Eye on city middle-class, BJP sees light in India Dimming

Apr 04, 2009

Cong slams BJP manifesto as ‘narrow vision’
Neera in, BJP brass scurries for coverNew Delhi: In 2004, the NDA was cohesive, the BJP didn’t have its own manifesto, the economy was in an upswing, the middle class consumer had started becoming confident, and through the NDA manifesto the BJP had spoken fairly confidently of a broad reformist agenda.

In 2009, the NDA is barely there, the BJP has its own manifesto, growth is slowing, urban consumption confidence has taken a hit, and the party has substituted a reform programme with a (middle class) tax cut/easy credit agenda.

Some parts of the tax cut/easy credit agenda raise policy questions. But there’s little doubt that this agenda is the BJP’s key attempt at differentiating its product from that of the Congress.

The BJP senses there may be a space to be occupied in what it sees as the Congress’s insufficient attention to middle-class consumers at a time growth is slowing.

This BJP agenda includes raising the exemption limit on personal income tax to Rs 3 lakh (Rs 3.5 lakh for women and seniors), scrapping the fringe benefit tax (FBT), tax-free pension, tax-free interest income from bank deposits (excluding deposits by Corporates and those with business income), tax-free income for armed forces and paramilitary forces, low interest housing loans and taking steps to bring money back from tax havens.

In other key political economic areas, the Congress and BJP manifestos are not widely different.

The BJP seeks populist policy parity with its rival — foodgrains at controlled prices for BPL families, Rs 2 per kg for 35 kg of wheat/ rice a month, and setting a 4% interest-rate cap on all farm loans.

On the hot button issue of land acquisition for industry, both the BJP and the Congress offer market prices for farm land and amendment of the British Raj land acquisition law.

On structural reforms, the BJP, like the Congress, is silent on most issues. The Congress manifesto explicitly ruled out privatizing public sector financial institutions; the BJP explicitly rules out retail reform. The Congress hinted at minority stake sale of PSUs. The BJP doesn’t say anything on this but offers a bit of labour reform (secret ballot for trade union elections).

The BJP ignores the rural jobs scheme that the Congress talked up. The BJP talks up the highway building programme that the Congress ignored. So, there’s similarity of tactic even when the rivals seek differentiation.

That’s why the tax cut/easy credit agenda is the BJP’s political economic marker this time. The party hasn’t sorted out the policy confusion that followed the 2004 defeat. Therefore, reforms are still out.