Three Phases of FM : Eat, Pray, Hope

It started bombastically – enjoying the fruits of political success. It slid rapidly into pandemonium, and in deafening, earsplitting, and viral pleas. Then came a belief – loads of it
By Alam Srinivas
  • Nirmala, fifth fM, delivered five consecutive full Budgets under the same regime, joining the elite list with Desai, Singh, Chidambaram, and Jaitley
  • Sitharaman, as FM, delivered the longest Budget speech in history at 160 minutes in 2020. She replaced the traditional briefcase with a ‘Bahi Khata’
  • Facing various challenges, the politician-FM navigated economic and business turbulence, employing political rhetoric to deflect criticisms and manage crises
  • Welfare scheme payments, now 3% of GDP, heavily impact budget allocations. States emulate, fostering loyal voter bases, securing power

IT started with a political high. And an economic low. Prime Minister Narendra Modi was on Cloud Nine. Finance Minister Nirmala Sitharaman had to dispel the dark clouds that engulfed the country’s economy for valid reasons. Against all odds, the BJP, on its own, crossed the 300-seat mark in Lok Sabha elections. Thanks to the odds, India’s GDP sank in the post-demonetization period. This was the scenario in 2019, when Modi rode again to power, and became the Prime Minister for the second time. Sitharaman was anointed as the first full-fledged and independent woman finance minister.

This year, Finance Minister Nirmala Sitharaman has made history by presenting her sixth consecutive Budget. This includes five annual Budgets and one interim Budget. This remarkable achievement has only been accomplished previously by former Prime Minister Morarji Desai. With the presentation of the interim Budget on 1 February, Sitharaman has surpassed the records set by her predecessors such as Dr. Manmohan Singh, Arun Jaitley, P Chidambaram, and Yashwant Sinha, all of whom had presented five budgets in a row. With MA and MPhil from JNU – under BJP’s repeated ideological, cultural, and academic attacks – Sitharaman worked in private and NGO sectors, with a fleeting fling in academia. As FM, she gave the longest Budget speech in history, which lasted 160 minutes in 2020 due to health issues. She ditched the traditional ‘Budget Briefcase’ that every FM carried for decades, and opted for a ‘Bahi Khata’.

Over five years, she was unable to find stability and could not balance on her feet. She jumped onto the political gravy train, as the gains stared her in the face, and economics could be buried under the cheering crowds. But, on and off, she grappled with the economic engine that invariably ran short of steam and coal, or diesel and electric power. Through several ups and downs, on different roller coasters, the politician-FM tried to balance herself with feet in two boats. She used political rhetoric to fend off economic criticisms and business crises. She wanted to be known as a politically-savvy economist.

Pomposity, laden with large doses of politics, marked her first economic document, her vision embedded in her first Budget. Like strong and effective political slogans, she quoted Chanakya, India’s first genius in political economy who, 2,000 years ago, linked practical truisms in politics and economics

Pomposity, laden with large doses of politics, marked her first economic document, her vision embedded in her first Budget. Like strong and effective political slogans, she quoted Chanakya, India’s first genius in political economy who, 2,000 years ago, linked practical truisms in politics and economics. “With determined human efforts, the task will surely be completed,” she flung a verse from Chanakya’s Niti Sutra. “If you believe, a path will open; using a breeze’s cover, a lamp will brighten,” she followed it up with an Urdu verse.

After Independence, it took 55 years for annual GDP to reach a trillion dollars. Between 2014 and 2019, during Modi’s first reign, it grew at a compounded annual rate of nearly 8% to $2.7 trillion. This was possible because of “aasha, vishwas, and akansha,” or hope, trust, and aspirations. “So, when we aspire to reach a 5 trillion-dollar level, many wonder if it is possible. If we can appreciate our citizens ‘purusharth’ or their ‘goals of human pursuit’ filled with their inherent desire to progress… the target is eminently achievable,” she boldly claimed.

Many experts considered it a political statement, rather than an economic blueprint. In the next five years, she ducked this dream, or had no choice but to, as India, like other nations, found itself in the giant-like tentacles of a menacing virus. Unlike other nations, the country was forced to fight other demons such as the after-effects of demonetization, consequences of tax and debt terror, feelings of fear and loathing within the business community, middle class muddle, and bitter truths about rural poor. Sitharaman was bang in the middle of this confusion, chaos, mindlessness, and madness.


