as the indirect tax collection, despite GST , has been modest at best and therefore the pressure on the fiscal situation is high. However, elections in key states are around the corner, followed by big Union elections that could very well be moved up to this year end. Will the FM fight the temptation to give some sops to his loyal voters?

Fourthly, one promise that has been haunting the ruling party is that it would get black money stashed abroad and put Rs 15 lakh in every bank account. This question comes up in all opposition party narratives and must hurt. Will the Finance Minister then use the nine year old idea of a Universal Basic Income, mentioned in the 2009 Economic Survey, and directly transfer some amounts of money to a targeted group? Vulnerable sections like Dalits, single women and landless labour might be the first beneficiaries. The signal this would send is strong indeed, but where will the money come from. If done judiciously and in a targeted manner, this would cost about Rs 20,000 crore a year.

Lastly, the issue of jobs. India’s unemployment The other major challenge is in job creation. Surplus agriculture work force migrates to urban centres looking for employment, but as the export sector and the MSMEs suffer, there are no jobs for this semi skilled work force. The budget could help if it allows private sector investment to pick up again with increased savings rates. The FM must spend to catalyse investment and take India back to the 40% rates of 2008. That is when growth will return and jobs get announced. The PM has promised a prudent budget, the FM must deliver.

( Amir Ullah Khan is Professor of Economics at the Maulana Azad National Urdu University and Visiting faculty at the Indian School of Business.)

( The views expressed in this article are not those of Fortune India)

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