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Congress declared it  a HOPELESS Budget

2 Feb, 2018
P. Chidambaram, and Randeep Singh Surjewala addressed the media at AICC on Thursday on the Budget . Shri Chidambaram said let me make an opening statement – the Budget for 2018-19 was presented today. It is the last full budget of this Government, and I should add ‘thank god for that’. Let me recall the economic context in which this Budget has been presented. I draw my facts from the official document of the Government – namely - the Economic Survey that was presented on 29 January 2018.
*There are two macro-economic situation vulnerabilities — fiscal account and current account.
*The real effective exchange rate (REER) has appreciated about 21% since 2014 affecting India’s export competitiveness, but the domestic political economy
(meaning BJP) favours a stronger, less competitive exchange rate. * In the last four years, the level of real agricultural GDP and real agricultural revenues have remained constant.
* Jobs is the number one issue. Jobs are not being created. Industry — especially MSMEs — create jobs. Industrial GVA growth has declined from 9.8 per cent in 2015-16 to 6.8% in 2016-17 to 2.7% in 2017-18. In the same period, Manufacturing GVA has declined from 12.7% to 7.9%to 3.1%.
* The last number on investment (GFCF) was 28.91%of GDP in the second quarter of 2017-18. The last number on CPI inflation was 5.21% in December 2017. The last
numbers on credit growth are: Non-food credit 10% and credit to ‘Industry’ 2.1%. The Big Disappointments of the Budget In the light of the above, the Budget proposals should have been bold and radical, and backed by adequate provision of funds. Unfortunately, the Budget proposals are a big letdown.
Let me list the big disappointments:-
1. FISCAL DEFICIT: The FM failed the fiscal consolidation test. All deficits have crossed the budget estimates. Against a BE fiscal deficit target for 2017-18 of 3.2, the final number will be 3.5. Even that is questionable. Similarly, for 2018-19, against a target of 3.0, FM has pegged it at 3.2. Both these slippages will have serious consequences and raise grave doubts about India’s commitment to fiscal consolidation.
2. EXPORTS: I did not hear any measures to boost exports. Because the government has run out of ideas to boost exports, the FM has imposed additional customs duties to restrict imports. The PM’s speech at — and the spirit of — Davos has been forgotten within a few days!
3. AGRICULTURE: There is a promise to increase MSP 1.5 times, but there are no details. (The Swaminathan Committee has been remembered in the last year of the Government’s tenure). Besides, Rs 2000 crore for e-markets and Rs 500 crore for Operation Green (whenever the Cabinet will approve the schemes) amount to a pittance. There is nothing to indicate that farmers’ real income will rise. Farm sector distress will continue and deepen, putting in peril the lives of a majority of the people primarily dependent on agriculture.
4. HEALTHCARE: The promise of Rs 5 lakh per family for secondary and tertiary healthcare is a big ‘jumla’. The target group is 10 crore families. There is, as yet, no scheme. Assuming that each family will avail of Rs 50,000 (1/10th of Rs 5 lakh), the amount required per year will be Rs 5 lakh crore. If the Insurance Companies will foot the bill, the premium at Rs 5000-15,000 per family will require an outgo of Rs 50,000 -1,50,000 crore per year. Is the FM serious?
5. JOBS: The FM has no new ideas and has fallen back on the tried and failed Mudra scheme. The average size of the Mudra loan is Rs 43,000. This is tokenism and will not create even one job. More Mudra loans will mean more tokenism, but no additional jobs.
6. INVESTMENT and CREDIT: There was nothing in the Budget to boost private investment. There was nothing in the Budget to encourage banks to lend, and investors to borrow, for new investment. The FM seems to have given up on private investment altogether.
7. TAX RELIEF: There is no tax relief to the average tax-payer. Only corporates with income up to Rs 250 crore get a tax relief of 5%. For individuals, Standard deduction is back, but Long Term Capital Gains Tax is also back. For the middle class earner and saver, one cancels the other. Actually, by way of LTCG and 4% cess, the taxpayers will pay the Government Rs 31,000 crore more whereas the gain through Standard deduction will be only Rs 8000 crore.
8. SLASHING ALLOCATIONS: The most disappointing part of the budget is the cut in the outlays on major schemes for 2018-19. Some important schemes that will get constant or reduced outlays are: MGNREGA, PMAY, National Drinking Water Mission, Swachh Bharat Mission, National Health Mission, Midday Meals Scheme, and Interest Subsidy for Short Term Farm Credit, Northeastern Investment Promotion, Price Stabilization Fund and Gram Jyoti Yojana. The FM will have much to explain when Parliament debates the Budget next week. On the question on the allocation on Health Care, Shri Chidambaram said that a family is five persons – it is an average. Some will claim Rs. 5 lakhs, some will claim Zero, you assume an average of Rs. 50,000 per family. You are promising me Rs. 5 lakh crores. Why would I not claim it? I am assuming an average of Rs. 50,000 per family. 1/10th of what I am entitled to - very small fraction of what I am entitled to. If you take an average of Rs. 50,000 what will it cost? Where is the money provided? The money is not even provided for paying the premium - even the premium. If an Insurance scheme, as I suspect, it is, there is no money in the Budget even to pay the premium. On a related question that some States are already following, Shri Chidambaram said they are. This is a new scheme and the Government and the Finance Minister have touted it as the world’s biggest Health Care Scheme. So I am looking for where is the money provided? Obviously, the Government is not going to pay out of its pockets; it is an Insurance scheme but covered by Insurance? There must be a premium, where is the premium provided for? I do not find the number, if somebody can find, please let me know.
