Economic Highlights
New Delhi, 11 April 2014
BJP’s Many Promises
VAGUE ON ECONOMIC REVIVAL
By Shivaji Sarkar
The BJP has voiced plenty of promises in its manifesto, but
when it comes to revival of the economy it has hiccups. The party promises credibility
and trust in Government, re-sowing confidence in the India story through containing
price rise, “increasing” jobs and opportunities for entrepreneurship as also national
agriculture market, eliminating the scope for corruption et al. But it remains
vague on the paths to revive the economy.
It is virtually non-committal on the tax policy though it
says it would end “tax terrorism” as well as rationalise and simplify the tax
regime. However, it is silent on the process. Before the manifesto was cast, the
Party had debated the issue -- from Nitin Gadkari and Subramaniam Swamy’s putting
an end to personal income tax to Arun Jaitley’s opposition to it.
Swamy’s contention is simple. No more than three-odd crore
people pay it and the tax rules itself turns much of hard earned actual white
money into black. Refunds are too high to the tune of almost Rs 70,000 crore a
year. This apart, tax collection mechanism is cumbersome and expensive. Every
taxpayer instead of being extended some basic respect is looked at with
suspicion. The abolition of tax would save much botheration to both citizens
and the government. The BJP should have taken a stand on it. A clear approach
would have created more confidence among the people and policy planners.
Notwithstanding the manifesto’s concern about autonomy of
the States, its approach to goods and service tax (GST) does not reflect the
reservations expressed by the State governments. This issue has sadly remained
pending despite the UPA government’s adamant attitude on a uniform tax pattern across
the country to suit the needs of the corporate. But the States have been
protesting. Importantly, they are not against uniform rates but are clearly not
in favour of its collection by the Central Government. The collection, they
insist, must be decentralised at their levels. Perhaps, the BJP has deliberately
not elaborated on it, simply to keep its different constituents guessing.
The previous NDA regime, as BJP claimed, had been able to
break the cycle of high inflation and high interest rates. Its new course is
short of instilling the required trust. The two methods suggested – special
courts against black marketing and price stabilization fund – are
controversial. With the dilution of the Essential Commodities Act by the
previous NDA Government much of its teeth have been lost. A prosecution would
have little sense except harassment of small traders.
Recall that the Price Stabilisation Fund (PSF) Scheme was
launched in 2003 by the NDA for coffee, tea, natural rubber and tobacco to
provide financial relief to the growers following prices of these commodities
falling below a specified level, without resorting to the practice of
procurement operations by Government agencies. Contribution to the members of PSF
saving bank account by the PSF fund trust and/or the member, in a given year is
on the basis of categorization of the year as boom/normal/distress year which
is done on the basis of a price spectrum band, fixed and announced every year.
The growers received Rs 880,000
between 2007 and 2010 from the PSF. A total contribution of Rs. 643,000 towards enrollment
fee under the PSF scheme was received from 46239 growers.
The consumer of any of these commodities did not benefit.
Soon after the introduction of the PSF, coffee and tea prices had shot up and
are continuously rising. Its implementation at the national level is not only
difficult, it is doubtful that it would be beneficial for the consumer.
The proposal to unbundle Food Corporation of India (FCI) for
greater efficiency in procurement and distribution is more sensible provided it
is allowed to function as a market intervention agency. Evolving a national
agriculture market seems a good proposition. It has to come with increase in
public investment. The manifesto promises it. It would require changes in many
laws and creation of an effective mechanism. Presently, it is restricted to the
proposal to amend the APMC Act. The farmers are divided on it. Some of them shall
benefit from it while others have problems. These steps would require detailed
discussion else it might go against the consumers as in the case of PSF as
prices instead of coming down are likely to go through the roof.
The road map for job creation is also not clear. After 10
years of jobless growth, the country needs a straight and firm path. The
manifesto does not state how textile, footwear and electronics could become
labour-intensive, if free imports from China
and South Korea
continue. Further, the manifesto is silent on growing imports, which is eating
into the job market.
The statement on strengthening employment bases of
agriculture and allied industries is a new orientation but needs a roadmap. There
are many promises of every shade to farmers, including high priority to poverty
alleviation in rural areas. One only wishes that such elaborate promises do not
end up as just that for it is indeed difficult to comprehend how jobs would
grow.
A hope is being seen in “national land use policy” through the
creation of a National Land Use Authority, to regulate it. But there are already
many regulators, each working more in the interest of certain groups with
vested interest rather than the assigned task. It is difficult to fathom how
this would protect the interest of farmers. It would have been it had just
promised to create a land bank.
Similarly, the sop for the industry of simplifying the
procedures and a single-window system of clearances does not eliminate the
points of corruption that led to the 2G and Coalgate scams. The solution was
suggested by the PHD Chamber of Commerce and Industry and FICCI. It was simple,
for it only wanted that before handing over any project to a company, the Government
itself should ensure that all clearances, including ecological, have been given
to it. This would end the process of greasing the palms of officials and
politicians at various levels.
Insofar as the working class is concerned, the BJP’s approach
of strengthening pension and health insurance does not appear credible. It was the
NDA Government that had demolished assured pension. The equity-linked National
Pension Scheme is eroding savings of the workers and what the Party promises
would make health services more expensive.
If the BJP really wants that people’s confidence is reposed
in the Government, it needs to clarify many things that remain unsaid. Neither
prices nor corruption would be contained by these prescriptions nor would the
economy get a boost by half-baked measures. The manifesto may be well-intentioned
document, but individual promises should have been weighed properly. Remember,
discretion is the better part of valour. --- INFA
(Copyright,
India News and Feature Alliance)
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