AICC seeks to reinvent itself, look business-friendly
Given how difficult it is to sell reform after decades of populism, it is not surprising that party manifestos, particularly of the Congress party, tend to be low on the reform quotient. Which is why the party’s 2014 manifesto comes as a breath of fresh air, despite its obvious contradictions—one part of the manifesto talks of raising user charges and targeting subsidies at only the poor, but the Food Security Act which gives subsidised food to most Indians is extolled in an earlier section. Even so, while there is no guarantee every manifesto promise will be honoured, it tells you what the party will not do. In the 2009 manifesto, the Congress was clear that ‘blind privatisation’ was off the agenda and that PSUs were to be given whatever support they needed—a very bad idea.
To that extent, the 2014 manifesto touches all the right chords, though it doesn’t give up on its practice of promising more ‘rights’—desirable as it is, how do you implement a ‘right to entrepreneurship’? Given the Congress has been slammed for slowing growth and employment opportunities, the party promises to bring back 8% growth rates within 3 years. While getting the fiscal balance right is vital to this—the FRBM has been brushed afresh—the manifesto promises there will be no repeat of Vodafone-type retroactive taxation policies; a clear policy on tax treatment of foreign firms and M&A transactions has been promised. Does this mean Vodafone will be let off the hook? Possibly not, since another section talks of ensuring taxes are paid in the jurisdiction they are earned. Buoyed by the success of the Cabinet Committee on Investments, a similar body is to be set up to facilitate solutions to the problems investors have; a regulatory reform task force is to be set up, and a flexible labour policy is also on the agenda. Given its political sensitivity, the manifesto sensibly doesn’t talk of modifying the Industrial Disputes Act—any unit with more than 100 persons has to get official permission for firing workers or shutting down—but it makes an important first step by promising to reform the Apprentice Act to encourage firms to hire apprentices, which gives them more flexibility while providing on-the-job training.
There are enough questions that remain. Are oil subsidies to go since subsidies are to be carefully targeted—just 0.07% of the LPG subsidy in rural areas goes to the poorest fifth of households. If education outcomes are to be measured, how are existing teachers—who don’t teach—to be dealt with. Empowered mayors, a big manifesto promise, who function as city CEOs are the only way urban India’s problems can be fixed but, for instance, will a chief minister of Maharashtra allow an empowered mayor of Mumbai? That, however, is the thing of politics; manifestos are about direction.