New Delhi [India]: Former Finance Minister and senior Congress leader P Chidambaram on Monday slammed the NDA government for its “status-quoist” Budget which he said lacks structural reforms.
“This is a status-quoist budget of a government which talks reform, but the idea of reform in its head is incremental reform, just making changes on the margins. This is not the kind of structural reforms and radical reforms that this country needs. What we need are radical reforms and the best example of a radical reformer is Dr Manmohan Singh,” Chidambaram said at an event here.
Chidambaram also took on the government over the figures mentioned in the Budget.
“Except for the corporate tax, every other number in this Budget is suspect. Every number is not credible,” he said.
Chidambaram stated that over a period of last five years, the NDA government has delivered 7.5 per cent growth. “Even that 7.5 per cent is suspect as testified by Raghuram Rajan some months ago and as testified by Arvind Subramanian two weeks ago,” he shared.
He went on to add, “The economic survey promises 7 per cent growth, not even the 7.5 per cent that they achieved over the last five years and certainly nowhere near the double-digit growth that they boasted about five years ago.
However, while the economic survey promises 7 per cent, the Budget document are premised upon an 8 per cent growth. In fact, if you look at the first page of the Budget, you will find that they have assumed 8 per cent growth… and nominal growth of 12 per cent. I have not come across recently a situation where the economic division is projecting 7 per cent growth whereas the ministry is projecting 8 per cent growth.”
While explaining how the central government will achieve “the 7 or 8 per cent growth,” Chidambaram said, “Firstly, every economist of international repute and national repute has said we must do structural reforms. The Budget speech in two paragraphs uses the phrase ‘structural reforms’… I find them only in paragraph nine and 24. But a close reading of the Budget speech will indicate that there are no structural reforms that are being proposed.”
He added, “In the five year NDA government I can point to two structural reforms – one is the introduction of GST and the other is the introduction of the IBC code. I do not find anything comparable to that in the Budget speech for 2019-20. Nor do I find anything comparable to the kind of structural reforms that were done by the Congress government of P. V. Narasimha Rao and the subsequent governments of United Front and UPA. This Budget speech does not have any structural reform.”
Chidambaram stated that the Budget speech indicates only three major investment related and major growth promoting activities.
He said, “I can only find the following – 300 kilometres of Metro, Rs 10,000 crore promised under FAME under what period of time is not mentioned, certainly it can’t be in one year, and accelerating water transport movement of cargo along the Ganga river. These are three concrete growth promoting programmes that I found in the Budget. The rest are simply a continuation of existing programmes. If they are doing these new programmes and they are continuing existing programmes what will be the investment and where are they going to find the money?”
Chidambaram further stated that the Budget speech “boasts that we got FDI of 64 billion dollars last year.”
“That’s correct, expect that the Finance Minister missed out a word. It’s gross FDI that she is talking about. The net FDI was only 43 billion dollars in 2018-19. I don’t know how much FDI they will get this year. It can’t be much more than 43 billion dollars because the world’s economy is slowing down and I don’t know how much appetite there is in the world to invest in India,” he said.