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Yet another cess: Congress’s economic blueprint is a rehash of old ideas and more populism

This weekend, at the Congress party’s 84th plenary session, a blueprint to boost India’s economic prospects was unveiled. It covered a wide spectrum, from suggestions on revitalising the rural economy to helping the technology sector. But its default template remains a combination of loan waivers, support prices and redistribution through more taxation. The highlight was a 5% cess on the richest 1% of Indians. Missing in the blueprint was a coherent framework to make India a more competitive economy which creates job opportunities for its young workforce.
The BJP-led NDA government has run its economic policy on similar lines. All of this translates into a series of ad hoc measures which have produced a complex regulatory regime marked by high taxes. To illustrate, World Bank this month pointed out that India’s GST regime not only has among highest rates in the world but is also too complicated. Governments are aware of these problems but the sense of urgency to mitigate them rarely matches the alacrity with which new taxes are levied.
Another feature common to India’s national parties is their failure to deliver good governance. For instance, between 2006-07 and 2016-17, Rs 83,497 crore was raised through a cess to finance secondary and higher education. Unfortunately, this wasn’t followed up with measures to identify appropriate schemes to solve India’s learning crisis. When the Congress plenary promised to establish an IT Skill Upgradation Fund and a National Poverty Alleviation Fund, it was just a repetition of hackneyed ideas. The promise of farm loan waivers and a new methodology for agricultural support prices are also a rehash of palliatives. When it comes to economic policy, India’s national parties still cling to populism. Concrete plans to increase productivity and jobs remain sadly elusive.

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