Will Modi’s speech bring tears or cheers (or both)?
- The PM is expected to address the nation at 7.30PM on December 31.
- He could take stock of the national situation following demonetisation and announce sops.
- The speech comes a day after the end of Modi’s self-declared deadline for post-demonetisation hardships.
Whether they love him or loathe him, most Indians are likely to set aside New Year festivities at 7.30PM on December 31 and switch on the TV when Prime Minister Narendra Modi is expected to address the nation.
The speech is Modi’s first after he announced the demonetisation of ₹500 and ₹1,000 notes on November 8 and comes a day after the end of the 50-day period that the PM had sought from citizens to endure hardships related to the note ban. The speech is significant both politically and economically.
Politically, the BJP will be looking for the PM to retake the national narrative ahead of crucial state elections in 2017, including the mother of all poll battles: Uttar Pradesh. He will also be looking to contain the opposition, following the washout of the winter session of Parliament. The speech affirms Modi’s unique method — of bypassing the press and opposition and directly communicating with the people.
Economically, the continuing scarcity of cash in several parts of the country and resultant shock on sectors of the economy is a concern the government cannot ignore. The seemingly mixed results in the war on black money make it incumbent on the government to undertake further “tough” measures.
As the Prime Minister holds his cards close to his chest (as he always has), we try to present a primer on what we expect him to say during his speech on December 31:
Salve for exasperated consumers: The PM could announce incentives for consumers including cuts in income taxes. The PM had set the ball rolling on Christmas when he announced two schemes to promote digital transactions. There are expectations in some quarters that the daily ATM withdrawal limit could be raised to ₹4,000, though logistical constraints could play a spoiler. A wild fantasy that is still reported by sections of the press is that a portion of the tax windfall from demonetisation penalties could be transferred to the poorest account holders under the Jan Dhan Yojana.
Sops for parched sectors: Businesses and employees in the small and medium-sized and unorganised sectors can look forward to some good news given that they have been hit hard by demonetisation. An Economic Times report suggested special treatment for sectors such as consumer durables, construction, textiles, vegetable growers and traders. The sops could take the form of subsidies, tax cuts and loan benefits.
“I’m still the tough guy”: Despite negative publicity in recent weeks, the Prime Minister has never backed down from declaring that further tough measures to curb black money and corruption are in the offing. The government has dropped hints that it could crack down on benami properties next, which Asianet Newsable had recently reported. Other measures could include tightening of banking regulations and standardising on the Aadhaar card as a prerequisite for transactions.
Err, sorry, don’t expect much: Given political calculations concerning the coming elections in Uttar Pradesh, the Prime Minister could decide to announce big-ticket sops on January 2, when he is scheduled to hold a rally in Lucknow. The Prime Minister could also just play safe, mouthing niceties for the New Year, and leave major economic announcements to Arun Jaitley during the budget.