The Indian Express (Delhi Edition)
Budget wasted, no steps to spur growth: Chidambaram
ARGUING THAT the Union Budget was a “damp squib” and a “wasted opportunity”, former Finance Minister P Chidambaram Thursday said it offered nothing to revive “flagging growth” and offsetting the negative consequences of demonetisation, which he added would spill over to the next two years. He said the government, “demoralised” due to demonetisation’s “inevitable consequences”, has retreated from reforms.
Chidambaram added that the period of lower growth will extend to 2018-19, claiming that the government was in no position to raise growth rate to 7.5-8 per cent.
“The government seems chastened after the debacle of demonetisation and has not done anything reckless or disruptive. I compliment the Finance Minister on adopting a tone of moderation. It is, however, obvious that demonetisation and its inevitable consequences have demoralised the government. Government has retreated from reforms. And the government has no answers to the severe challenges faced by the economy,” he said.
He said the Budget had “absolutely nothing” that points to a change of strategy to create new jobs, which he argued, was the most vocal demand of the people, adding that it “cruelly neglected” farmers, farm sector and farm workers, manual labourers, the selfemployed, artisans and micro, small and medium businesspersons.
He called the tax cuts “pitiful” and “tokenism” and argued the government “discarded” fiscal prudence and violated the FRBM Act. The fiscal deficit target, he felt, should have been 3 per cent instead of the 3.2 per cent. “Analysts, bankers and investors, in India and abroad, will not take kindly to this disregard of fiscal responsibility,” he said.
The former Finance Minister also said that the economic survey had in a “convoluted way” said that the growth rate will be 6.5 to 6.75 per cent against the forecast of 7.6 per cent. “Actually, it will be worse. It will be worse not only in 2016-17, but the period of lower growth will extend to 2017-18 and 2018-19. There is absolutely nothing in the Budget that points to measures to revive flagging growth,” he said.
Chidambaram said the government should have cut indirect taxes, which he argued was a “tried, tested and the best way” to boost aggregate demand. The GST, he said, would be rolled out only in October and the government should have used the eightmonth window the boost demand.
“Government has foolishly rejected this option. I am afraid the country will pay a heavy price in terms of poor demand, lower sales, fewer jobs and closures of micro, small and medium enterprises,” he said.
The former Finance Minister also questioned the GDP figures calling it a puzzle. He, however, complimented steps like banning cash transactions of over Rs 3 lakh, attempt to cleanse political funding and increase in coverage under Fasal Bima Yojana and raising of capital expenditure by 25 per cent.
He said he was surprised by the 0.5 per cent reduction in total expenditure as a percentage of GDP. He said 0.5 per cent would be about Rs 75,000 crore which could have been spent on health, education and even defence, a sector which he said got pitiful allocation.