BJP's ambitious plan to reverse UF's economic policy
R R Nair in New Delhi
The Bharatiya Janata Party has chalked out an ambitious plan to reverse Union Finance Minister Palaniappan Chidambaram's economic policy.
Blaming the United Front government's low public investment for the current economic slowdown, the BJP has vowed to rectify it by increasing capital expenditure in all sectors, especially in rural areas.
"The rural sector has been our economy's backbone and it has been providing employment to two-third of our total workforce. Yet both former finance minister Manmohan Singh and his successor Chidambaram neglected it to such an extent that all the investment was in industry. So the bulk of the investment of the BJP government would be in the rural sector for building infrastructure," BJP ideologue Jay Dubashi told Rediff On The NeT.
The BJP's efforts to focus on the rural economy in its election manifesto, which would be released shortly, stem from its desire to shrug off the party's image -- it is considered a middle class-upper caste party.
If it comes to power, almost 60 per cent of the allocations would be in the rural sector. Not only the agriculture sector but also the development of infrastructure would be targeted so that the migration from villages to cities could be checked.
"More than roads, electricity and such other amenities, we would concentrate on employment generation in the rural sector. Take the example of fruit and vegetable growers. As they don't have any means of storage and transportation, the farmers just dump the produce in the market for whatever price they get. Now if we provide the infrastructure for storing and refrigerated transportation there would be a lot of white and blue collar jobs in the villages," says BJP economic cell convener Jagdish Shettigar.
While Chidambaram tried to reduce the fiscal deficit by cutting public investment, the BJP think-tank feels not much importance should be attached to the former.
"The government is the major player in the economy and, when it is not spending, the economy's aggregate demand is bound to come down. And that has happened this year. We would reverse the
public investment policy and would generate more demand to kick off the economy," says Shettigar.
What this means is that the BJP would broaden the tax base and strengthen the tax-collection machinery to contain the fiscal deficit.
A recent study by the National Council for Applied Economic Research has found that there are 600,000 to 1 million people in India with a monthly income of more than Rs 100,000. However, only 12,000 file their income tax returns in this category.
Quoting NCAER figures, Shettigar told Rediff On The NeT that the government would be able to mop up Rs
300 billion a year by way of tax revenue.
As for foreign investment, the BJP's proclaimed swadeshi slogan has been reiterated on poll eve.
A selective approach towards foreign direct investment would mean a strong 'no' to consumer giants coming into the country.
In fact, a worried foreign investor approached the BJP think-tank with a doubt: will the BJP's ally Samata Party chief George Fernandes again close down foreign companies as he did in 1977 as industry minister in the Janata Party government.
The BJP is very clear it will not ask any foreign company to close shop. But it does not approve of more foreign direct investment in the white goods sector.
Stabilising the rupee is a patriotic mission for the BJP. It does not plan to listen to market forces as the party feels they have been manipulating the currency market.
Dubashi said a big 'no' to capital account convertibility. The party feels the fundamentals are not strong enough for capital account convertibility to be enforced in five years.
BJP ideologues feel that capital flight -- pegged by the party at $ 100 billion -- through under-invoicing of exports and over-invoicing of imports should be stopped first.
Liberalisation of imports would be looked into so that there would be an attempt to minimise imports.
Shettigar has an ambitious plan to overhaul the entire public distribution system. ''More than 50 per cent of the amount spent is being wasted as 36 per cent of the population lives below the poverty line and would not be able to utilise the fortnightly or monthly allocation."
Ration cards, it is being argued, have become an alternate for identity cards and the affluent, too, have ration cards for purposes other than getting the ration. The ration on such cards is also being issued and siphoned out of the system.
The targeted PDS, it is alleged, has not made any difference since the daily wage earner still cannot make a bulk purchase once a fortnight. Instead the BJP advocates food coupons or a daily quota.
Elections are not the time to be unpopular. So the BJP, in its bid to be populist, talks of taking the workers's plight into consideration while disinvesting the government's stake in public sector units.
The BJP is firm that the money raised by PSU disinvestment will be used to return the debt and that it would be used to contain the fiscal deficit. Now more than 52 per cent of the revenue is being utilised for debt servicing.
The BJP is quite wary of the impending World Trade Organisation's multilateral agreement on investment. The party wants its government to fight the agreement from within the WTO so that, "New Delhi wouldn't be a subsidiary WTO office and no company should set shop here and function independent of the Indian government.''
The other thrust areas of the manifesto are drinking water and literacy. The BJP feels it would be able to cash in on these 'chronic problems' which have been neglected all along.
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