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As the first phase of Lok Sabha polls kick off on Friday, India’s economy and plans of the two top contenders to grow it, will be key factors. The manifestos of both the Bharatiya Janata Party (BJP) and the Congress spell out plans to grow India’s stature in the global arena, but both take radically different paths.
The BJP tells voters they have managed to bring India from the “fragile 5 to top 5 economies” and will continue their current growth policies to make it the third largest economy. The Congress says NDA’s legacy is that of ‘job-less’ growth and the grand old party, if voted to power, will double India’s GDP in the next 10 years, and reinvent the economy, as it did in 1991.
Rahul Gandhi with a copy of the Congress’ manifesto | Photo Credit: SHIV KUMAR PUSHPAKAR
With the IMF forecasting 6.8 per cent growth for India in 2024 and the UK and Japan estimated to clock less than 1 per cent growth, the third largest economy tag is not too far away and BJP’s promise can be projected to be achieved by 2027. Similarly, between 2014-2024, despite Covid, India more than doubled its nominal GDP from around Rs 100 lakh crore to Rs 260 lakh crore. Thus, the Congress’ declaration of doubling the GDP in the next 10 years seems achievable.
While the BJP’s manifesto highlights GST, the Make-in-India scheme and Production-linked Incentive (PLI) among its key wins. Congress says it will focus on the twin challenges facing India -- unemployment and inflation. Interestingly, the word ‘unemployment’ does not feature in the BJP’s manifesto, but the party commits to leverage infrastructure projects and the manufacturing sector to achieve growth and employment goals. However, with automation playing a key role in manufacturing, the sector is not as labour-intensive as it used to be. The Congress’ manifesto sets a specific target to raise the share of manufacturing from 14 per cent to 20 per cent of GDP in the next five years. With the share of manufacturing in GDP stagnating post-pandemic, this looks to be a tall ask.
On the taxes and compliance front, both parties agree that the framework needs a revisit, but the Congress is calling for a complete overhaul of the taxation system. During the NDA’s 10 years, the tax base increased, but the tax-to-GDP ratio did not see a large rise. With the Congress making a promise to keep personal income tax stable and coupled with the party’s commitment to revamp GST and Central Government cess, tax revenue will likely be impacted.
Radhika Rao, senior economist at DBS, said in a note the BJP’s manifesto lacks a push towards more “contentious structural reforms (land, labour, farming, etc.),“ but these could be prioritised if the party returns for a third term. “On the other hand, implementing the Congress’ social welfare and populist measures will entail significant fiscal costs, necessitating subsequent revenue-enhancing measures,” she added.
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