India is a developing country, aspiring to be a middle-income country by the year 2030. Wealth creation and the welfare of our people are our 2 principal goals.
Congress's economic philosophy is based on embracing the idea of an open and liberal market economy, creation of wealth, sustainable development, reduction of inequalities, and assurance of welfare of all sections of people. Such growth will be driven by both the private sector and a viable public sector, and underpinned by a robust system of social security.
Our economy is still over-regulated. Structural problems remain. Government control and bureaucratic interference are aplenty. Regulators have morphed into controllers. There is growing interference by the courts in economic policies. The BJP Government has reversed the clock of reforms. Congress promises to undo these distortions and restore an open, liberal market economy.
- Fiscal stability is the starting point. Congress promises to reverse the BJP Government’s fiddling with the target of fiscal deficit. Congress promises to achieve the target of 3 per cent of GDP by 2020-21, and remain under that limit. Revenue deficit will be contained, as far as possible, under 1 per cent of GDP. Off-Budget and Extra-Budget borrowings will be faithfully reported with the justification for such debt, and the means of servicing and repaying such debt.
- Monetary policy is the provence of the Reserve Bank of India. Congress promises to reverse the unwarranted and illegal interference by the BJP Government into the functioning of the RBI. Congress will respect the autonomy of the RBI in matters reserved to the RBI under the Reserve Bank of India Act, 1939, including the formulation of monetary policy. However, the Governor shall periodically render an account to a Committee of Parliament. Congress promises that the government will work closely with the RBI to ensure that fiscal policy and monetary policy are aligned to achieve the common goal of growth with price stability.
- Sustained economic growth is the path toward creating wealth. Millions of people produce goods and services and they must have a large degree of freedom, unfettered by excessive regulations. Congress will provide a conducive policy climate that will recognise the contributions of both the private and public sectors, sector, promote entrepreneurship, encourage innovation, employ advanced technology, and reward risk-taking.
- We are the party that first declared the criticality of high and sustained economic growth measured by GDP. Congress reiterates its firm belief in a high rate of growth of GDP. Hence, the 4 drivers of economic growth are important and the Congress wishes to state its position on each of these:
- Private Investment: In an open-market economy, the private sector must play the lead role in identifying opportunities, mobilising resources, adopting advanced technology, producing goods and services, and securing domestic and foreign markets. Congress promises to extend full support to the private sector and to revive the animal spirit of our entrepreneurs.
- Government Expenditure: Government expenditure must play a lead role in the creation and provision of public goods. Congress promises adequate expenditure on roads, railways, waterways, drinking water, sanitation, healthcare, education, and national and internal security.
- Domestic Consumption: In a developing country, rise in consumption is a sign of healthy economic growth. It is important that the poorer sections of our community are able to consume what they need. Supply of goods and services must be abundant, and prices must be reasonably stable. Congress will repose faith in the trading community and create a policy environment that will encourage domestic consumption.
- Exports: No country has achieved high economic growth without high growth of exports. An example is India during the Congress period from 2004 to 2014. Congress will adopt a policy on foreign trade that will ensure that exports become, once again, a key driver of economic growth.
- Congress promises to encourage saving, especially household saving, through suitable rewards for savers. Savings provide the resources for investment. Our goal will be to achieve a savings level of 40 per cent of GDP and a Gross Capital Formation level of 35 per cent of GDP. We will work with banks and insurance companies to introduce simple financial products for households.
- Foreign Direct Investment (FDI) plays a crucial part in development. FDI will be welcomed in all sectors, subject to exceptions on the grounds of national security. Rules and regulations will be minimal. FDI will be accorded national treatment and there will be a level playing field for foreign and domestic investors. There will be no expropriation and no retrospective taxation.
- Investments have to be prudently distributed among the different sectors — agriculture and allied activities, industry, and services with special emphasis on education and healthcare. Congress believes in the crucial role played by the market in allocation of resources. Where it is absolutely necessary, there will be policy intervention to prevent misallocation of resources.
- Congress promises to review all laws, rules and regulations governing investments within 3 months. Instruments that are inconsistent with a market economy, outdated, or obstructionist will be repealed.
- Foreign Trade Policy will be reviewed and restated within 3 months. Exports and imports shall be free and consistent with WTO rules. Any instrument that has the effect of altering this guiding principle will be supported by sufficient justification and its operation will be limited to a sunset date.
- Every sector of the economy needs credit. A robust and healthy banking system, supplemented by non-banking finance companies, is critical to delivery of credit. While the RBI is the regulator of banks and NBFCs, the government has the responsibility to ensure that there is adequate liquidity, cash in circulation, and flow of credit. The BJP Government denied adequate credit to MSMEs, agriculture, trade and exports. They created the NPA scare that brought lending to a virtual halt. A one-size-fits-all approach drove companies into insolvency. Demonetisation shut out all sources of informal credit. The result is that the agriculture sector is in acute distress, MSMEs are shut or struggling to survive, trade is paralysed, and the volume of merchandise exports was flat for 4 years. Congress promises to reverse these gross distortions and, working closely with the RBI, re-start the process of credit delivery and ensure sufficient liquidity and cash in circulation.
- India must increase the share of manufacturing from the current level of 16 per cent to 25 per cent in a period of 5 years. Congress believes that anything that can be made in another country can be made in India. Congress promises that it will adopt policies, formulate rules, levy taxes, and reward entrepreneurship - all of which will make India a global hub of manufacturing.
- Congress recognises that business — be it manufacture, supply, trade, or exports — runs best on predictable and stable laws, protection of property rights, and sanctity of contracts. Congress promises to enact and enforce a comprehensive Law on Doing Business in India that will incorporate the best business practices and rules.
- We will endeavour to bring every Fortune 500 company to set up a business in India.
- Congress promises to encourage and incentivise starting of new businesses. The Angel Tax imposed on Start-Ups will be withdrawn completely. We will make India an innovation hub.
- MSMEs were badly hit by demonetisation and a flawed GST. Congress promises to devise a rehabilitation plan for MSMEs that were severely affected, and help them revive and grow.
- Congress promises to disinvest from non-core, non-strategic central public sector enterprises.
- Congress promises good and competent governance. The capacity of the traditional bureaucracy to deliver on our economic goals has been inadequate. We promise to induct into the administration good economic policy -makers and managers and give them a large degree of autonomy to design and implement policies that will advance the economic goals of the government.
- Unless we are vigilant, government has a tendency to interfere with markets as well as re-acquire control over trade, industry and business. Government has a role in an open and liberal market economy and it is worthwhile to state the Congress position on the role of government:
- We must get government out of gratuitous interventions in the market;
- We must get government into addressing notable market failures through regulation (e.g. capital market, banking, etc.); and,
- We must build the capacity in government to do the things it must do (e.g. taxation, delivery of public goods and services, etc.)
Congress is conscious that while much has been achieved since liberalisation in 1991, there is much more to be done. Between 2004 and 2014, 14 crore people were lifted out of poverty. That task has to be continued with renewed vigour. Congress promises that between 2019 and 2024, another 10 crore people will be lifted out of poverty and the ground will be prepared to wipe out poverty — and ensure that no one is left behind — by 2030.