Ahead of elections in India, a recent position paper by the BJP has provoked worry and consternation by those seeking to do business in this major economy. With the political party likely to build off gains from state elections, the ‘statement of intent’ may indicate the future of business in the country.
On April 7, India began its national elections, which will last until May 12, with the results being announced four days later on May 16. In keeping with earlier practice, the Bharatiya Janata Party (BJP) released its manifesto, or ‘charge sheet,’ on the day the election commenced.
The BJP, which led the National Democratic Alliance from 1998 to 2004, has released manifestos every five to six years since 1998. The 52 page document touches on a variety of issues, from ones as local as the construction of a Ram temple in the northern town of Ayodhya to ones with a more national bent such as national security and economic issues. The latter is garnering the most attention and offers a good indication of the policies which the BJP may seek to implement. The party is presently leading in the polls.
The party has roots in the Bharatiya Jana Sangh, which formed shortly after partition, but did not become the BJP until the early 1980s, when it won two seats in Parliament in 1984. Since this period, the party has steadily built off electoral wins and challenged the political dominance of the Congress Party.
The party has continued to diversify, but has maintained ties to Hindu nationalists and those seeking policy steps away from the Fabian socialism which the Congress Party long symbolized.
The BJP was long considered the party that was more business friendly. Despite worries of extremism, the BJP governed rather moderately from 1998 to 2004, which is why the latest manifesto has caused some degree of shock and concern.
Seizing on widespread concerns about the economy, the manifesto has a very strong economic focus. This is a welcome development as it was not always prioritized during the Nehru-Gandhi period of governance. It also prioritizes the need to recover and better develop India’s manufacturing base. Perhaps most notably, the document describes the need to better develop India’s economic brand.
According to senior BJP official and head of the manifesto committee Murli Manohar Joshi, “As far as infrastructure is concerned, improving manufacturing is important and it needs to be export oriented. We need to build a Brand India.”
The document offers some important changes to foreign direct investment (FDI) in the country. According to its manifesto, the BJP will ban FDI in retail. The document does state however that “Barring the multi-brand retail sector, FDI will be allowed wherever needed for job and asset creation.”
This news is unwelcome to large retailers such as Wal-Mart and Tesco who had major retail plans within the country. Tesco itself expressed their concern, stating that it was “regrettable.”
For a party which has seemed more business friendly than the opposition, and which has previously rhetorically opposed insular and protectionist policies, this curtailing of big retail FDI in India may seem surprising. Yet, when put in political context and placed alongside other items, the manifesto illustrates the BJP continues to cater to big business and nationalists in its platform.
The move by the BJP to oppose overseas investment in retail comes after the current government’s controversial 2012 decision to allow overseas investors to own up to 51 percent of domestic retail. That particular reform was meant to shore up India’s fragile economy, but has since become unpopular and symbolic of India’s economic problems.
The new policy supported by the BJP makes strong political sense as it appeals to nationalistic sentiments strong with the party’s base. Encouraging and stating the need to grow India’s economic brand and emphasizing an arguably more insular-led growth, the BJP is profiting from widespread dissatisfaction with the country’s financial affairs and concerns over corruption following a scandal with overseas retailers.
For a country with a long tradition of looking inwards and anti-colonial sentiment, the manifesto makes perfect political sense. The manifesto is appropriately vague and should leave significant room for movement (or the lack thereof) on several of its stated positions. Additionally, the nature of the elections and the likelihood of a BJP win will also allow for a marked variance in the pursuit of policies and objectives.
Stated objectives include better coordinating federal and state infrastructure spending, simplifying taxes, ensuring greater transparency on spending, and, in a real nod to big business, reviewing labor laws. At present, large retailers such as Wal-Mart have stated that they are viewing ongoing political developments cautiously, and remain open to other projects such as e-commerce and wholesale.
While it might not be good politics to admit it, given a dissatisfied middle class, shaky economy, and concerns over ties between politicians and business, the BJP still offers much in the manifesto that can be viewed as business friendly.