Yesterday I reviewed click here a part of the Congress Manifesto that is key to the future of India’s youth – Kaam - Employment and Growth. It had some impressive action plans, though some of them seemed fancy. However, if implemented as a package it can boost morale and the GDP.
Today in Part II we will review the Economy and National Security and see what they have to offer if voted to power.
DAAM - an economy that works for all
a. NYAY – Let me quote from the manifesto directly as Congress sees this as their true election game changer: "Congress believes that the size of India’s GDP and the level of Total Expenditure (Central and State Governments) allow us to undertake an ambitious programme of cash transfer to the poorest sections of the people, without, in any way, affecting the goal of fiscal prudence. The main features of the Minimum Income Support Programme (MISP) or Nyuntam Aay Yojana (NYAY) will be: The target population will be 5 crore families who constitute the poorest 20 percent of all families. They will be the beneficiaries of MISP or NYAY; Each family will be guaranteed a cash transfer of Rs. 72,000 a year; As far as possible, the money will be transferred to the account of a woman of the family who has a bank account, or who will be urged to open a bank account; There will be a Design Phase (3 months), followed by Pilot and Testing Phases (6-9 months) before the rollout; The rollout will be implemented in phases; The estimated cost will be
Congress hopes that this promise, much like the 15 lakhs in each account promised in the run-up to the 2014 election, will be a game changer and it may well be. The implementation plan is also broadly detailed, apparently after consultations with economists and even the former Governor of the RBI, Rajan, and the Congress may well appoint an economist Finance Minister to implement it! First, however, they must be able to convince the people to vote them to power.
b. Agriculture - This subject is a hot potato for political parties, much like the hot summers without water our farmers endure. What do they propose to do? Serve up a separate Kisan Budget and establish a couple of commissions, a National Commission on Agricultural Development and Planning consisting of farmers, agricultural scientists, and agricultural economists to examine and advise the government on how to make agriculture viable, competitive and remunerative and also establish a Commission on Marginal Farmers and Agricultural Labour to advise on policies and programmes that will help them earn income from higher wages, and from non-crop based agriculture such as horticulture and floriculture, dairying and poultry. They will also, (naturally), according to their manifesto, completely re-design the BJP government’s 'failed' Fasal Bima Yojana (Crop Insurance Scheme).
c. Science Technology and Innovation – The Congress party proposes to strengthen patent laws, science departments, provide adequate funds for research and fill all vacancies - the usual drill. What is different perhaps is its promise to set up a Scenario Planning and Strategic Futures Office to look at medium-to-long term strategic opportunities and risks for the country as an aid to informed policymaking and a National Data Science Institute with adequate funding and human resources to train and produce world-class Data Scientists.
d. Tax and Tax Reforms - This is a crucial sector of the economy that affects every citizen and the promises are detailed - especially about GST. But first, they promise to impose (or apply?) only reasonable and progressive individual and corporate tax rates - What that means is unclear. After all one man's food is another man's poison. But the clincher for them seems to be their promises on the Goods and Services Tax - which they have upgraded to version 2.0. What does this entail? According to their plans, the GST 2.0 regime will be based on a single, moderate, standard rate of tax on all goods and services. The rate will be revenue neutral to the current indirect tax revenues of the Central and state governments and will take note of the potential of GST 2.0 to boost their tax revenues. The GST 2.0 regime will levy a special rate of duty on demerit goods.
GST 2.0 they promise, will be easy to administer, easy to understand by the taxpayer, and easy to comply with. Incredibly, the manifesto promises that the Real Estate (all sectors), Petroleum Products, Tobacco and Liquor will be brought within the ambit of GST 2.0 in a manner and time period not exceeding two years as agreed to in the GST Council. With many states in opposition to this as it is now their only source of additional revenue - some states do not even allow liquor sale - is this a pipe dream? Essential goods of mass consumption (such as food grains, lifesaving drugs, vaccines, etc.) and essential services will be exempted from GST 2.0 or zero-rated.
For industry, Congress promises that threshold exemption for small businesses will not be affected by the inter-state supply of goods or services. In order to support small, unregistered businesses that supply goods and services, there will be no GST liability on the purchaser through the reverse charge mechanism - This is significant.
Congress also promises to abolish the e-way bill. Tax evasion they say, will be detected through the risk management mechanism and strengthening the intelligence machinery – Will this be a return the terrorism of the check post system?
