Congress Manifesto steps away from spirit of liberalisation

Discussion in 'Politics & Society' started by Ray, Mar 27, 2014.

  1. Ray

    Ray The Chairman Defence Professionals Moderator

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    Cong tugs at pre-91 hearts

    Manifesto steps away from spirit of liberalisation


    March 26: The Congress today set out a broad economic agenda in its election manifesto that blended a chimera with a mirage, embellished the resulting fondue with some bits of paradox and topped it off with fanciful numbers.

    The party, which is going to the polls battling the pangs of incumbency and a botched-up economic record, promised to return to an 8 per cent rate of growth in the next three years.

    The Congress said if voted to power, it would create 10 crore jobs in the next five years even as it signalled its commitment to economic pragmatism by promising to haul fiscal deficit down to 3 per cent of GDP by 2016-17 and always stay below that level.

    But there is a stark irony behind these pie-in-the-sky numbers: economic growth this financial year, which ends on March 31, is projected at 4.9 per cent with the slowdown likely to persist well into the next year.

    The big beef is over manufacturing sector which has gone through the wringer this year and is reporting a contraction of 0.4 per cent in the first 10 months (April-January) against a tepid 0.8 per cent growth in the same period last year.

    The party’s manifesto said it would ensure a 10 per cent growth rate in the manufacturing sector.

    There were some disturbing elements in the party’s economic agenda that appeared to strike at the root of the spirit of liberalisation and openness that the Congress had embraced way back in 1991.

    Protectionist move

    First, it signalled a throwback to protectionism when it tried to explain how it would get the manufacturing sector out of the deep rut. Then it appeared to articulate a desire to crank up exports in a manner that could force it to duck its obligations as a member of the World Trade Organisation (WTO).

    “We… propose that there should be a minimum tariff protection so that there is an incentive to manufacture goods in India rather than import them into India,” the manifesto said. This is likely to warm the cockles of India Inc, which has been trying to stave off competition from a rising tide of imports.

    It also promised to provide tax incentives so that companies could be persuaded to establish manufacturing plants in the country to make IT hardware, seeking to re-energise an idea that had been snuffed out more than two decades ago by competition from superior products made overseas.

    The Congress said that it would ensure that all central and state taxes that go into an exported product will be “waived or rebated”. It was short on specifics but long on intention and seemed to promise a new tax El Dorado for exporters.

    But the trouble is that the two big ideas — protectionist tariff for Indian manufacturers and a tax waiver for exports — would fly in the face of India’s commitments to the WTO, inviting the wrath of its trading partners and a rash of lawsuits before the world trade body’s dispute settlement wing.

    Indian industry will, however, be uneasy with the Congress’ desire to build a national consensus on affirmative action for SCs and STs in the private sector.

    The manifesto is a mish-mash of progressive and regressive ideas.

    The progressive elements included the desire to limit subsidies to only the deserving, a commitment to promote flexible labour laws especially for the export-oriented sectors and the introduction of sensible user charges in areas like the provision of uninterrupted power — borrowing an element that already exists in cities like Mumbai and Pune.

    During the Congress-led government’s decade in office, subsidy spending has soared from Rs 45,900 crore in 2004-05 to an estimated Rs 2,55,000 crore in 2013-14.

    The manifesto said there was “no room for any aversion to foreign investment” and underscored the intent to put out a clear policy on tax treatment for foreign firms. It also attempted to soothe foreign investors’ fears by vowing to ensure that the “unpredictable risk of retroactive taxation is avoided”.

    This is a suggestion that was made by the Parthasarathi Shome committee in September 2012 after the huge outcry over the government’s move to amend a 60-year-old tax law in order to force Vodafone Plc to fork out over $2 billion in taxes over its buyout of India’s second largest mobile telephony operator in 2007. The retrospective amendment had blunted the effect of a Supreme Court verdict that had gone in Vodafone’s favour.

    The manifesto promised that the party, if voted to power again, would invest more than $1 trillion over the next decade in upgrading country’s power, transport, and other infrastructure.

    The growth rate in manufacturing reduced from 9.7 per cent in 2010-11 to 2.7 per cent in 2011-12 and 1 per cent in 2012-13. In the last fiscal, only 3.3 per cent of the country's growth was generated by manufacturing as opposed to 83 per cent contributed by services.

    It also aimed to double trade in services within five years from the current level of $ 1 trillion.

    The Congress pledged to encourage foreign direct investment (FDI) and push goods and services tax (GST) and direct taxes code (DTC) within a year of returning to power.

    The GST has been in the making for almost a decade with stiff opposition by several political parties including the BJP on some of the provisions. The tax will subsume central excise taxes, additional customs duties, surcharges and state taxes such as VAT, entertainment and luxury taxes, lottery and gambling taxes.

    Cong tugs at pre-91 hearts
     
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  3. Ray

    Ray The Chairman Defence Professionals Moderator

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    Rahul pins hope on India Shining needle

    New Delhi, March 26: Rahul Gandhi today predicted that the “myth” that a Narendra Modi wave is sweeping the country will explode just like the India Shining balloon burst, and the 2014 election will throw up a surprise.

    Sonia Gandhi shared Rahul’s optimism as Prime Minister Manmohan Singh contended that the Congress’s inclusive politics alone, not the Gujarat model, could provide a lasting solution to India’s problems.

