The Bharatiya Janata Party’s economic resolution has steered clear of a single tax like banking transaction tax and instead pitched for simplification of the fiscal regime. But it has criticised the retrospective taxes of the government which it claimed delivered a “body blow to Indian and foreign investor confidence”.
It has also come out in support of the Reserve Bank of India saying, “the government tried to pass the buck on the RBI for its own failure” to control inflation. While it does not accept there is any need to expand organised retail including foreign investment, it accepts that inflation is a supply side issue.
“Instead of addressing the supply side issues to arrest inflation, the government continued with squeezing the demand and investment by raising the interest rate for 17 times,” it notes. The resolution passed at the national executive committee meeting of the party will be expected to be fleshed out more as the party bids to form a government in the general elections later this year.
The main element of the paper are criticism of the slowdown because of what it calls policy paralysis and also makes a striking point that the government is cooking its data. “For the first time the reliability of government data is being questioned,” it adds.
Commenting on the paper public finance economist DK Srivastava, Chief Policy Advisor, Ernst &Young said the objective is “welcome but the diagnosis seems to be a bit incomplete”.
According to him what is needed right now is increasing the domestic savings. It will be crucial to lower the interest rates and expand investments which will in turn spur growth. “The next government also needs to cut down on its consumption expenditure and revenue deficit,” he said.
Expanding on the theme BJP president Rajnath Singh on Sunday highlighted concerns over the slowing economy and said that issues of laggard industrial output, a high current account deficit, spiraling inflation, complex tax regime and low investments in infrastructure must be taken up head on.
“The wheel of country’s development which was moving at a pace more than 8 percent during the NDA regime has now slowed down below 5 percent… Today most of the large economies in the world are ‘reviving’, the Indian economy facing the problem of ‘surviving’,” he said at the same meeting.
In a welcome comment, Singh’s panacea for the ailing economy included developing the bond market to attract investments into infrastructure,