India elections: Where do parties stand on the economy?

http://www.bbc.co.uk/news/business-26888516

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The world's biggest general election is under way in India, with the Hindu nationalist Bharatiya Janata Party (BJP) opposition taking on the ruling Congress party.

Trying to fix the economy will be a top priority for whoever comes to power. India is currently going through its worst economic crisis for two decades, with high inflation a particular problem.

So where do the major political parties stand on the big economic issues?

Ravi Shankar Prasad from the BJP and Abhishek Manu Singhvi from the Congress party gave the BBC their views.

Inflation

There aren't many places where onions - or at least the price of them - play such a big role in politics. But people here eat their way through 15 million tonnes of them every year and so when the price shoots up, that hurts ordinary Indians and worries politicians.

It is just one common food item that's become much more expensive in the past couple of years and that has contributed to the overall cost of living increasing by about 10% annually.

To try to control prices, India's central bank - which is independent of government - has raised interest rates many times. But that also can hurt growth and affect company profits.

Ravi Shankar Prasad, BJP, says:

"First, you need resilience in the economy. You need to enlarge the economic activity - then you'll have the revenue to take care of the supply side of it.

"Then you need to address the gross management of the food economy. Where is the problem of foreign investment or international factors in the price of milk, eggs or vegetables? This is basically supply side problems that need to be taken care of."

Abhishek Manu Singhvi, Congress party, says:

"It is very clear if you compare the nine years of the Congress-led government with the six years of the previous government - real incomes have beaten inflation. Real incomes on real GDP growth have increased more.

"You have to have this very curious and striking balance of not having deflation or stagflation either. So I think at the moment, we are - if I may say so with some satisfaction - at the right level with some improvement possible. But it's a constant watch and a constant battle."

Social spending

With a $100bn (£60bn) fiscal deficit in the first 11 months of the 2013-14 financial year, India has to rein in its spending.

The ruling Congress party's welfare programmes, including the national rural employment scheme and cheap food grains, along with the country's dependence on oil imports, has meant that subsidies currently amount to 2.2% of GDP.

So should social spending be cut?

Ravi Shankar Prasad says:

"The difference between our approach and other approach is that you can have growth without equity. But to have good equity, you need to have proper growth - so that there is revenue available to take care of inclusive equitable growth.

"The problem here is that as the economy is going down, there is a lot afflicting this. Secondly, the social spending needed for equitable growth must have proper administration and management."

Abhishek Manu Singhvi says:

"When you have excise concession given to big industrialists in the budget, do you have all this noise? Why do you grudge it to the lowest of the low?

"In the last decade compared to the previous decade, poverty reduction has been three times in the Congress UPA-led government compared to the BJP. Now this is something where you have to spend."

Growth and jobs

India's economy today is growing at just under 5% a year - pretty good compared with the UK, the US and Europe - but well below the double-digit growth of a few years ago.

An estimated $1 trillion needs to be spent on infrastructure, transport and power, about half of which is expected to come from the private sector.

But investors have been cautious, wary of interest rate rises, subdued growth prospects and a so-called government "policy paralysis". At the same time, industry has been demanding that the government urgently kick-start economic reforms.

What should be done to help growth and create jobs?

Ravi Shankar Prasad says:

"To create jobs, you must enlarge the manufacturing base, the service base and you must encourage self-employment which is a big area of growth. What has happened is that the total canvas of activity under the present government has shrunk so badly that employment is going down."

Abhishek Manu Singhvi says:

"The real issue is that certain kinds of growth - like diploma holders and degree holders - need skill development. No other government other than this government has offered as much in the budget for skill development.

"But we have to actualise it because that's the category that has the degree or the diploma but doesn't have quite the skill to operationalise it. The job giver doesn't want just the degree. It's a big initiative and you'll see the results."

Foreign retail

Easing rules to allow foreign investment from international retailers has been one of the current government's most distinctive policies - saying opening the door to the likes of Wal-Mart and Tesco would help improve consumer choice, modernise India's creaking supply chain and generate employment.

But it has been controversial - and some fierce opposition has made big chains cautious about getting involved.

The BJP says it would scrap the policy, arguing it threatens small traders - a key part of its support.

Ravi Shankar Prasad says:

"Our experience is that India has to compete with Bangladesh, Vietnam, Malaysia and China. Because of the manufacturing sector being down, what big retailers do is outsource cheap goods from the world and dump it in their warehouse. That will be a case where the Indian sector will lose a lot and create a problem for our grocery owners."

Abhishek Manu Singhvi says:

"We are prepared to take the responsibility politically and otherwise. If it's given a fair chance, it will show results.

"What happens to paying more to the farmer and getting less from the consumer because you have telescoped four middlemen? Are you happy paying more to the middlemen? What happens to the promotion of refrigeration chains and warehousing?"

While everyone is focused on the BJP and Congress, the new Aam Aadmi Party (AAP) surprised many with a strong showing at state elections in Delhi by promising to fight corruption, and could play a crucial role in forming a coalition government.

But it has not yet wanted to talk about its economic vision.