BJP promises low-tax, low-interest regime; silent on disinvestment
The Financial Express, April 4, 2009, Page 1
fe Bureau, New Delhi
US companies with Indian operations are in for a shock if the BJP wins the upcoming Lok Sabha polls. The party’s strategy to put the slowing domestic economy back on a high-growth path envisages imposing restrictions on the local operations of foreign firms if their home countries restrict the hiring of Indian workers with valid work visas—as the Obama administration has done for US companies receiving federal aid.
Significantly, the party’s election manifesto unveiled on Ramnavami, Friday, ostensibly to reiterate its Hindutva commitment, outlines 16 steps to revive the economy “from recession to job-generating growth”. Terming the incumbent UPA’s recent attempts to backtrack from its inflation-obsessed monetary policies as “half-hearted”, the BJP has promised “determined, direct and visible” interventions to revitalise growth.
Mooting a low-tax, low-interest regime that puts more money in the hands of the people, the BJP promises to double the threshold for personal income-tax exemption to Rs 3 lakh, as well as exempt interest on bank deposits by individuals. Pension receipts will be made tax-free as well. “Good governance, development and security, these summarise our promises,” said the BJP’s prime ministerial candidate, LK Advani.
Competing with the Congress in poll pledges, the BJP promises an array of populist measures including 35 kg of foodgrain for the poor at Rs 2 a kg, farm loans at 4% and an income-tax-free regime for soldiers and paramilitary forces. However, for a party that made a strong case for disinvestment, the document is conspicuously silent on the subject.
Like the Congress, the BJP also promises a goods & services tax, but has specified a rate of 12%-14%, which economists say point to a hike in service tax, excise and Vat. For India Inc, it has promised to scrap the fringe-benefit tax and rationalise the minimum alternate tax. As a fiscal stimulus, the party vowed to put infrastructure projects on the fast track, with at least 15-20 km of new highways every day.
Taking a pot shot at the Congress’ handling of the Satyam Computer Services scam, the BJP manifesto says: “Regulatory bodies, which are supposed to monitor the performance and balance sheets of companies, will be strengthened to prevent corporate fraud that dents India’s image and has a direct impact on the market and investors.”
The manifesto does not say how these sops would be financed, except for promising to repatriate back black money stashed away in overseas tax havens. Advani has already raked up the issue of illegal money in foreign banks, saying that its retrieval could result in funds of Rs 4 crore for each village in the country for infrastructure projects.
“While the BJP’s economic agenda is more specific than that of the Congress, there shouldn’t be too much difference between the two parties on actual implementation. The UPA was leaning more towards social sector projects to revive the economy and the BJP seems to be making up for it,” said Sonal Varma, economist at Nomura.
The Financial Express, April 4, 2009, Page 1
fe Bureau, New Delhi
US companies with Indian operations are in for a shock if the BJP wins the upcoming Lok Sabha polls. The party’s strategy to put the slowing domestic economy back on a high-growth path envisages imposing restrictions on the local operations of foreign firms if their home countries restrict the hiring of Indian workers with valid work visas—as the Obama administration has done for US companies receiving federal aid.
Significantly, the party’s election manifesto unveiled on Ramnavami, Friday, ostensibly to reiterate its Hindutva commitment, outlines 16 steps to revive the economy “from recession to job-generating growth”. Terming the incumbent UPA’s recent attempts to backtrack from its inflation-obsessed monetary policies as “half-hearted”, the BJP has promised “determined, direct and visible” interventions to revitalise growth.
Mooting a low-tax, low-interest regime that puts more money in the hands of the people, the BJP promises to double the threshold for personal income-tax exemption to Rs 3 lakh, as well as exempt interest on bank deposits by individuals. Pension receipts will be made tax-free as well. “Good governance, development and security, these summarise our promises,” said the BJP’s prime ministerial candidate, LK Advani.
Competing with the Congress in poll pledges, the BJP promises an array of populist measures including 35 kg of foodgrain for the poor at Rs 2 a kg, farm loans at 4% and an income-tax-free regime for soldiers and paramilitary forces. However, for a party that made a strong case for disinvestment, the document is conspicuously silent on the subject.
Like the Congress, the BJP also promises a goods & services tax, but has specified a rate of 12%-14%, which economists say point to a hike in service tax, excise and Vat. For India Inc, it has promised to scrap the fringe-benefit tax and rationalise the minimum alternate tax. As a fiscal stimulus, the party vowed to put infrastructure projects on the fast track, with at least 15-20 km of new highways every day.
Taking a pot shot at the Congress’ handling of the Satyam Computer Services scam, the BJP manifesto says: “Regulatory bodies, which are supposed to monitor the performance and balance sheets of companies, will be strengthened to prevent corporate fraud that dents India’s image and has a direct impact on the market and investors.”
The manifesto does not say how these sops would be financed, except for promising to repatriate back black money stashed away in overseas tax havens. Advani has already raked up the issue of illegal money in foreign banks, saying that its retrieval could result in funds of Rs 4 crore for each village in the country for infrastructure projects.
“While the BJP’s economic agenda is more specific than that of the Congress, there shouldn’t be too much difference between the two parties on actual implementation. The UPA was leaning more towards social sector projects to revive the economy and the BJP seems to be making up for it,” said Sonal Varma, economist at Nomura.
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