BJP dangles Rs3 lakh I-T exemption, tax-free FDs

The BJP reached out on Friday to recapture the urban vote it lost to the Congress in 2004 by announcing a series of big tax sops for the middle classes and defence forces in its 2009 polls manifesto.

The tax sops were the main differentiator in the document that otherwise echoed the Congress party’s platitudes for rural, women, and youth voters and even contained a separate section on educational and other schemes for the welfare of the minorities.

In an obvious attempt to rebuild a constituency that seems to have shifted to the Congress, the BJP has promised to exempt salaries up to Rs3 lakh per annum from income tax. It also said it would waive tax on income from bank deposits for individuals. Corporations and business depositors would continue to be taxed.

The most radical measure the BJP proposed in its election manifesto, which was released on Friday, was full tax exemption for the defence and paramilitary forces. This is a constituency the BJP has gone out of its way to woo for the past two decades using the plank of national security. Another sop to the armed forces, which have been agitating over the Sixth Pay Commission, was the promise to revise their salary structures and, in future, have a separate pay commission for the services.

The document also held out promises to scrap a pet scheme of former finance minister P Chidambaram, the controversial fringe benefit tax, and to rationalise the goods and services tax at between 12% and 14%.

Ram temple an afterthought

The BJP election manifesto promises to raise income tax exemption limit to Rs3 lakh and tax-free fixed deposits, an attempt to win of urban voters it lost to the Congress in 2004.

At the risk of sounding like its leftist ideological enemies, the BJP addressed another strong voter constituency, the shopkeepers and petty traders, with the assurance that no foreign direct investment would be allowed in the retail sector.

Significantly, while the manifesto did mention core BJP issues like the construction of a Ram temple in Ayodhya, enforcement of a uniform civil code, and scrapping of Article 370, they came almost as an afterthought, at the end of the document. The language appears to have been kept mild deliberately to satisfy its “secular” partners in the National Democratic Alliance, particularly the Janata Dal (United), with which the BJP hopes to sweep Bihar.

A broad reading of the BJP’s poll document, however, suggests that the differences between the two national parties are narrowing. At a time when the economy is reeling from the impact of the global financial meltdown, both parties seem to have decided that populism is the way to go. Job and education quotas for the poor of all communities, cheap rice through the public distribution system, financial schemes for girl students, loan waivers for farmers, and a go-slow on SEZs are par for the course for both parties.