On the question that considering the fact that the Government could be entering the election year next year and this is the last full budget, do you actually rate the budget as the more of a populist budget since it does not address the fiscal deficit, Shri Chidambaram said it is a ‘Defeatist Budget’. I think that they have run out of ideas, they have run out of gas. It is just words, it is the defeatist budget; it is a budget of a Government which has conceded that it is failed to address the important issues in the last three years. Remember the Economic Survey said that at the end of four years, we have failed to address three important areas – Employment, Education and Agriculture. What I want to ask is if the Government at the end of 4 years speaking through the CEA will say sorry we have failed to address Education, Employment and Agriculture, what has this Government been
doing for the last four years? On the disinvestment figures of the next financial year and how do you see the Commission of the General Insurance Companies and amalgamation of three companies into one, Shri Chidambaram said if they wish to consolidate three insurance companies, I have no comment on that, I have no quarrel with that but let us go back to disinvestment – the ONGC purchase of HPCL is not strategic disinvestment in its crude sense. It is simply an accounting gimmick - instead of Government borrowing in the market, Government has asked the ONGC to borrow in the market and pay the Government by buying HPCL shares. No strategic purpose is served by that disinvestment. This is the classical example of
Government selling its silver to meet its daily needs. I support strategic investment; I don’t support ONGC buying HPCL shares just to bail out the Government for another Rs. 30,000 crore. I hope next year, they don’t do that again.
On the question as how do you look at the GDP growth with this Budget, Shri Chidambaram said that they will not achieve in 2017-18. The first half has a growth rate of 6%. The second half, I think, the growth rate will not cross 6.5% or 6.75%. So the average will turn out to be about 6.25% or 6.3% or 6.4% for the whole year - for the whole year 6.4% may be 6.5%. From 6.5% in 2017-18 to jump to 7.75% and so on in 2018-19, it is for this Government, given this Budget, I think, is pretty much not possible. On the question that, you had obviously said that only a miracle can save the present Government in General elections and now they say it is a pro-farmer budget, Shri Chidambaram said where is the pro farmer? They say that we have already done 1.5 times the cost in MSP in some crops and we will do it for the remaining crops. Where have they done it? If they have already done 1.5 times the cost for some crops, why does the Chief Economic Advisor say that in Agriculture and I have quoted it; the real agricultural GDP has remained constant in the last four years, the real agricultural revenue has remained constant in the last four years which means that in the last four years, the economic status of the farmer has not improved even one bit. That is a statement of the economic survey. So the four years, if you have done so much, why has the real GDP in agriculture not improved? Why has the real farm income not improved? And I do not find anything in this Budget which will suddenly improve the real GDP or the real income and I certainly do not find anything in the Budget which leads me to believe that farm income will be doubled in four years, the real income is being constant, and how will it double suddenly. And what is provided in this Budget, I want to ask, what is provided? Show me anything which amounts to a provision, short-term credit has been increased from Rs. 10 lakh crore to Rs 11 lakh crore but that goes on every year. We started short term credit in 2004, I remember the number was about Rs. 80,000 crore, it has now come to Rs. 10 lakh crore, that goes
on every year. What is new, what else is there for the farmer?
On the question on the focus on the agriculture and rural, Shri Chidambaram said if the Minister or Ministers say we are focusing on agriculture, we are focusing on rural areas, just because they say it ten times, that does not become true, you have to tell me, where is the focus, what have they done? You will have to show me the paragraphs in the Budget speech. You will have to show me the outlays in the annexure. You will have to tell me how much is provided for in so much activity. You must identify the schemes and the money spent on them. Simply because ten Ministers are focusing on agriculture, the Ministers are focusing on agriculture, the Budget is not. On the question of money for Health and Education schemes in relation to the Budget, Shri Chidambaram said let us look at the outlay under the head. And expenditure on major items on page 10 of the Budget at a Glance and this is being done very quickly. Health – the revised estimates for the current year is Rs. 53,198 Crores and the Budget estimate for next year is Rs. 54,667 Crores. It is an increase of about Rs. 1,500 crores in terms of expenditure under the head ‘Health’. If you go the major schemes, I do not find a scheme there which reflects the Insurance proposals that they have announced. There must be a scheme. There must either be an outlay but the Government will pay for the Hospital care or the Government will pay the premium for the Insurance Company to pay but I do not find any entry here for that kind of money. All that is accounted, Health cess is been taken into account in the revenue, expenditure is being provided. No more money than what is already provided both the revenue and expenditure has been accounted for already. You are not going to add anything to numbers. These numbers are final for 2017-18 and 2018-19.
On the question of fiscal account and the current account, Shri Chidambaram said that it is the CEA’s statement in the economic survey.
