FORGET THE MANIFESTOS, THE BUDGET WILL BE KEY
As campaigning by the two big national parties degenerates to levels so low that they defy imagination, it’s hugely depressing that no one — neither the BJP, which is supposedly riding a wave, nor the Congress, which looks like a horribly hobbled defender — has anything that comes near a roadmap for reviving the economy. No one expects the star campaigners — the BJP’s prime ministerial candidate, Narendra Modi, or Congress’s vice-president Rahul Gandhi — to spout strategies for economic revival during the numerous rallies that they address, but the sections dealing with the economy in both parties’ manifestos can leave you bewildered.
The Congress came out with its manifesto early and promised that it would not only get the economy back to the target of 8% growth but, in the event that it came back to power, unveil a jobs agenda that would create 100 million jobs, get the fiscal deficit back to 3% of GDP, and push through long-pending tax reforms. All of which are things that have been on its agenda for the past 10 years. The fact is during the Congress’ regime, we saw economic growth plummet from a high of 9.6% in 2006-07 to a low of 4.9% in 2013-14, deficits (fiscal and current account) go out of control, and, most disastrously, jobs shrink. So, it’s a bit rich to hear the party say that it will magically make everything good once again, especially as it doesn’t say how. In any case, its track record of managing the economy for the past five years doesn’t elicit much confidence. Ask anyone.
It is commonly said that in these elections, the Indian voter is voting for change and, according to supporters of the BJP, the harbinger of that change is Narendra Modi. They point to the high turnout of voters thus far (five more phases of polling are yet to be held) as indicative of this yearning for change and expect that to be borne out by the final verdict when it comes on May 16. They may well be right but what does the BJP say about economic revival in
THE CONGRESS’ ECONOMIC MANIFESTO IS FULL OF TALL PROMISES. THE BJP’S HAS NO SPECIFICS BUT MUCH FANTASY
its election manifesto? Not a lot that goes beyond general statements.
Some of it can even seem ludicrous. The BJP wants to make India a ‘global manufacturing hub’. The world’s manufacturing hub, as we all know, is China. Its ability to produce globally acceptable products at costs that are the world’s lowest has made it emerge as the biggest outsourcing destination for some of the world’s largest corporations. China is able to dominate manufacturing by keeping costs, including those of labour, capital and inputs, low and productivity and efficiency high. Its government subsidises costs heavily and allows flexibilities in the labour market that are well nigh impossible to achieve in the Indian market.
Partly that is because of the difference in governments — between China’s regime and India’s democratic system; and partly it is because of the half-finished saga of India’s economic reforms, including that for the labour market. In any case, plans to compete with China, which is by any reckoning at least a couple of decades ahead of India, can at best be a pipe dream.
The Congress’ economic manifesto is full of tall promises (easy to do that if you’re pretty sure that no one will hold you up to them!). The BJP’s has no specifics but much fantasy. The one specific in the BJP’s manifesto debars multi-brand foreign retailers because they could harm small Indian retailers — as if giant Indian retailers are benign! Whoever comes to power will inherit an economy that needs far more than tall promises or grandiose ideas. Those who want change want a lot of it and want them now: India’s youth wants jobs; business wants the policy freeze to thaw and uncertainties to go; and foreign investors want less hurdles to cross. The two manifestos have been disappointing. What will have to be watched is the next Union budget.