Voting The BJP to Power Is Not Taxing, But Will Pinch The Public Purse

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It will not tax you to vote the BJP to power, but it could cost the treasury at least Rs 50,000 cr. The BJP's political manifesto, released after a gap of 11 years - because the two in between were the agendas of governance of the NDA - reads like an advance copy of the Budget it would present if voted to power.

In the past five years, the UPA government has pursued tax and spend policies. Former finance minister P Chidambaram had a fetish for new taxes whether fringe benefit tax, securities transaction tax, or the just abolished banking cash transaction tax.

The BJP seems to be believe in spending without taxing.

By proposing to raise the tax free limit to 3 lakh rupees a year, the BJP will move about half the current number, that is 1.5 crore assessess, out of the tax net and that will mean a loss of Rs 22,500 crore. Revenue officials says a large tax-payer base aids collection, as the tax department can deduce possible incomes from expenditures made. The people who pay taxes are also relatively better-off than most other citizens and it is only fair that they pay for relief of the set that is down and out.

The abolition of fringe benefit tax should cost Rs10,200 crore rupees, which is the budget estimate for this year.

Providing 35 kgs of rice and wheat per month to very poor families at 2 rupees a kilogram might mean an outgo of Rs 10,000 cr.

Farm loans at 4 percent, will raise the subsidy from two percentage points to five, and swell the bill to Rs 6500 crore. A complete farm loan waiver may not cost much, as the UPA government has done much of the waiving at Rs 66,000 crore.

One rank one pension for exservicemen is variously estimated to cost between Rs 1500 and 5,000 crore.

One has not been able to put a number to subsidised education loans at 4 percent interest, or exemption of soldiers and armed police from income tax.

The BJP is silent on the UPA's flagship social sector innovation - the national rural employment guarantee scheme, though BJP spokesperson Prakash Javdekar had told social action groups recently that his party would extend entitlement beyond 100 per family, to every individual. The Congress has written this promise into its manifesto and that is expected to double the bill on this score alone to 60,000 crore rupees a year.

The BJP's promises, if implemented, will blow a hole in government finances the size of 1 percent of GDP. Some might see it as expansion of the fiscal deficit, its supporters might call it yet another instalment of the fiscal stimulus.

Since it is unlikely that the BJP will come to power on its own, it can always wriggle out, saying that these promises do not bind the NDA.