Congress targets "inclusive" growth in election pitch

NEW DELHI Wed Mar 26, 2014 8:18pm IST

1 of 2. Rahul Gandhi, vice president of India's ruling Congress party, walks past his mother, chief of the party Sonia Gandhi (R), and Prime Minister Manmohan Singh (L) during the release of their party's manifesto for the April/May general election in New Delhi March 26, 2014.

Credit: Reuters/Adnan Abidi

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NEW DELHI (Reuters) - India's ruling Congress party, facing a likely general election defeat, defended its economic track record over a decade in power and sought to woo voters with offers of further costly welfare measures.

The party, controlled by the Nehru-Gandhi dynasty and its scion Rahul Gandhi, is expected to lose due to public anger over graft scandals, high inflation and an economy growing at its slowest pace in a decade.

Unveiling its election manifesto on Wednesday, the party said it would lift 800 million people - almost as many as have the right to vote - into the middle class and raise gross domestic product (GDP) growth to 8 percent within three years.

Appealing to its core constituency of poorer voters with a call for inclusive growth, Congress proposed new rights to include guaranteed access to health, pensions, housing and even "to entrepreneurship".

"Growth by itself is not sufficient," Prime Minister Manmohan Singh told an event at which Congress president Sonia Gandhi made a rare public appearance in support of son Rahul's leadership of the party's flagging campaign.

The 50-page policy document was long on policies to redistribute wealth with fewer proposals on how to generate it, reflecting a left-leaning heritage that predates independence in 1947.

The nationalist opposition Bharatiya Janata Party (BJP), which opinion polls show winning the most seats in the election starting on April 7, is expected to unveil a more pro-business manifesto next week, party sources said.

FISCAL BURDEN

The Congress proposals risk further straining public finances, already under duress due to weak tax receipts and high public spending.

Already, party programmes like guaranteed paid work and subsidised grain for 67 percent of India's population cost about 1 percent of GDP. The party contends that these have helped pull 138 million people - more than the combined population of Britain, Spain and Australia - out of poverty on its watch.

The manifesto "suggests that the focus will be on getting the economy back on track", Nomura economists Sonal Varma and Aman Mohunta said in a research note.

"However, the entitlement-based policies will continue and will be widened to cover housing and health, which will entail a higher fiscal cost," they said, adding that farm subsidies would be inflationary.

Seeking to blunt BJP prime minister candidate Narendra Modi's campaign, the ruling party promised to generate 100 million new jobs for youth in a decade. It floated a plan, similar to Modi's, to create 100 new urban clusters.

It also pledged to trim the federal fiscal deficit to 3 percent of GDP in the next three years from 4.6 percent projected for the current fiscal year.

To achieve that goal, Congress would rationalise spending on subsidies, which currently amounts to 2.2 percent of GDP, and charge a user fee for access to uninterrupted power supplies and better train services.

It has also promised to enact a general goods and services tax. The measure, stuck for years, would convert the country into a single fiscal union and add 2 percentage points to overall economic growth, economists estimate.

(Editing by Douglas Busvine/Ruth Pitchford)

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