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  • BJP promises a lot but vague on economic revival

    Published on April 14, 2014

    By Shivaji Sarkar

    BJP-LOGONew  Delhi  (Hindusthan Samachar ): The BJP manifesto 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.

    It also promises eliminating the scope for corruption.

    But it remains vague on paths to revive economy. It is virtually non-committal on the tax policy though it says it would end “tax terrorism” as well as rationalise and simplify tax regime. It is silent on the process. Before the manifesto was cast the party had debated the issue from Nitin Gadkari and Subramaniam Swami putting an end to personal income tax to Arun Jaitley’s opposition to it.

    Swamy’s contention is simple. Mere about three crore people pay it and the tax rules itself turn much of hard earned actual white money into black. Refunds are too high to the tune of almost Rs 70,000 crore a year. 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 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.

    Despite the manifesto’s concern about autonomy of the states, its approach to goods and service tax (GST) does not reflect the reservations of the states. It has remained pending despite UPA government’s adamant attitude on a uniform tax pattern all through the country to suit the needs of the corporate. The states had been protesting. They are not against uniform rates but are not in favour of its collection by the central government. The collection, the states want, must be decentralised at state levels. The BJP may be deliberately has not elaborated it 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.

    The Price Stabilisation Fund (PSF) Scheme was launched in 2003 by NDA for coffee, tea, natural rubber and tobacco to provide financial relief to the growers when prices of these commodities fall below a specified level, without resorting to the practice of procurement operations by the Government agencies.

    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 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 benefit from it while other 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 not clear. After 10 years of jobless growth, the country needs a firm path. The manifesto does not state how textile, footwear and electronics could become labour-intensive, if free imports from China and South Korea continued. 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 to farmers of every shade, including high priority to poverty alleviation in rural areas. One only wishes such elaborate promises just do not end like that. It is difficult to comprehend how jobs would grow.

    A hope is in “national land use policy” through creation of National Land Use Authority, to regulate land use.  There are many regulators. Each works more in the interest of certain groups with vested interest. It is difficult to fathom how this would protect the interest of farmers. It would have been better 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 PHD Chamber of Commerce and Industry and Ficci. It was simple. 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.

    About the working class, its approach of strengthening pension and health insurance appears not credible. It was NDA government that had demolished assured pension. The equity-linked National Pension Scheme is eroding savings of the workers and what BJP promises would make health services more expensive.

    If BJP really wants that people’s confidence to be 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 be boosted by half-baked measures. A well-intentioned document it may be but individual promises should have been weighed properly.

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