UBS bid on BJP-Congress manifesto, competition is between existing policy vs populist promises
2024 Loksabha Election Manifesto: Political parties are not legally bound to fulfill the promises made in the manifesto.
2024 Loksabha Election Manifesto: Both the major national parties of the country, Congress and BJP, have released their respective manifestos regarding the Loksabha Elections. Veterans and experts related to the economic field have also started doing post-mortem of the manifestos of both the parties. The world's leading financial firm UBS has issued a research note reviewing the manifestos of political parties.
UBS reviewed the declaration papers
UBS in its note, keeping in mind India's economic picture, will Modi win? Election Manifesto: A research paper has been released on the manifestos of political parties titled: Policy Continuity vs Populism. UBS said in its research paper that in the election manifestos, political parties have focused on youth, women, farmers, poor and minorities. UBS said that it has reviewed the manifestos of regional parties including national parties like BJP, Congress for the 2024 Lok Sabha elections. Political parties are not legally bound to fulfill the promises made in the manifesto, but policy choices and reforms matter for setting the narrative for growth and macro stability in the medium term.
Populist announcements will increase the financial burden!
According to UBS, BJP in its manifesto said how it has demonstrated high growth and fiscal prudence with low inflation rate in the last decade and it will continue on the same path in future also. The party has guaranteed that the Indian economy will be the third largest economy in the world in the next five years. UBS said that focusing on policy continuity will be beneficial for business sentiment and will encourage private corporate capital expenditure. According to UBS, Congress has also said some right things in its manifesto but it is more populist. The note said that by fulfilling the populist promises made in the Congress manifesto, the fiscal deficit will increase to 7 to 8.5 percent of the GDP, whereas the BJP government has set a target of keeping the fiscal deficit at 5.1 percent of the GDP in the interim budget. According to UBS, the increase in fiscal deficit will blow to macro stability and further delay private corporate capex recovery.
Congress BJP's emphasis on manufacturing
UBS has also compared the things said in the manifestos of BJP, Congress and regional parties regarding different agendas. Regarding economy, BJP said in its manifesto that it will make India from fifth to third largest economy and will make India a manufacturing hub. Congress has promised to focus on employment generation, wealth creation and social security along with implementing the new economic policy. The party has also promised to increase the share of manufacturing in GDP from the current 14 percent to 20 percent.
Legal guarantee of MSP
Regarding the agricultural sector, BJP in its manifesto has promised to create an Agricultural Infrastructure Mission to implement agricultural infrastructure projects with integrated planning and coordination. It has been promised to make India self-reliant in the matter of pulses and edible oil along with making India Agricultural Satellite for agriculture based activities. Whereas Congress has promised to give legal guarantee to the Minimum Support Price (MSP) by implementing the recommendations of the Swaminathan Commission. DMK has promised loan waiver of farmers.
Congress will give Rs 1 lakh annually, BJP will give free grains
BJP, in its manifesto for rural India and the poor, has promised to provide free ration for the next five years under the PM Garib Kalyan Anna Yojana. PM has promised to provide free electricity under Surya Ghar Free Electricity Scheme, increase the limit of loan amount under PM Mudra Scheme from Rs 10 lakh to Rs 20 lakh and construction of 3 crore new houses for the poor. Whereas Congress has promised to give Rs 1 lakh annually to every woman from a poor family under Mahalakshmi Scheme. Apart from giving minimum wage of Rs 400 per day under MNREGA, it has also been promised to provide clean drinking water to the entire country. Apart from this, Congress has mentioned in its manifesto about providing pulses and edible oil under PDS.
Promise of 30 lakh government jobs!
The issue of employment is prominent in this election. So BJP in its manifesto has talked about increasing employment opportunities in manufacturing through PLI scheme and Make in India, developing India as a major center in terms of toy manufacturing, increasing employment opportunities in tourism along with greater global capability. It has been promised to create centres, global tech centers and global engineering centres. If we look at the promises made in the manifesto of Congress on the issue of employment, the party has promised to give apprenticeship for one year to every diploma holder and graduate under the Right to Apprenticeship. Employment guarantee scheme like MNREGA will be started for urban areas. Congress has promised to fill 30 lakh vacant posts in the central government. It has also promised to provide 10 percent quota in jobs and educational institutions for economically weaker people. Also, the outstanding interest on all education loans will be waived off till March 15, 2024.
BJP will provide health insurance to the elderly, Congress will bring GST 2.0
On the issue of health, BJP has promised to provide benefits of Ayushman Bharat scheme to senior citizens above 70 years of age and transgenders, in which the government provides insurance cover for treatment expenses up to Rs 5 lakh. Congress in its manifesto has promised to provide cashless insurance benefit of up to Rs 25 lakh to the poor. On the issue of infrastructure, BJP and Congress have also made big promises in their manifestos. On the tax and GST front, BJP has promised to further simplify the GST portal, while Congress has promised to bring a new single rate GST 2.0. Congress has given assurance of stable personal income tax rate along with bringing Direct Tax Code. And assurance has been given to keep Union Cess and Surcharge at 5 percent of gross tax revenue.
Financial burden will increase due to promises from Congress
UPS said in its note that many populist promises have been made in the Congress manifesto but it has not mentioned how much burden it will put on the exchequer. UBS said that if all the announcements of Congress are implemented, there will be an additional financial burden of 2 to 3 percent of GDP on the government treasury. The note said that it has also not been made clear whether the old welfare schemes will be withdrawn. UBS said that it does not seem possible to implement this unless the economic recovery becomes faster and more taxes are not imposed, while the Congress is committed to keeping the income tax rates stable throughout its tenure and increasing the central government's cess and surcharge to the gross tax revenue. There is talk of keeping it stable at 5 percent.
Will Modi win?
UBS said in its research note, we are not predicting the results of the elections because in the past also opinion polls and exit polls have been proved wrong, however in the recently conducted opinion polls there is talk of better performance of BJP in the elections. . On the basis of these trends, it can be said that Prime Minister Narendra Modi is the most popular leader of India. The results of the recent assembly elections show that BJP has benefited greatly from the Modi factor, the work of his government and the welfare schemes implemented by the government. Despite the Lok Sabha elections, the government has avoided making populist announcements. According to UBS, political stability will ensure policy continuity, which will have a positive impact on market sentiment.
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