Was she prescient? Was it a coincidence? Who advised her? We do not know, but one wonders if the Finance Minister was plagued, distraught, and troubled by something she said in the first Budget speech. Did she realise that it would boomerang on her government? It was a verse from a treatise from Tamil Sangam era, which was sung as an advice to a king. “A few mounds of rice from paddy that is harvested from a small piece of land would suffice for an elephant. But what if the elephant itself enters the field and starts eating? What it eats will be far less than what it would trample over!”

Not one, but several elephants marauded India’s economic fields over the next two-three years. According to World Bank data, GDP growth sank to less than 4% in 2019. It had tumbled downwards each year since 2016, when it was over 8%. A few brave businesspersons expressed their emotions about the atmosphere of fear. In December 2019, at a swank, well-attended corporate awards ceremony, Rahul Bajaj talked about the issue, including tax terrorism. Kiran Majumdar Shaw, the owner of Biocon, tweeted, “So far, we are all pariahs n govt does not want to hear any criticism of our economy.”
At the meeting, Sitharaman was present. So was Home Minister Amit Shah, and RBI Governor, Shaktikanta Das. The finance minister responded that theirs was a government that “listens, whether it is a criticism or input.” But then she lashed out that “if such impressions gain traction, (it) can hurt national interest.” Suddenly, as was the case with other issues, economic criticism was akin to being anti-national. Years later, Sitharaman remained pickled, rankled, and pained by such comments. At the same awards ceremony in 2023, she said, “Tax terrorism is an anathema, but the authorities won’t remain mute spectators of brazen misuse of tax provisions.”

She went on to give an example. “Shell (empty) companies, about 300 of them, operating in about 50 sq m area, with just one table and a few chairs, and getting tax refunds to the extent of (Rs) 400 crore! Would you expect the (tax) department to sit, wait and watch?” she questioned. Ironically, in her first Budget, the finance minister acknowledged the existence of “certain undesirable practices on the part of tax officials,” which forced the government to discard tax scrutiny via “high level of personal interaction,” and adopt “faceless assessment in electronic mode involving no human interface.”

Possibly, Sitharaman felt that she was being unnecessarily attacked. After all, the government introduced GST, which pleased every honest businessperson, reduced 17 taxes and 13 levies into one, lowered rates, replaced dozens of returns into one, eliminated checks at state borders, and allowed goods to travel freely without delays and efforts. An average household, she said in 2020, saved 4% on monthly spends due to lower GST tariffs. However, the business community felt that it was being targeted as the tax officials had greater powers.


By the time Sitharaman presented her second Budget in 2020, despite the unsavoury comments by Bajaj and Shaw, and muted charges of debt dread due to the insolvency code, she was still on a political roll. The 2019 electoral victory indicated that Indians had “unequivocally given their jan-desh for not just political stability and also reposed faith in our economic policies.” She hinted that “higher growth” was within grasp, and economic fundamentals were strong. The Budget would boost people’s incomes and enhance their purchasing power.

For millennia, Indians had proved their entrepreneurship. “The guilds of Saraswati-Sindhu civilization and the Harappan seals are remarkable,” said Sitharaman. Words from the Indus Script-hieroglyphs in those seals were deciphered. They revealed commerce and trade related words such as “Takara Kolimi=Tin smithery,” “Sreni=Guild,” “Sethi=Wholesale merchant,” and Poddar=Assayer of metal into treasury.” The mindset, attitudes, skills, and beliefs still existed. By their sheer will and power, the entrepreneurs would turn around the downward direction of GDP growth.

Covid-19 dashed the hopes. The crisis was unimaginable. Experts predicted a global recession worse than the Great Depression of the 1930s. No economy was safe. Every sector across the world went into a free fall. India’s GDP contracted by nearly 6%, an unprecedented figure. “So far, only three times has a Budget followed a contraction in the economy. All such contractions were… (due to) situations typical of India. This time… (it) is due to a global pandemic…,” admitted the FM. The government doled out Rs 2.76 lakh crore to provide free food to 800 million, and cash to 400 million.

There was only one recourse – prayers to the almighty. “Faith is the bird that feels the light and sings when the dawn is still dark,” Sitharaman quoted a verse by Rabindra Nath Tagore. Although one could not see the light at the end of the tunnel, she had belief in people’s spirit and devotion. She referred to the joy the cricket-loving nation felt after Team India’s “recent spectacular success” in Australia which, as the FM said in her third Budget, “reminded us of all the qualities that we as a people… epitomise of having abundant promise and the unsuppressed thirst to perform and succeed.”

