BJP's enabling manifesto (April 12, 2009)

Sunday Pioneer, April 12, 2009

By Swapan Dasgupta

When Devi Lal, that great purveyor of earthy wisdom, first asked “Who reads manifestos”, he was mocked by an intelligentsia that still believed in the sanctity of political commitments. That, however, was in 1989. Two decades later, the presiding deities of the intellectual establishment have become emotional Third Front-ers, and willing to propagate the notion that what matters in politics are flexibility and the ever-willingness to be a part of any government. Last Wednesday, for example, I was simply taken aback by the endorsement of Devi Lal Thought by Hindu editor N.Ram—one of the last pillars of Brahmanical Stalinism—in TV show. If the editor of the stodgy Hindu, which makes it a point to report every inanity of those in authority, could find nothing worthwhile about manifestos, it must surely mark the end of civilisation as we know it.

There is a basis to Ram’s scepticism about manifestos in general. The Congress manifesto of 2004, for example, promised the creation of one crore jobs per year. Against that assurance it is estimated that nearly 1.5 crore jobs have been lost in the past six months alone. However, at the release of the 2009 Congress manifesto last month, Prime Minister Manmohan Singh claimed with a straight face that the party had fulfilled 80 per cent of its previous commitments. When the holder of the highest political office can fall back on such an incredible claim, there are grounds for believing that manifestos have about as much sanctity as the Congress contention that the UPA is intact.

The overall scepticism notwithstanding, there are grounds for viewing the BJP manifesto a little differently from the rest. This is not on account of its tall promise (in the IT Vision document) to ensure a mobile phone for all those below the poverty line or the amazing assertion that the Ram Setu can be made into a tourist spot. The importance of the BJP Manifesto, as I see it, lies in its approach to the economy.

The global economic slowdown has induced a fundamental rethink about the role of the state in the economy. First, the champions of capitalism have acknowledged that unbridled human greed can lead to wild speculation, irrational exuberance and lead to debilitating distortions. Second, there has been a revival of Keynesian economics which emphasises the overriding importance of the state in kick-starting the process of economic recovery. Neo-socialists such as British Prime Minister Gordon Brown have gone to the extent of describing the G-10 summit formulations as the basis of a “new world order”—a turn of phrase that conjures unhappy memories of the false dawn of socialism in the 1960s.

The likes of Manmohan who had to reluctantly dismantle India’s over-regulated economy are ecstatic. There is nothing the dinosaurs among economists like better than putting more and more money at the disposal of an ever-expanding state. This was the basis of Indira Gandhi’s disastrous Left-turn in the 1970s, a process that set India back by at least two decades. Given half a chance, the Congress would love to get back to the good old days of reckless government expenditure and high taxes to fund it.

The BJP Manifesto differs from the new orthodoxy in two significant ways. First, the role of the state in the economy has been narrowed down to two specific areas. There is, of course, the heavy investments in infrastructure—the building of roads, the upgrading of ports and airports and investments in low-cost housing. Along with this the state has been entrusted to ensure cheap food to those citizens who need it the most and special facilities for the advancement of women.

There is a fundamental difference between this and the Congress emphasis on the NREGA. The NREGA scheme was a flawed exercise in welfare precisely because it channelled government expenditure into earthworks and non-asset building projects. The money the UPA Government diverted away from infrastructure projects has resulted in the creation of nothing tangible.

The second feature of the BJP manifesto which is a radical break from the past is the commitment to a low tax and low interest regime. The thinking behind this is important: the economy can be revived if there is more money in the pockets of individuals and their families for both consumption and investment. Individuals and families can be expected to make more rational choices than a centralised state. India’s post-1998 success was entirely entrepreneur-driven and not state-driven. It is that logic which has been incorporated in the manifesto.

If taxes are low, where will the money come from? This is a question that some Congress leaders have raised. Implicit is the Congress belief that the ever-growing state must be paid for by individuals and corporates through high taxes. Apart from blunting India’s competitive edge, this is precisely the sort of economics that encourages tax evasion and the growth of the black economy (which in turn distorts politics).

The low tax alternative is based on the premise that greater economic activity will more than make up the dip in the per capita burden of taxation. Of course, this has to be complemented by two additional measures: the unblocking of idle government assets (a euphemism for targeted privatisation in the non-strategic sector) and better tax compliance. The promise to unearth illegal money stashed overseas isn’t a moral issue alone; it is imperative to ensure that honest Indians pay less taxes.

The extent to which these ideas can be put into effect depends on the outcome. But whatever the May 16 verdict, the BJP has added an extra feather to its famed distinctiveness. And this time, the critics can’t raise the communal bogey.