Policy Continuity and Business Sentiment
The Bharatiya Janata Party (BJP) released its election manifesto on Sunday, focusing on policy continuity. This emphasis on continuity could bode well for business sentiment in India and potentially lead to a recovery in private corporate capital expenditure, according to economists at UBS Securities India.
The manifesto highlights the work done by the BJP government over the past ten years and outlines plans to expand existing welfare programs. These programs include extending free health insurance to senior citizens over 70, providing piped cooking gas connections, offering free food rations for the next five years, and providing free electricity to poor households. Additionally, the manifesto mentions a broader government push towards supply-side reforms, including increased infrastructure spending, a manufacturing push, and the creation of employment opportunities.
Populist Promises and Fiscal Concerns
In contrast to the BJP's focus on continuity, the Congress manifesto leans towards populism. UBS economists believe that the promises made by Congress could lead to a higher fiscal deficit compared to the 5.1% projected by the BJP in their FY25 interim budget. Implementing the populist schemes outlined in the Congress manifesto could potentially increase the fiscal deficit to 7-8.5% of GDP. This would require either a significant economic recovery or higher taxes, as the Congress manifesto proposes stable personal income tax rates and limits union cess and surcharges to 5% of gross tax revenue.
## Election Timeline and Conclusion
The 2024 Lok Sabha elections will begin on April 19th and will be held in seven stages until June 1st. The results are expected on June 4th. The contrasting approaches of the BJP and Congress manifestos present voters with a clear choice between policy continuity and populist promises. The outcome of the election will have significant implications for the Indian economy and its business environment.