The pandemic would mark a new beginning. Like what happened after the two World Wars, the global political, economic, and strategic relations would change. This was the “dawn of a new era,” and India was “well-poised to truly be the land of promise and hope.” Luckily 2021 was a year of several milestones – 75th year of Independence, 60 years of Goa’s accession, 50 years of India-Pakistan war, 8th Census of independent India, BRICS presidency, Chandrayaan-3 Mission, and Haridwar Kumbh Mela. It was also a time for the “economy’s reset.” An opportunity to raise and capture the new growth phase.
AtmaNirbharta (self-reliance) was the new mantra. Post-Covid, the government rolled out two AtmaNirbhar packages, whose financial impact along with measures taken by RBI, amounted to 13% of GDP. It was a massive mobilisation to help the citizens to claw out of their scary and fearsome socio-economic dungeons. It was, as Sitharaman said, “an expression of 130 crore Indians who have full confidence in their capabilities and skills.” Not that it was a new concept. “Ancient India was largely self-reliant, and equally, a business epicentre of the world.” It was time for the nation to repeat the feat.


Fortunately, the prayers worked, hopes soared, and growth was back on track. India witnessed a U-shaped recovery, as GDP boomed by over 9% in 2021, followed by more than 7% each in the next two years. An article in the Economist predicted that India would grow by 6% or more every year, for the rest of the decade. “The overall sharp rebound and recovery… is reflective of our country’s strong resilience,” she said in the 2022 Budget speech. Recently, Prime Minister Modi boasted, “At a time when the world is surrounded by many uncertainties, India has emerged as a new ray of hope.”

More importantly, as mentioned earlier, it allowed the FM to open the vaults of the Public Exchequer, and borrow heavily to dole out freebies to every section of the society, especially the poor. It was needed too, and gave an excuse to allow government expenditure, and fiscal deficit to skyrocket. Apart from health and food, other amenities were given free. Today, the payments under the welfare schemes are worth 3% of GDP. They consume large chunks of budgetary allocations. States have followed suit. Such expenses enable leaders to build solid, growing, loyal, and grateful vote banks, and hold on to power.
What is crucial is the mode of delivery. Gone were the days when a former prime minister desperately lamented that only 15 paise out of every rupee spent on welfare reached the poor. Today, hundreds of government programs push money directly to the bank accounts of the beneficiaries. Despite a few niggles, it is a “big improvement” on the old corrupt system, which failed the country. Hence, the poverty rate fell from 19% in 2014 to 12% in 2021. (One can, however, dispute the way the government describes poverty – living on less than $2.15 a day.) A poor family gets cash or gold as members embark on their journeys from the cradle to grave.

Over five years, she was unable to find stability and could not balance on her feet. She jumped onto the political gravy train, as the gains stared her in the face, and economics could be buried under the cheering crowds. But, on and off, she grappled with the economic engine that invariably ran short of steam and coal, or diesel and electric power

According to the Economist, the doles served a larger purpose. Since Sitharaman took charge, the decibel levels intensified against the lack of jobs. Experts said that jobless growth during 10 years of Manmohan Singh swiftly transformed into less-job-less-growth syndrome. Many claimed that by the end of the last decade, the unemployment rate was the highest for the past several decades. Welfare schemes, ever larger in their expanse, managed to put a lid on the public, on-ground reactions against lack of jobs. Welfare payments, as opposed to jobs, emerged as a substitute to improve the lives of the poor. They dented the travails faced by migrant workers during Covid-19.

Still, in almost every Budget speech, Sitharaman expounded on how initiatives in education and skill-training were changing the lives of the young people. The government upgraded the quality of education – in 2014, not a single Indian institution featured in the top 200 in the world university rankings and, in 2019, there were three, two IITs and IISc. A new education policy was introduced. There was the idea of a full-fledged degree-level online education. In 2023, she expressed the desire to launch Pradhan Mantri Kaushal Vikas Yojana 4.0 to “skill lakhs of youth,” and expand the digital ecosystem for skilling.


Despite the pandemic, thousands of farmers came on the highways to protest legal Acts that aimed to privatise large chunks of agriculture. It was one of the rare occasions when the Modi regimes decided not to implement the laws they had enacted. The opposition showed the uncertainties in the farm community, and its disbelief in government’s discourse to double farm incomes by 2022. Sitharaman pinned her hopes on farm credit, horticulture, blue economy (fisheries), cooperatives, and Farmers Producers Organizations.