Another significant promise is the promise to find a way to allocate a share of GST revenues to Panchayats and Municipalities. Also significantly, in a departure from the alleged tax terrorism of the current regime, the Congress manifesto promises that the DTC and GST 2.0 will be essentially civil laws and any violations will attract civil penalties that will be proportionate to the tax evaded. Prosecution under DTC and GST 2.0 will only be in cases of criminal conspiracy, corruption, or fraud.
e. Fisheries and Fisherfolk - Here the manifesto promises one more employment generation scheme - but not for the fisherfolk. The Congress says it will establish a separate Ministry of Fisheries and Welfare of Fisherfolk. "We will constitute a National Fisherfolk Commission to promote fishing and the welfare of fisherfolk. It will address indebtedness and appropriate funding mechanisms for fishing."
f. Banking and Finacial Sector - The banks, their assets, their NPA's and the frauds in the sector are in the limelight. Public sector banks were the brainchild of the Congress party and today they are facing the wrong end of the stick. They are caught between a rock and a hard place and ironically promise "a comprehensive review of the concept, role, and functions of Public Sector Banks (PSBs) in order to make PSBs robust and competitive with healthy balance sheets.
Congress will amalgamate 2 or more PSBs so that there will be only 6-8 PSBs with a national presence and reach. Each of the amalgamated PSBs will be adequately capitalized. “We will undertake a comprehensive review of the governance structure of PSBs and implement changes to make the PSB an independent commercial banking organization that is competitive, healthy, efficient and profitable. We will abolish the redundant Banking Board Bureau." This is the essence of their manifesto for the sector and it falls far short of expectations of a comprehensive reform of the sector.
SHAAN - Pride in our hard and soft power
a. National Security - On national security, the Congress has always been on the back foot. It has not been able to compete with the robust nationalist image that its rival and incumbent, has been able to create with all the forces at its disposal. One chief minister has even referred to the armed forces as those of the leader in power. Most unfortunate, but that is the perception. How then to reverse it? Well, the Congress says, spend more, review more, manufacture more (in India) and create a centralized office of the Chief of Defence Staff (CDS) a proposal that has been hanging fire for some time now. Additionally, they propose to "provide a statutory basis to the National Security Council (NSC) and the office of National Security Adviser (NSA). Their powers and functions will be defined under the law and both authorities, and the agencies under them will be accountable to Parliament." No word on how they will address the challenges of equipping the armed forces, preventing corruption in the acquisition process, modifying the defense strategy, given the challenges on the western and eastern borders and the like.
b. Internal Security - The Congress has also been known to be weak on Internal security. But in order to strengthen its image in this crucial area, it says it will revive its pet project the National Counter Terrorism Center and NATGRID that was shelved after PM Modi, then CM of Gujarat and other BJP Chief Ministers expressed opposition to it on the grounds of violation of the federal structure of the constitution. The Congress promises that the NCTC will be set up within 3 months and NATGRID will be made operational by December 2019. Apart from this, they propose to tackle Internal Security issues by putting the onus of responsibility on the District Administration and state police forces. A better approach would have been efforts to inculcate a more responsible attitude among polity influencers’ including their own.
c. Foreign Policy - The web page on foreign policy, a very important part of India's rising stature in the international world sadly regurgitates its tourism manifesto. Such technical glitches must be alien to this document.
d. Tourism - A tourism development bank is on the anvil - Tourism projects have a long gestation period, during which local regulations, etc can change, putting projects in jeopardy and the country could be faced with another failed infrastructure bank. But perhaps this is one way forward. Expansion of the Visa on Arrival scheme is another good move. Already initiated by the BJP regime, they plan to take it forward which is good. More important however is the need to streamline the tourism system within the country - the cleanliness, the access, especially for the challenged, a non-discriminatory regime of visit charges and the like are very important. Safety, security, and accommodation too are important and these have not been addressed.
e. Ex-Servicemen - For the ex-servicemen, there is something on offer - "Congress will formulate and implement a policy that will allow Armed Forces personnel, who retire after a period of colour service or earlier, lateral entry into the civil services based on their qualifications. We will also allow Armed Forces personnel who retire before the age of 40 years to enter the Central Armed Police Forces at suitable levels based on their qualifications and physical fitness." They also promise to fulfill OROP promises, substantially expand the capacity of the Armed Forces medical corps and hospitals and revise the procedure to determine the disability of injured armed forces personnel and make the determination final subject to an appeal only at the instance of the disabled person. All of these seem very good moves for the benefit of those who put their lives on the line for the nation.
To be continued in Part III (Review of Samman, Sushasan and Swabhiman)
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