Modi's guarantee vs Nyay Patra: How BJP and Congress election manifestos differ? UBS decodes

It's policy continuity versus populism, says UBS  Securities as it decodes manifestos of both BJP and Congress ahead of the Lok Sabha elections 2024.  In the case of BJP manifesto, "Modi's guarantee" reflects a focus on policy continuity. On the other hand, there is a tilt towards populism in Congress' 'Nyay Patra', the foreign brokerage said in its latest note. (Full table at the bottom) 

The BJP election manifesto largely focused on policy continuity and highlighted the work done by the incumbent government over the past 10 years when in power. Notably, the manifesto highlighted that BJP has set up a high powered committee to make ‘One Nation, One Election' a reality and reiterated its stand to draw a Uniform Civil Code (UCC) that was first proposed in 2019, UBS economist Tanvee Gupta Jain and associate economist Nihal Kumar argued.

"The election manifesto talked about expanding existing welfare programmes, including extending a free health insurance programme to senior citizens (>70 years), piped cooking gas connections, free food rations for the next 5 years, and free electricity to poor households, among others. It also mentioned a broader government push towards supply side reforms including higher infrastructure spending (both digital and physical), a manufacturing push and creating employment opportunities," the UBS economists said.

Nyay Patra" and regional parties manifestos have a populist skew, the UBS economists argued.

Key promises made by the Congress in their election manifesto include Rs 1,00,000 ($1200) per year to one woman in each of the poorest families under the Mahalaxmi Scheme as an unconditional cash transfer. However, the number of beneficiaries identified has not been disclosed (will be known once the social and economic census is conducted) with no discussion around the financial implications, UBS noted.

Besides, Congress talked about legal guarantee to minimum support prices (MSPs), as recommended by the Swaminathan Commission. UBS said this could increase the existing food subsidy bill by 25 per cent YoY if implemented.

INC's manifesto talked about job creation and proposal to enact 'Right to Apprenticeship Act' for youth below 25 years with Rs 1,00,000 ($1,200) annual stipend. It also talked bout making India a manufacturing hub by raising the share of manufacturing from 14 per cent to 20 per cent of GDP by 2030. However, no indication of the likely roadmap and relevant sectors has been discussed in the manifesto.

Rahul Gandhi’s Congress also promises to replace the GST laws enacted by the BJP/NDA government with GST 2.0. The new GST regime will be based on the universally accepted principle that GST shall be a single, moderate rate (with a few exceptions) that will not burden the poor, Congress suggested.

"Notably, the Congress manifesto also rejects the ‘one nation-one election’ idea. The regional parties, including AIADMK, DMK and CPI, on the other hand, talked about cash handouts to women and farmers, increasing minimum wages, lowering fuel prices, cash transfers to women and called for farm-loan waivers," UBS said.

UBS said the Congress manifesto does not lay out the overall financial implications of the above promises and seems open ended. UBS' rough analysis suggests that implementing these poll promises would entail an additional fiscal cost of 2-3.3 per cent of GDP, given no clear plan to cut back existing programmes.

"In our view, the arithmetic does not add up unless there is a significant economic recovery or higher taxes. However, Congress talks about stable personal income tax rates throughout the term, limiting union cess and surcharges to 5 per cent of gross tax revenue," it said.

UBS said it does not predict the election outcome and cited that that opinion/exit polls have in the past proved wrong. but based on the recent polls, where Prime Minister Modi remains the most popular leader in India and given the recent performance in assembly elections, it said the 'Modi factor'; the perception of the work done; and implementation of welfare programmes has worked in favour of the BJP.

"The government has refrained from turning populist and remains on the fiscal consolidation path in the run up to the 2024 election. We believe political stability would likely lead to policy continuity, which could bode well for market sentiment," the brokerage said.