On the question of the Government achieving the fiscal deficit, Shri Chidambaram said this year they said they will achieve 3.2%. They have now admitted that the year will end with 3.5%they have slipped by6 0.3%. Even that is a bit of a jugglery because they have not counted Rs. 30,000 crore which the ONGC is giving them. Market will take it as they are borrowing rather than ONGC’s borrowing nor have they accounted for Rs. 80,000 crore, they have provided for recapitalization of banks. I am keeping all this. This year they failed the test. Next year, according to the original fiscal consolidation path, they should have achieved 3% fiscal deficit. The FM said next year, we will achieve 3.3%. Going by this year’s track record, it inspires no confidence.
On the question of the spirit of the Budget as suggested by Shri Amit Shah as ‘Sab ka saath, sab ka vikas, Shri Chidambaram said when we heard it is for four years, They said for four years, they will say for another 12 months. What is new about it? On the question of growing disparity, Shri Chidambaram said you are absolutely right. If real income of the farmers has been constant for four years, whereas real income of certain other sections of the people are rising. Inequality is indeed growing – there is growing in inequality. Research papers establish that, which means the Government is not focusing on how to raise the income levels of the On the question that the farmer income will be doubled, Shri Chidambaram said I am not an expert on agriculture. All I know is that they want to double farmers’ income by the year 2022. We are already in 2018. They started in 2014. So there is eight years to double the farmer income. In four years, the economic survey admits that the farmers’ real Income has been constant. So where is the question of doubling it in the next four years? The Economic Survey, the CEA has said it has been constant on the first four years. How can it double in the next four years?
On the decline in the petrol and diesel prices, Shri Chidambaram said I do not think the consumer will get any relief on petrol and diesel as long as this Government is in office. I will tell you why – the Excise duty on petrol and diesel per liter is the highest ever under this Government. When oil prices were down, they should have given relief to the consumer. They did not. Now oil prices are rising, when oil prices are rising, and the fiscal deficit is over shooting the original target, there is no way this Government will cut your excise duty on petrol and diesel. If you want excise duty on petrol and diesel to be cut, you are to follow the example of Rajasthan.
On the job creation in the Budget, Shri Chidambaram said you take the Mudra scheme. If you take the number of people got Mudra loan and the number of amount of money that has been given as Mudra loan. You divide one by the other. You will get Rs. 43,000. The average loan size is Rs. 43,000. If I give you Rs. 43,000 to make an additional investment, can you create a new job with Rs. 43,000 investment create one an additional job. I have not heard anywhere Rs. 43,000 investment will create a job in which even millions of jobs can be created in this country. Therefore, the MUDRA loan scheme is not a job creation scheme. They keep on saying every Mudra loan has created at least one job. I want to find a person who has taken a loan of Rs. 43,000 who can create a job. So that is out jobs are created as CEA says in the small, and medium industrial sector. But in the MSEM sector after demonetization, and after the flawed GST, many units have simply closed down. Many units have cut back production. Many units have retrenched their workers. Are jobs being created in the MSME sector ? No ! He further said jobs are not being created in MSME. Where are the jobs created? Which is why there is so much unrest in India especially amongst the youth? Look at the CSDS survey, which was just published yesterday. The CSDS survey is an authentic survey, very reliable survey and the Number One worry; number one concern of all families is jobs. Just look at the survey – the survey results have been published in one of the papers and it is available on line. It is No. 1 worry in your own family; you ask your relatives, you ask your children, the number one worry is Jobs.
On the question of any relief in the budget with regard to Income tax, Shri Chidambaram said I have given you the numbers. The middle class get or middle class is the income tax paying. They get a standard deduction of about Rs. 8,000 but in terms of and if he has invested safe money in Mutual fund or etc. and he has to pay the cess, I have given you the numbers Rs. 31,000 crore is what this class will pay the Government and in return the Government has given them Rs. 8,000 crore.

Is it ethical for Central ministers to use social media to launch a massive propaganda campaign in favour of Aadhaar?
There are clearly too many loopholes in the manner in which the Aadhaar scheme has been outsourced without regard to data theft, infringement of commercial secrecy and manipulation of markets At a time when the matter is pending before the Constitution Bench of the Supreme Court, is it proper for various organisations in the public and private sectors to deny service without Aadhaar linkage? Does that not amount to contempt of court? Also, is it ethical for senior Central ministers to use social media to launch a massive propaganda campaign in favour of the controversial electronic identity programme? Does that not amount to an attempt to influence the judiciary? Such questions are being raised in the wake of the unusual flurry of tweets and online messages posted by several Modi ministers of the stature of Ravi Shankar Prasad and Piyush Goyal in the last few days. These posts are being retweeted in their thousands by the ruling party’s online media brigade.As a special hash-tag called #AadhaarMythBuster has been created for this purpose and soon became the top trending topic on social media. As regards banks and mobile phone companies continuing to send their tersely worded reminders to all customers to link their service to Aadhaar despite the court having extended the deadline for three months, legal pundits are of the view that it could amount to improper pressuring tactics in a matter that is sub-judice.