ELECTION YEAR BUDGET: MINORITIES GET THEIR SHARE

UNCLAS SECTION 01 OF 02 NEW DELHI 000735 SIPDIS SENSITIVE SIPDIS DEPT FOR SCA/INS E.O. 12958: N/A TAGS: PGOV PREL SOCI KISL ECON EFIN IN SUBJECT: ELECTION YEAR BUDGET: MINORITIES GET THEIR SHARE REF: NEW DELHI 692 ¶1. (SBU) The United Progressive Alliance (UPA) budget announced last week doubled government spending on minorities (read Muslims) from roughly USD 125M to over USD 250M (reftel) for fiscal year 2008-2009. The Muslim vote bank used to be one of the most reliable in the Congress Party's traditional Dalit-Muslim-Brahmin coalition but has been eroded by regional parties such as the Samajwadi Party (SP) and the Bahujan Samaj Party (BSP). With this election year budget, the Congress Party is looking to shore up its Muslim vote bank. The bulk of the new spending will go to a multi-sector development plan worth nearly USD 1B over five years. Congress has seized the momentum with its populist budget. But in order to translate that momentum into votes, it must now fight a grassroots campaign at the regional level, not the party's forte. Leave No Vote Bank Behind -------------- ¶2. (U) Spending for minority programs received a large increase but remains a fraction of the USD 15B set-aside for farmers. Highlights of the minority-focused outlays include (calculated at 1USD=40INR): -- USD 945M over five years (USD 135M for 2008-2009 fiscal year) for a multi-sectoral development plan for 90 minority-concentration districts -- USD 60M for various government-owned finance and development corporations which invest in minority areas and projects -- USD 25M for scholarships to secondary school level minority students and USD 18M for pre-secondary minority students -- USD 15M for the Maulana Azad Education Foundation, which promotes education in minority communities -- USD 11.35M for modernization of madrassas -- Opening of 288 public sector bank branches in targeted areas to extend credit to minorities -- Recruitment of more minorities into the central paramilitary forces Comment: How Many Votes Does 250 Million Buy? -------------- ¶3. (SBU) In its last budget before the national elections, the UPA tried to think of a sop for every interest group and every voter block - commentators have labeled it a "please-all" budget and a "sop opera." With a 100 percent funding increase, the minorities/Muslim vote block did not fare too badly. One analyst has estimated the 90 targeted minority concentration districts total approximately 90 million voters. However, as India Today pointed out, USD 250M is "too little to make a dent," in a community of 180 million. Many Muslims will no doubt also benefit from the massive farmer debt relief measure, but the targeted minority spending will be welcome. As detailed in the Sachar report, India's Muslims suffer from widespread, higher than the national average, illiteracy and poverty. As usual in India, execution remains the elusive key. ¶4. (SBU) The opposition Bharatiya Janata Party (BJP) wasted no time attacking the budget as "communal." The BJP, however, will find it hard to make its Muslim appeasement charge stick because the USD 250M earmarked for minorities pales in comparison to the UPA's centerpiece USD 15B loan waiver scheme for farmers and is, in any event, lost in the something-for-everyone populist budget. Now Congress must translate its budget into votes with a broad grassroots campaign, something the party hasn't excelled at in several years. Even with the increased spending analysts continue to NEW DELHI 00000735 002 OF 002 speculate that Congress will have to form an alliance with the SP or BSP, particularly in Uttar Pradesh, the Muslim heartland and Lok Sabha linchpin state. The party has announced a string of rallies around the country and some sycophantic state party units are making "thanksgiving" pilgrimages to Delhi to thank Sonia Gandhi for her generosity and largesse. Yet, it is not clear whether such blatant vote-buying works any more in India where the Indian voter has become increasingly sophisticated and politically aware. MULFORD