Cash worth more than Rs 2 lakh crore was transferred to more than 110 million farmers in nine years, claimed Sitharaman in 2023. Annual farm credit catapulted to Rs 20 lakh crore. However, the mainstay of the farmers remained the minimum support prices (MSPs) for various commodities. The 2021 Budget speech claimed the MSP regime underwent a “sea change” with prices fixed at 1.5 times the cost of production across commodities. MSPs were enhanced largely because of the farmers’ protests. But this helped the large, rich, and powerful farmers, and those who were organised.

India witnessed a U-shaped recovery, as GDP boomed by over 9% in 2021, followed by more than 7% each in the next two years. An article in the Economist predicted that India would grow by 6% or more every year, for the rest of the decade

Procurements by the central and state entities did go up. For example, in 2021-22, the government estimated that it would purchase more than 1200 lakh tons from more than 16 million farmers, and transfer Rs 2.4 lakh crore into their bank accounts. Expensive and ambitious river-linking projects were envisaged to improve irrigation. For example, the cost of Ken-Betwa Link Project was estimated at nearly Rs 45,000 crore. Similar plans were put into action for Par-Tapi-Godavari, Godavri-Krishna, Krishna-Pennar, and Pennar-Cauvery. The government promised to support their implementation. Most farmers, especially small and marginal ones, were unable to get MSPs. They remained under the stranglehold of the exploitative middlemen and local moneylenders. Time and again, during surplus seasons, the growers threw their produce on the streets as they were unable to sell or reach the marketplace. During droughts and periods of scant rainfall, thousands starved, and committed suicide every year. Even the large and rich farmers complained that they were unable to recover costs, thanks to additional expenses on logistics and non-production areas. Agriculture remained a mess.


Sitharaman praised the Make in India policy, and touted how its various facets wooed foreign investment. But she obliquely admitted there was a problem with private investments, and focused on the public sector to boost production. In 2023, she said that the capital investment under budget outlays would increase “steeply” for the third year in a row by 33% to Rs 10 lakh crore, or 3.3% of GDP. This was “almost three times the outlay in 2019-20.” Yet again, like the welfare schemes, the post-Covid loose purse strings helped.

But, in 2019, the FM estimated that India needed Rs 20 lakh crore ($300 billion) every year, or twice the outlay for capital expenditure in 2023-24. Despite attempts to broaden and deepen opportunities to raise capital for infrastructure projects, there was little enthusiasm among private and foreign investors. According to the article in the Economist, Modi’s record on giving a boost to manufacturing was “poor,” and “private-sector investment has disappointed.” But it added that now, India may be on the “cusp of an investment boom.” “So far, however, these (private) projects are too small to be economically significant. The value of manufactured exports as a share of GDP has stagnated at 5% over the past decade, and manufacturing’s share of the economy has fallen from about 18% under the previous government to 16%,” added the Economist. Foreign investment was hurt by high interest rates. There were so-called private-foreign projects, where the government’s exposure was huge. For example, of the $2.75-billion plant of Micron, a chip maker, the government would bear 70%, or $100,000 for every job the plant created.

Things may change for the better in the future. A report by Axis Bank states that the private investment turnaround will happen due to healthy balance sheets of the banks and corporate sector. CMIE estimated that the private sector announced projects worth $200 billion in 2023, which was the highest in a decade, and roughly double the value for 2019. FDI inflows can improve as foreign firms pursue the China+1 strategy, and decouple their businesses from the Red Dragon. Still, some experts feel that Sitharaman, and Modi, have focused on freebies, rather than real reforms.
However, the confidence is there. Hopes are soaring, thanks to the recent hattrick victory in the three assembly elections in December 2023, and expectations that a hat trick is imminent in the national elections this year. As an economy, India is still the fastest-growing among large economies and, if private investments take off, the growth engine can gain speed, and cross the double-digit mark. In 2022, Sitharaman said that “we are marking Azadi ka Amrit Mahotsav, and have entered into Amrit Kaal, the 25-year-long leadup to India@100 (from India@75).” The roadmap for this new vision was unveiled by Modi.

Alam Srinivas

Alam Srinivas is a business journalist with almost four decades of experience and has written for the Times of India,, India Today, Outlook, and San Jose Mercury News. He is working on a new book on the benefits and pitfalls of the Indian Bankruptcy Code.

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