A populist budget unveiled by India's ruling Congress party forgiving loans for poor farmers and cutting income taxes is unlikely to help its re-election chances in looming polls, analysts say.
Finance Minister Palaniappan Chidambaram announced last week a hefty $15- billion loan bailout for 40 million poverty-hit farmers and reached out to the middle classes with a big income tax exemption rise
The budget handouts reflected Congress's worry about its fate in general elections following a string of state poll drubbings, analysts said. However, evidence that pro-people budgets win elections is not on the government's side.
"A populist budget has worked only once" when charismatic Congress premier Indira Gandhi "was in full socialist flow and gulled the voters in 1971 with her rhetoric," said national columnist T.C.A. Srinivasa-Raghavan.
But since then "populist budgets have never succeeded -- not ever," he said.
National elections are due by early 2009 but the budget's populist tone suggested they could be held sooner, analysts said.
Chidambaram's budget also featured big health and education spending hikes along with steps to spur falling farm output and job creation to help hundreds of millions bypassed by torrid economic growth of nearly nine per cent.
It was "a typical election-year budget," said Goldman Sachs economist Tushar Poddar.
Congress, which called it "a common man's budget," is keen to reconnect with poor voters, mainly in rural areas, credited with giving the party its upset 2004 general election win.
Party chief Sonia Gandhi dubbed the farm loan waiver a "revolutionary step." Tens of thousands of despairing farmers have committed suicide in the past decade because they were unable to repay loans.
The reprieve under which 30 million farmers will have their loans forgiven and another 10 million will get aid is "the single biggest giveaway" in India's fiscal history, said Business Standard publisher T.N. Ninan.
Analysts gave the government marks for trying to help many Indians struggling to get enough food, basic education and health care but said Congress was unlikely to get much credit.
This budget "was obviously aimed at capturing votes and proving its credentials as a caring government but those tactics haven't worked in the past and are unlikely to now," said Outlook magazine columnist Prem Shankar Jha.
"No one has ever doubted the government's intentions to deliver on social justice, but the trouble is when they throw a lot of money at state governments it's the state governments which get the credit," he said.
"The central government is extremely remote" in voters' eyes.
Also the government has "done very little in the past four years to create a separate identity for which people will vote. All these giveaways have come a bit too late for them to reach the people," Jha added.
India's increasingly fragmented politics in which regional- and caste-based parties are grabbing an ever larger share of the national vote has compounded Congress's woes, analysts said.
One of Congress's biggest challenges is from Mayawati, chief minister of the most populous state Uttar Pradesh which has produced most of India's premiers as it sends the biggest number of members to parliament.
Mayawati, who styles herself as a "living goddess" of poor minorities, is cannily melding her traditional low-caste base with people from the other end of the social strata -- upper-caste Brahmins -- to forge a national rainbow coalition that analysts say could make her a strong contender to be premier.
"She'll want to be prime minister" if she gets enough seats in the next general election, said Srinivasa-Raghavan.
"People say Uttar Pradesh is just a glimpse of what's going to unfold at the national level," declared Mayawati at her lavish 52nd birthday celebrations in January in the state capital Lucknow -- and in New Delhi. (AFP)
Follow Emirates 24|7 on Google News.