A vote on account is supposed to be a simple exercise. The government takes parliament’s approval for its spending needs for the first few months of the next year while the country’s elections take place. An interim budget, ventures to go beyond that and actually make more detailed projections for the next year, announce policy changes the Government intends to bring on if elected to power. UPA announced OROP (One rank, One pension) for the armed forces in 2014. The sense is NDA will do a lot more signalling.

The markets meanwhile struggle under the weight of governance issues relating to crony capitalist companies, resolution of power sector loans, and continuing impact of ILFS crisis on banks. Populism in the interim budget can add to market worries unless it is packaged more acceptably. While it is given that the interim budget will be intensely populist, the markets will watch its intrinsic packaging very closely. Some big moves to watch out for in the interim budget are direct benefit transfer for farmers, raising personal tax slabs significantly for the middle class, and big transformative ideas for the poor.

The 2019 battle for big ideas begins with the interim budget. It is going to be a long and well fought out battle.

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