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| Congress banks on 'stimulus' for aam aadmi |
| BS Reporter / New Delhi Mar 25, 2009, 00:08 IST |
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 The Indian National Congress, the single-largest party in the current Lok Sabha with 150 seats, committed itself to massive public spending to strengthen its aam aadmi (common man) platform through vastly extended employment guarantee, social sector and farm loan waiver schemes, even as it ruled out privatisation in banking and insurance in the manifesto released today.
Key among the new pre-election mega-promises from the party that leads the governing United Progressive Alliance are a right-to-food law, student scholarships and social security to “special risk groups”.
Declaring that the Congress is a party that does what it says, the manifesto has cheered NGOs but left economists concerned about the departure from fiscal prudence these measures will entail.
The manifesto extends the National Rural Employment Guarantee (NREG) scheme, which was passed into law in 2005, and considered the "crown jewel" of the Congress agenda, to all individuals who enrol with the guaranteed payment of Rs 100 a day (the original scheme covered families). Later, Congress officials clarified that the expansion of the scheme would be confined to rural areas, despite demands for more coverage from NGOs.
The cost of the NREG is not known. But the government is projected to spend Rs 22,000 crore on rural employment guarantee schemes in the current fiscal. It spent Rs 46,640 crore in the last three financial years covering 95.7 million households out of the 97.4 million that demanded work.
The food law entitles every family living below the poverty line in rural or urban areas to 25 kg of rice or wheat per month at Rs 3 per kg. This scheme was implemented in Tamil Nadu with considerable electoral success.
Assuming that 60 to 70 million families live under the poverty line and a subsidy of Rs 10 per kg of rice or wheat, the proposed scheme would entail estimated additional expenditure of Rs 1,500 crore to Rs 1,750 crore a year.
On educational loans, the manifesto says all students admitted to recognised course in any recognised college/university will be provided, on a need basis, either a scholarship or an educational loan without collateral and repayable over a long period.
The party also promises a comprehensive social security cover to “special risk” groups including single-woman headed households, the disabled and the elderly; the urban homeless and so on.
It offers interest relief to all farmers who repay bank loans on schedule. The loan waiver scheme in the last Budget was for marginal and poor farmers and cost the government more than Rs 60,000 crore.
FOR THE PEOPLE?
(The Congress manifesto commits large sums of taxpayer money to aam admi schemes) |
| * Extends employment guarantee scheme: At least 100 days of work at a real wage of Rs 100 a day for individuals in the rural areas |
| * Promises a Right to Food law: Every family living below the poverty line will be entitled to 25 kg of rice or wheat per month at Rs 3 per kg |
| * Interest waiver for all farmers, who repay their loans on time |
| * No ‘blind privatisation’: Enterprises in manufacturing (like energy, transport and telecom), banks and insurance companies will remain in the public sector |
| * Social security for ‘special risk’ people: (i) Single-woman headed households; (ii) disabled and the elderly; (iii) urban homeless; (iv) released bonded workers; (v) primitive tribal groups; and (vi) dalits |
On the sensitive issue of land acquisition for industrial projects, the manifesto says farmers will be paid market rates and be given the option of becoming stakeholders in these commercial ventures. The party also promises Rs 30,000 crore for skill development.
On privatisation the Congress appears to have hardened its stance. The manifesto says the party would reject “blind privatisation” on grounds that “the Indian people have every right to own part of the shares of public sector companies while the government retains majority shareholding”. This could mean a dilution of stakes in companies like ONGC Ltd and NHPC Ltd, in which the government owns nearly 90 per cent stake.
In some sectors, however, the party rules out privatisation.“Public sector enterprises in the manufacturing sector (like energy, transport and telecom) and in the financial sector (like banks and insurance companies) will remain in the public sector and will be given all support to grow and become competitive,” the manifesto says.
More areas, however, will be open to foreign investment, like coal and iron ore, subject to the caveat that local value addition would be maximised.
A scheme to supply energy to poor families at affordable prices has also been offered, although how it will be rolled out has not been specified.
Though the Congress has committed to higher social spending if it returns to power, the manifesto reiterates its commitment to fiscal responsibility. After containing the fiscal deficit for the first four years, after the United Progressive Alliance came to power, till March 2008, the deficit slipped to 6 per cent of Gross Domestic Product (GDP) in fiscal 2008-09. It is projected at 5.5 per cent in the next fiscal 2009-10, owing to the loan waiver, higher spending on Pay Commission pay-outs and various economic stimulus package.
“These are all gap-filling measures that will help in the short run. But the need is to create conditions for long-term growth that will require sustained investments,” said D K Joshi, chief economist with Crisil Ltd, a ratings and advisory firm.
Nikhil De, founder member of Mazdoor Kisaan Shakti Sangathan, told Business Standard, “The party’s intent to have a national food security Act is welcome. But linking it to those below the poverty line will have problems since many deserving people will be left out.”
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