Reforms to rain: NDA

Manifesto promises 26% FDI in retail; Most tax exemptions to go within 2 years.

Setting an annual growth target of 8-10 per cent for the Indian economy over the next five years, the National Democratic Alliance (NDA) today promised to permit 26 per cent foreign direct investment (FDI) in retail trade, remove most tax exemptions within two years, revisit the 26 per cent FDI limit in insurance, revamp the civil aviation sector and provide incentives to states to switch over to value-added tax.

The 36-page NDA manifesto, "An agenda for development, good governance and peace", released by Prime Minister Atal Bihari Vajpayee, also said it would continue with the disinvestment process to realise the hidden wealth in public sector undertakings, further encourage consolidation of public sector banks and facilitate Indian banks to enlarge their footprint abroad. A significant feature of the manifesto is the NDA's commitment to bind itself to fulfilling the promises within set deadlines.

The states will be encouraged to restructure their debt and carry out fiscal reforms to eliminate their revenue deficit by 2006. At the central level, the NDA manifesto said the tax to gross domestic product ratio would be improved through further widening and deepening of the tax base and also by rationalising and simplifying tariffs.

The NDA agenda also promises a big dose of investment for the infrastructure sectors, including aviation, power, telecom, roads and railways.

The proposed open skies policy would be adopted within the first 30 days, fleet acquisition of Indian Airlines and Air-India would be completed before 2004-end and Air-India would be promoted as the country's proud national carrier, it said. Ten cities, to be developed as global cities, will have world-class airports.

The Rs 100,000 crore Sagar Mala project would be launched before August 15, 2005, the manifesto said and promised a new Pradhan Mantri Pradesh Sadak Yojana to improve state highways.

For improving passenger amenities at important railway stations, it promised a Rs 5,000 crore fund, to be raised from users and augmented by public-private partnership. An independent Rail Tariff Regulatory Authority too would be set up, it said.

In the telecom sector, it promised to increase the rural teledensity five-fold in five years, an increase in the number of telephones from 70 million now to 300 million by 2009 and an increase the Internet connections five-fold to 20 million.

It, however, did not state its position on the long-pending demand to increase the foreign investment limit in the sector from 49 per cent to 74 per cent.

While committing to eliminate electricity shortages by 2012, it said 50,000 megawatt of additional generation capacity would

be created over the next five years. Besides, losses of the state electricity boards would be reduced to less than Rs 5,000 crore by 2009 from Rs 24,000 crore now.

Necessary legislation for encouraging private initiatives in the coal and the mines sector and enactment of the Petroleum and Natural Gas Regulatory Board Bill were among the other initiatives promised.

The NDA manifesto also said it would allow government officials to work in the private sector and simultaneously encourage lateral entry of talented professionals at senior levels in the bureaucracy.

A separate ministry for international trade and re-organisation of the Planning Commission to meet changing development needs were the other significant changes it proposed.

As part of a second green revolution, the manifesto also mooted a Rs 1,000 crore Mandi Development Fund to modernise agricultural markets and planned to incentivise states to abolish mandi taxes.

A review of the minimum support price system and setting up of an independent Food Regulatory Authority to enforce standards for food products also figure in the agenda.

Incentives to the private sector for creating job opportunities for scheduled castes and tribes, poverty eradication and 100 per cent literacy by 2015, raising the education spend to 6 per cent of GDP in five years and doubling of the public health budget to 4 per cent of GDP during the period, and a Rs 1,000 crore Infrastructure Incubation Development Fund for small and medium sector enterprises were among the other social and economic priorities in NDA's "feel good" agenda.

---

The Agenda

• Incentives to states to switch over to VAT
• Eliminate revenue deficit in every state by 2006
• GDP growth of 8-10% over the next 5 years
• Education spend to be raised to 6% of GDP in 5 years
• Public spend in health to double to 4% of GDP
• Consolidation of PSU banks will be encouraged
• Separate ministry for international trade
• Incentives for private sector for creating jobs for SCs and STs
• Lateral entry of private sector executives into bureaucracy
• Rs 1,000 cr Infrastructure Incubation Development Fund for SMEs
• 50,000 MW additional generation capacity in 5 years
• Rs 10,000 crore Mandi development fund