Prime Minister Narendra Modi addresses after releasing the Bharatiya Janata Party’s manifesto for Lok Sabha elections 2019, in New Delhi. (Source: PTI)

Modi Pledges $1.44 Trillion on Infrastructure in Re-Election Bid

(Bloomberg) -- Prime Minister Narendra Modi’s ruling Bharatiya Janata Party pledged to spend $1.44 trillion on infrastructure to boost the economy and raise living standards, in a bid to match its main rival’s populist promises.

The BJP, which is seeking to retain power in elections starting April 11, released its manifesto in New Delhi on Monday, reiterating its pledge to double farmers’ income by 2022, improve GDP share from manufacturing and double exports. It will also scrap Article 370 of the Indian Constitution which grants special concessions to the disputed state of Kashmir.

Modi Pledges $1.44 Trillion on Infrastructure in Re-Election Bid

India’s 263 million farmers are a key voting bloc in the world’s largest democracy. The main opposition Congress Party has promised to write off farm loans throughout the country. To match it, BJP said it would invest 25 trillion rupees ($359 billion) in rural development and offer farmers 6,000 rupees per year in income support.

The infrastructure promise ties in with estimates reflected in the 2017-18 Economic Survey document by former adviser and economist Arvind Subramanian, who pegged the needed investments at $4.5 trillion till 2040. BJP’s figure is roughly one fourth of this requirement. In comparison, the government has set aside $57 billion for spending on roads, railways and airports in the year ending March 2020.

The manifesto lists banking reforms and lower inflation as achievements that can help raise funds for building infrastructure, but gives no details of how the party will ensure funds will be raised.

"The essence of the manifesto is to deplete poverty to single digits in next five years and then eventually eliminate it," said Finance Minister Arun Jaitley. "This manifesto has been prepared with a strong nationalist vision."

‘Lacks Details’

It also promised to take its flagship programs -- providing toilets, electricity connections, houses, cooking gas, crop insurance and loans for small businesses -- to more beneficiaries by allocating additional resources.

The ruling party, which is leading in opinion polls, is offering giveaways to stave off a challenge from Congress, led by Rahul Gandhi. Congress has promised in its manifesto to rid India of poverty by 2030 by providing income support to the poor, waiving farm loans and creating jobs.

The BJP is playing catch up with Congress, Nilanjan Mukhopadhyay, New Delhi-based political analyst and Modi’s biographer said by phone Monday.

"It’s a fusion of populist nationalism and majoritarianism," Mukhopadhyay said. "After all their criticism of the Congress about being shallow on specifics in their manifesto, the BJP’S own document lacks in details."

It’s banking on the support of around 220 million Indians who have benefited directly from the government’s flagship programs, as well as a 750 billion rupees ($10.8 billion) income support program for small farmers and lower taxes for middle-class.

Modi has been criticized by the opposition for not fulfilling his promise of creating 10 million jobs each year -- a pledge that helped him win over India’s youth in the 2014 election. The ruling party denies this charge.

The boost to infrastructure will also "lead to creation of a large number of jobs and livelihood opportunities," the manifesto reads, noting the government would target "untapped employment-generation of potential of sectors such as defense and pharmaceuticals."

©2019 Bloomberg L.P.