    All the three leaders defended the UPA’s record and hoped the ruling combine would return for a third term.

    At a question-answer session after releasing the party’s manifesto, Rahul said: “Here in 2009, this question was raised that the Congress would be thrashed. The opinion polls gave five seats to the Congress in Uttar Pradesh. It didn’t happen. (The Congress had won 22 seats.) The result will surprise you. I know UP and the result this time will be better than 2009.”

    The emphasis on Uttar Pradesh reflects the heartburn created by opinion polls that forecast 40-50 seats in the state for the BJP because of “the Modi wave”.

    The Congress knows that if the BJP fails to pull off the miracle in Uttar Pradesh, the challenger cannot be in a position to sew up majority. The surveys have forecast less than 10 seats for the Congress in 2014. Without a specific question being asked on Uttar Pradesh, Rahul addressed the core concern on his own.

    “The BJP has the ability to carry out campaigns. Just like the India Shining balloon exploded... I can say certainly the balloon will explode, 100 per cent,” he said. “India Shining was a brilliant campaign. Everybody was convinced. But on the day of voting, it evaporated.”

    Rahul avoided making any personal attack on Modi but rejected his brand of politics by criticising the divisive ideology. “This kind of divisive politics will hurt India. Every Congressman will fight and defeat that,” he said.

    Asked if he agreed with the assessment of Manmohan that Modi as Prime Minister would be disastrous for the nation, Rahul said: “The Prime Minister is a wise man and, on most of the issues, I bow to him. I tend to agree with his wisdom. But it was not a question of individual whom you may like or dislike. But the ideology which is questioning the idea of India — the real danger is that ideology.”

    This was Rahul’s matured way of endorsing the Prime Minister’s blunt remark without actually making a personal reference to Modi.

    While Modi never misses an opportunity to heap scorn on the “shehzada”, Rahul has launched blistering attacks on the RSS ideology, linking it to Mahatma Gandhi’s assassination and Hitler but avoiding directly targeting Modi.

    The manifesto, too, deals with the ideological question in a big way, giving it a much greater thrust than development issues and welfare schemes.

    “The BJP’s narrow and communal perspective denies equality to all. Theirs is an exclusionary doctrine. Peace cannot be constructed on conflict. Societies cannot be built on injustice and hatred…. This is an ideology that seeks to impose uniformity in the name of unity,” the manifesto said.

    Responding to questions about the predictions of doom for the Congress, Sonia too recalled the 2004 and 2009 elections to buttress her contention that opinion polls have been proved wrong time and again.

    “We are ready to fight and we will win,” she thundered while describing the Manmohan era as a period of robust growth, social empowerment and revolutionary legislation.

    To a question about his government being the most corrupt, the Prime Minister said: “The BJP attacked me as they felt I was a weak Prime Minister and, under constant criticism, I will run away from the job entrusted to me by the Congress. I proved them wrong. There is no reason to believe there is substance in what the BJP set out to argue.

    “Corruption is an issue and can’t be wished away. Efforts have to be made to fight corruption and the government did a lot to strengthen the institutional framework.”

    Sonia said tens of thousands of suggestions had come in the course of consultations for the manifesto and a separate document enlisting them would be brought out in the next few days as everything could not be accommodated in it.

    Rahul and other senior leaders were engaged in a unique five-month manifesto-making exercise, which involved deliberations with over 10,000 people from different social groups held at 27 locations.

    ‘A big joke’

    The BJP dubbed the Congress election manifesto a “joke” and a “document of deceit” and claimed it amounted to a “rank insult” to Indians.

    Chief spokesperson Ravi Shankar Prasad said: “They are promising an eight per cent growth rate over the present rate of 4.6 per cent. This is a big joke.”

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    Rahul pins hope on India Shining needle
     
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    Ray The Chairman Defence Professionals Moderator

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    Congress manifesto swings rightward on economic policy and yet promises to push ahead with populism

    The Congress manifesto is the polar opposite of policies pursued by UPA-II. It promises to undo measures that clogged the economy and make economic growth the "overriding priority". Congress has finally come out and said there can be no social transformation without economic growth and, therefore, promised to push ahead with reforms. These include politically sensitive ones such as prioritising subsidies and amending legislation to ensure fiscal prudence. While such an emphasis is welcome, does the party have the political will to see it through?

    This question keeps coming up when the manifesto promises to expand the rights-based legislative framework to include health, pension and housing. Spending schemes to provide these exist, but they take a different dimension when they are made into a legal right. This is where the tension between fiscal prudence - critical to push up growth rates - and legal rights to a range of things will show up. There is nothing intrinsically wrong with a rights-based legal framework, but India can ill afford to expand its rights-based commitments at this stage of development.

    Another area where Congress's manifesto could have done better is reservation. It commits to extending reservation to economically weaker sections of all communities without cutting into existing quotas. Unless the extent of reserved quota is increased, it is difficult to see how this can be actualised. Similarly, the promise to build a consensus on "affirmative action" for dalits and scheduled tribes in private sector is puzzling when there are simply not enough jobs being created. No other country, even the most left-wing, has similar legislation because it could cripple the economy if realised. The moot point is the Congress manifesto promises too many things at once - in an attempt to cover all bases but at the cost of credibility.

    Congress manifesto swings rightward on economic policy and yet promises to push ahead with populism - The Times of India
     

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