BJP plans to steer economy out of rut, but shuts door on FDI in multi-brand retail
The BJP promised specific steps such as setting up a price stabilisation fund, and special courts to deal with black marketing to tame inflation—a key electoral issue in this year’s national elections.india Updated: Apr 07, 2014 17:16 IST
The BJP on Monday unveiled a broad plan to steer the economy out of its sticky slowdown by creating mega industrial hubs and 100 new cities to spin jobs and multiply income, easing foreign investment norms in most sectors except multi-brand retail stores, and simplifying the country's tax structure, a reform measure UPA did have in its agenda but failed to pull off.
The BJP also promised specific steps such as setting up a price stabilisation fund, and special courts to deal with black marketing to tame inflation—a key electoral issue in this year’s national elections.
That said, despite the burden of reform expectation, the party’s poll manifesto, released on the first day of the Lok Sabha polls, however made it clear that it would not allow FDI in multi-brand retail, potentially raising the fear of shutting the doors on global giants’ plans to open deep discount super-stores in India.
“Barring the multi-brand retail sector, FDI will be allowed in sectors wherever needed for job and asset creation, infrastructure and acquisition of niche technology and specialized expertise. BJP is committed to protecting the interest of small and medium retailers, SMEs and those employed by them,” the 52-page manifesto said.
The local trading community and the BJP are opposed to allowing any foreign investment in the multi-brand retail sector arguing that it would endanger livelihood of millions of neighbourhood grocery stores and street vendors at risk.
In January, in a bold move, the erstwhile Aam Aadmi Party (AAP)-led government in Delhi had reversed the decision to allow global chains to set up superstores in the national capital.
In September 2012 Centre eased norms arming state governments the powers to allow or prohibit FDI upto 51% in multi-brand retail stores. A roll-back of this decision and ban foreign retail chains in the country—a likely possibility if BJP comes to power—could throw one more controversial spanner into the implementation of the policy geared to attract billions of dollars to aid economic growth.
In a separate promise, however, which could soothe frayed nerves of investors, the BJP promised to put in place a “non-adversarial and conducive tax environment”, rationalise and simplify the tax regime and “overhaul dispute resolution mechanisms.”
It also promised to bring on board all state governments to roll-out a goods and services tax (GST), which when implemented can stitch together a common national market by subsuming a web of local levies such as VAT and octroi into a single structure.
“UPA Government has unleashed 'Tax terrorism' and 'uncertainty', which not only creates anxiety amongst the business class and negatively impacts the investment climate, but also dents the image of the country. BJP realizes the importance of having a Tax Policy Roadmap, so that people are aware of the future and plan accordingly,” it said in an oblique reference to the Rs 11,200 crore tax dispute with British telecom giant Vodafone.
In January 2012, Vodafone won a $2.2 billion (Rs 11,200 crore then) tax battle after the Supreme Court ruled that the British group was not liable to pay any taxes under prevailing laws.
The finance ministry then, in the budget for 2012-13, proposed changes in India’s 50-year-old tax laws to impose a retrospective provision for tax on some types of international mergers including Vodafone’s 2007 acquisition of Hutchinson’s mobile assets in India.
For the manufacturing sector, which is set clock its lowest growth since 1991, the BJP’s plan includes do away with the need for multiple registrations to set up an industrial unit and facilitate setting up of software and hardware manufacturing units to help reduce India’s import dependence and setting up new zones armed with state-of-the-art infrastructure.
The party’s plans also include specific focus on skill enhancement to enable employability of millions of young people who join the queue of job hopefuls every year” by initiating a multi-skills development programme in mission mode.”
A plan to get illegal money stashed in foreign countries by securing information from overseas bank accounts also features among the party’s set of poll promises to tackle black money.