Until just a month ago, everything was falling in place. The government was saving money as crude oil prices slipped from $115 a barrel last June to a low of $45. Till the end of the third quarter in December, the finance ministry had saved $47 billion on purchase of crude. Falling oil prices also allowed the government to increase taxes on petroleum products and raise additional funds for roads. Inflation was low, the fiscal deficit was under control, and the government had taken a slew of economic reform measures, especially easing of the foreign investment norms in some sectors.
Politically, too, whatever the BJP touched turned into gold. The party won the elections in Haryana and Jharkhand with a complete majority for the first time. In Maharashtra, the BJP walked out of the shadows of the Shiv Sena and became the bigger and dominant partner in the new government. The BJP has also stitched together an alliance in J&K with the PDP and would form the government for the first time.
But in the past one month, the pressure on the government has mounted after the BJP's unprecedented defeat in the Delhi assembly elections. The Opposition, which was disgruntled after the BJP-led NDA got a majority in the general elections, is now getting united to block the government and accuse it of being 'anti-poor' and 'anti-farmer'.
In the Budget session, the government is required to ratify six ordinances, including enabling coal mining by private players, amendments in land acquisition act, and opening up of insurance for foreign players.
The government is also talking about easing the investment flow, creating a favourable environment in the country to do business, and developing skill sets of the workforce. Also, the aspirations of India Inc. are high amid indications that the government is set to push the country into an era of manufacturing with its 'Make in India' initiative.
Although the defeat in Delhi may not impact the BJP much at the national level, yet it was symbolic.
It also mounts more pressure on Jaitley. Delhi is his home state, where he did politics all his life - right from his student days as a member of the Akhil Bharatiya Vidyarthi Parishad (ABVP) and later as president of the Delhi University students' union, and subsequently as a lawyer of several senior BJP leaders. He was one of the chief strategists for the party. He was the one who brought in Kiran Bedi as the chief ministerial candidate in the Delhi elections. His 'not so great' equation with Science and Technology Minister Harsh Vardhan was seen as another factor. All these backfired. The unprecedented defeat was not easy for people to digest.
So will the finance minister come out of the difficult period to present a historic Budget, as most are expecting? Or will he buckle under pressure?
The defeat in Delhi not only gives more strength to the Opposition, but also to the BJP's allies and sister-organisations. The BJP's colleagues from the RSS family complained that BJP leaders and ministers do not listen to the cadre. After this drubbing, will Jaitley listen to RSS outfits like Swadeshi Jagran Manch (SJM), Bharatiya Mazdoor Sangh (BMS), ABVP and Bharatiya Kisan Morcha and make his Budget more 'inclusive'?
Earlier, SJM leaders opposed clinical trials for genetically modified crops, which the government had agreed to, and were banned. Now, they are pushing the government to tone down the PM's pet programme 'Make in India' - and make it more convenient for Indian players to take a leap. They say that the red carpet for FDI and red tapism for domestic players would not work. They have suggested changes, including the title 'Made by India'.
Similarly, BMS is against labour reforms that the Modi-Jaitley combo is pushing for, and the farmers' outfit is against the land acquisition amendments.
A close aide of Prime Minister Narendra Modi, Jaitley was made finance minister and was given additional responsibility of the defence ministry. The big criticism then was that he was given these responsibilities despite his big defeat in the Lok Sabha polls from Amritsar. His defeat was more resounding as his other colleagues won with huge margins on Modi's appeal.
However, later Modi appointed then Goa chief minister Manohar Parrikar as defence minister and Jayant Sinha as Jaitley's deputy. Jaitley is also receiving flak from his party's Darbhanga MP and former cricketer Kirti Azad, for the mess in Indian cricket.
This Budget is a big milestone, particularly because it is the first full-year statement of accounts of the NDA government, and would pave the way to put PM Modi's vision for India to bed.
Will he make this Budget more pro-poor, inclusive or as expected, ease the path of businesses? In the next one year, his party would be involved in the elections in Bihar. Initial indicators and Lok Sabha poll patterns suggest that the BJP might do well. The Budget would be a crucial factor in impressing the voters there. Bihar sends workers to various industrial houses in different states, and is also among the poorest states in the country.
Will Jaitley come up with a populist Budget? Will he pull back his reform agenda? Will he opt for not cutting down the subsidies? The indications are he might not. In a recent joint press conference with US Treasury Secretary Jacob Lew at the end of 5th Indo-US Economic and Financial Partnership meeting, he insisted that his reform agenda would go on.
Industry veterans like HDFC Chairman Deepak Parekh have started portraying the sense of industry that things are not improving at the ground level, despite several commitments of the NDA government. However, his contemporaries are waiting for Jaitley's Budget on February 28 to give words to their thoughts. They are saying that the investment cycle would take another six months to a year to revive. Investors are seeing the developments with "cautious optimism".
Jaitley is committing that reforms will continue. The kind of reforms that the government has been undertaking, he said, would bring in investment, generate jobs, improve the quality of life of people and also help in alleviating poverty.
The industry is asking for making the tax regime more predictable and consistent. In the last Budget, Jaitley assured India Inc. that there would be no retrospective changes in tax laws, but the investors say they want changes in the legislation. Will he be able to do it?
In the last nine months, the RBI has pushed infrastructure companies to reduce their debts. In many cases, the bull run in the stock market is offering a helping hand. But the compelling question is: will Jaitley increase his spending in the infrastructure sector?
Last year, he surprised many by announcing 29 initiatives with Rs 100 crore allocations. Will we hear more such allocations for bullet trains and smart cities?