Farmers, jobs, infrastructure development, and national security are the major points of focus for both the incumbent Bharatiya Janata Party (BJP) and the main contender, Indian National Congress, in the general election which begins on Thursday. The first phase of polling will take place in 91 constituencies.
While the BJP makes national security top priority in its manifesto, it also promises to make India a $5 trillion economy by 2025, and a $10 trillion economy by 2032, from the current $2.9 trillion. The Congress, meanwhile, promises to increase the contribution of the manufacturing sector to GDP to 25% from 16% in five years. To this end it proposes to set up ‘Exclusive Export-Only Zones’ for Indian companies where they may manufacture and export their entire production. It also promises to do away with indirect taxes and lower corporate tax. The Congress also wants to achieve 3% fiscal deficit by FY21. The BJP promises to double exports in five years and bring down agri-imports. Both parties want to make India a manufacturing hub for the world, and reduce poverty.
The BJP seeks to bring down poverty to a single digit, while the Congress wants to lift 100 million people out of poverty. According to the United Nations, more than 27.5% of the Indian population is considered multi-dimensionally poor (poverty measured on various metrics like—poor health, lack of education, inadequate living standard, lack of income, etc.).
The BJP, which has faced a lot of flak for withholding the National Sample Survey Office (NSSO) data on jobs, which pegged unemployment at a 45-year high, doesn’t outline a clear plan for job creation. It, however, speaks about a new industrial policy for improving competitiveness and other incentives to boost industrial job creation. It also proposes a new scheme for collateral-free credit of up to ₹50 lakh for entrepreneurs, with 50% of the loan amount reserved for women.
However, “this could be a negative for PSU banks due to NPL (non-performing loans) worries”, research firm CLSA said in a note.
The party also mentions a new scheme for reskilling and upskilling the workforce to insulate it from “technological shocks”, and increasing MUDRA loan beneficiaries to 300 million from 170 million.
Meanwhile, the Congress, capitalising on the BJP’s recent trouble with job data, has a more direct approach to job creation. The party’s manifesto promises to create 10 lakh Seva Mitra jobs in rural and urban local bodies, and overall 1 crore low-skilled jobs for those who have completed only a few years in school.
Economists suggest that India doesn’t have enough manufacturing jobs to absorb new entrants to the workforce and displaced farm labourers, who might not be skilled for jobs in the service sector.
“While production levels have gone up and that’s driven consumption, our general extent of employment hasn’t gone up because the source of growth has not been very labour-intensive,” Deepanshu Mohan, associate professor of economics, O.P. Jindal Global University, had told Fortune India.
The Congress party also promises to fill 400,000 vacant positions in the central government, and increase the guaranteed days of employment under the National Rural Income Guarantee Scheme to up to 150 days, up from the current 100.
Suvodeep Rakshit, senior economist, Kotak Securities, says the unemployment scenario in India is not really clear, while some metrics would suggest a decent pace of employment, there are anecdotal evidences to suggest that the rate of unemployment is high, especially in the unorganised segment.
“There are 12-14 million workers coming into the workforce every year. The Congress manifesto has a clearer approach in terms of the number of jobs it aims to provide through the government and government-related route. However, feasibility of filling up the vacancies is not obvious,” he says. “The BJP manifesto addresses the issue of job creation through the self-starters/entrepreneurs route. While both parties are looking to address the issue of job creation, the approaches are different.”
Entrepreneurship and boosting startups is also on the agenda for both parties. While the BJP has proposed a seed fund of ₹20,000 crore for startups, the Congress says it will create an Enterprise Support Agency to help entrepreneurs, including startups, with all-round business support including counselling, incubation, access to technology, and funding, etc.
Both manifestos have promised much for farmers, who form a large section of the electorate. The BJP has reiterated its promise to double farmers’ income by 2022, and said it will expand the Pradhan Mantri Kisan Samman Nidhi Yojna (which promises direct payment of ₹6,000 per year to farmers owning less than 2 hectares of land) across the whole country. Farmers above 60 years of age and those who run small-scale shops will get a pension.
The ruling party has also promised to spend ₹25 lakh crore on the agri-rural sector to improve farm productivity.
Meanwhile, the Congress has promised to waive farm loans and make farm debt a civil liability, which means farmers defaulting on their debt won’t be tried under criminal law. The party also promised a separate agriculture budget and ₹72,000 a year or ₹6,000 a month to be transferred to the poorest 20% families. The party estimates that it will cost less than 1% of GDP in the first year, and less than 2% in subsequent years.
In a report, Nomura says that the Congress’ flagship poll plank—the minimum income guarantee scheme, will be an uphill task. “The NYAY scheme, along with proposals of universal farm loan waiver, increased healthcare and education outlay—are at odds with the INC’s concurrent aim of fiscal deficit at 3% of GDP. Likely compromises will be in the momentum of public capex, or higher taxation; both of which could also run afoul of the manifesto’s commitments,” it says.
Garima Kapoor, economist and vice president at Elara Capital, says to extend income support at this scale, the existing support in the form of housing, rural development or farm subsidies will have to rationalised, without which the budget will not have space for an additional ₹3 lakh crore.
The BJP has also promised to spend big on developing the road, railway, airport, port, and digital infrastructure in the country. It speaks of doubling the number of functional airports in the country (currently 101), doubling the number port capacity, and the length of national highways in the next three years. The party plans to spend $1.4 trillion on infrastructure development. Interestingly, the BJP mentions that it has already allocated ₹10,000 crore for promoting clean energy and battery-operated vehicles. It, however, doesn’t have a specific road map or timeline for e-vehicles.
While the Congress also talks of augmenting the length of highways and modernising railways, it makes design, quality, and maintenance its focus. Both parties also promised to prosecute big loan defaulters, and bolster health and education spending. The Congress has promised to double the government expenditure on healthcare to 3% of GDP by 2023-24 and a Right to Healthcare Act that will guarantee every citizen the right to healthcare services. The BJP, which launched the Ayushmaan Bharat scheme last year, says it is committed to reducing the out-of-pocket expenditure on health.
Elara Capital’s Kapoor calls it a “refreshing promise”. “The spending on these two—health and education—remains abysmal in India even today,” she says.
