declared it a HOPELESS Budget
2 Feb, 2018
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
(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.