The issue with all the political manifestos is that they are looked at with some scepticism as they tend to overpromise and one can never be sure of how much content will translate into action. In a way, the ruling party has the advantage that it has a track record to show to justify its aspirations. But, it also runs the risk of questions being raised on the unfulfilled promises.
The Bharatiya Janata Party (BJP) manifesto promises continuity which is assuring as there will be more of the same with certain toppings directed to the poorer sections. The immediate question for the critic is whether all this will be delivered or not because there has been a tendency for parties to turn cautious when in power with messages of difficult times and when the Budget is introduced with pleas for sacrifices. Therefore, all the manifestos, whether the BJP or the Congress, have to be treated with some apprehension.
This is more so because both the leading parties have promised not to stray from the Fiscal Responsibility and Budget Management (FRBM) path. Once this is the starting point, then the rest will fall in place and adjustments have to be made to dovetail the expenses to the fiscal deficit.
This said, are there any key takeaways from the manifesto? There is a promise of spending Rs 100 lakh crore on infrastructure in the next five years. Is this possible? The answer is that from the Budget, the government will not be able to do so because presently the capex is around Rs 3 lakh crore per annum which when multiplied by 5 years comes to Rs 15 lakh crore.
Quite clearly, the rest will come from the private sector or public sector undertakings (PSUs) through off budgetary borrowing. The same holds for agriculture where investment is to be Rs 25 lakh crore for improving productivity.
If it is already a part of what is being given for irrigation or land improvement or there are contributions coming from the states, then the numbers may add up. Otherwise, these allocations may not be incremental in nature.
There is also the objective of doubling farmers' income. Can this be really done? All the parties have made it a habit of talking of doubling farmer income but this does not seem to be happening. The ruling government had also spoken about a similar goal in the past. This can happen only in case production goes up and farmers get a higher price for their produce.
Productivity requires getting in a new Green Revolution across all crops so that farmers produce more on the same piece of land. Second, prices have to be more remunerative and this is hard to assure given that a lot depends on the demand-supply relation. Announcing higher minimum support prices (MSPs) does not help if not backed by procurement which had been the bane of all such programmes.
There are other objectives of providing power and liquid petroleum gas (LPG) to all besides housing which are schemes already in progress and have done fairly well. These steps taken have been beneficial to several households which will multiply if pursued. The same holds for toilets which is a continuation of Swachh Bharat Mission.
A mention of giving interest-free loans of up to Rs 1 lakh of fresh sanctions is new and it needs to be seen whether this will be financed through the Budget because banks cannot be made to pay for it. This will have to come as 100 percent subsidy that will have to fall within the contours of the Budget.
There are interest rate subvention provisions of Rs 18,000 crore already in the FY20 Budget and the question is whether this new scheme will come within this amount or will there be an additional allocation? Pensions for marginal farmers and traders sound good but the coverage and funding will be challenging as even the PM-farmer scheme is to become more broad-based. Quite clearly these schemes will tend to be more targeted.
There is an indication that tax rates will be lowered. This promise has not been fulfilled especially so as the government had shown that demonetisation and Goods and Services Tax (GST) had helped clean the system and with the war on black money being aggressive the number of tax payers has increased as have tax collections. This being the case, there is a strong argument for lower tax rates which hopefully should materialise.
The infra push seems more of highways and here it was hoped that the focus would be more on connecting the interiors. Presently, there has been a lot of progress on the national highways to the neglect of connectivity to the interiors. While this may technically be the role of the state government, ULBs and panchayats, it would have been in order to have the manifesto talk of this too as it has covered a lot of other problems of the village people.
In fact, poor connectivity has been one reason for farmers not being able to get better prices as they have been forced to sell to the adathiyas (middlemen) at a lower price. The reason for a long value chain is both knowledge and connectivity, which should be addressed. In fact, the National Agriculture Market or eNAM project will work well only if this is improved.
There is also focus on education and the setting up of more engineering colleges. While this is good, the linkage with jobs is necessary as there is a pecking order in terms of preference for employers. The problem with public educational institutions has been the quality of staff and education dispensed which had made them less attractive for student. There have been cases of new All India Institute of Medical Sciences (AIIMS) being started which do not have patients due to absence of facilities. Such gaps need to be addressed.
Hence, just like the Congress manifesto, which promises a lot, one needs to treat this one as another statement of intent where the delivery schedules will be linked more with the fiscal space available at the time of implementation. The advantage which the BJP has is that there is a good track record in some areas like infrastructure but the large numbers like Rs 25 lakh crore or Rs 100 lakh crore should be looked at with moderate eyes.
(The writer is chief economist, CARE Ratings)
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Updated Date: Apr 08, 2019 17:05:32 IST