New Delhi: Former Finance Minister P Chidambaram on Thursday said that the economy was “weak” and the Union Budget was expected to be “bold” for taking up structural reforms and improving investment but any such step was missing in the Budget as Finance Minister Nirmala Sitharaman’s speech was “insipid”.
Participating in the debate on the Budget in Rajya Sabha, Chidambaram also took a swipe at the government for its call on making India a USD 5 trillion economy, saying economy itself doubles due to “magic of compounding” and does not require a Prime Minister or Finance Minister.
“The economy is weak. The Budget Speech is insipid. A weak economy needs a bold approach. I feel the Prime Minister has enough will and determination to take bold decisions,” the senior Congress leader said.
He said it is not necessary that everything has to be said in the Budget Speech, it can be done even after.
“It can be done during the course of this Budget session. But, I expect this government to come and tell us what structural reforms they would do, what bold steps they would take, how they would improve investment which is the only engine that seems to be available to them to spur India’s growth to 8 per cent this year and to raise it to double-digit, 10 per cent,” he said.
Chidambaram said the budget was not inspiring but since the government has a five-year mandate, the government must pay serious attention to the concerns raised on the fronts of the economy by the opposition parties.
“Please ensure that bold structural reforms are implemented to boost economic growth,” he appealed.
Talking about government’s goal of a five trillion dollar economy, Chidambaram said in 1990-91, India’s economy was USD 325 billion and was doubled by 2003-04.
He said when the UPA Government came, the economy was doubled 1.22 trillion dollars in four years from 618 billion dollars and it doubled again to 2.48 billion dollars in September 2017.
“It will double to USD 5 trillion. It does not require a Prime Minister or a Finance Minister. It will double due to the magic of compounding. Any money lender knows this, any borrower knows this. If the nominal growth of the economy is 12 per cent, it will double in six years. If the nominal growth of the economy is 11 per cent, it will double in seven years,” he said.
The former Finance Minister said either BJP or its successor, whoever it may be, will double the economy to 10 trillion dollars by 2028-29 and double it to 20 trillion dollars by 2032-33.
“Please don’t put this pie in the sky before the people and say 5 trillion dollar economy is equal to Chandrayaan and landing on the moon. Five trillion dollars is simple arithmetic. It will double again and again. If you grow faster; it will double faster, if you grow slower, it will take one more year,” he said.
He said there was nothing in the Budget that will improve domestic savings and if household savings don’t improve, domestic savings will not rise and if domestic savings do not rise, the domestic investment will not rise.
“If the domestic investment does not rise, the Gross Fixed Capital Formation will remain at about 29.5 or 30. If it remains at 29.5 or 30, how will you get 8 per cent growth?” he asked the Finance Minister, showing his willingness to become a student.
He was referring to Sitharaman’s jibes at Opposition on Wednesday in Lok Sabha where she called herself as a teacher and the opposition the student.
“I believe there was some debate about teacher and student in the other House. I am willing to be a student. Let the Finance Minister be a teacher and tell me how will there be a growth rise if domestic investment and GFCF remains at about 30,” he said.
Speaking about FDI, Chidambaram said the Budget Speech mentioned that FDI was 64.37 billion US dollars that was right but Sitharaman forgot to mention that it is ‘Gross FDI’.
“Gross FDI was 64.375 billion last year while net FDI was only 44 billion. So, we should be absolutely transparent. She should have mentioned either both figures or she should have added the word ‘Gross’ to describe the FDI,” he said.
Calling government’s projections on income tax collections, the GST collections and others as “unrealistic”, Chidambaram said if income tax collections would rise by 23.25 per cent, the government would rank with the Olympian pole vaulter!
“Last year, GST increased by 3.38 per cent and the projection is 45 per cent. Now, if you achieve these targets, I would compliment you at the end of the year. But I am afraid, these targets are completely unrealistic,” he said.
In an apparent attack on former Finance Minister Arun Jaitley, Chidambaram said he doesn’t blame the Finance Minister for it as she assumed office only about 50 days ago.
“But if she would have reflected on the macroeconomy, I am sure she would have done that. I mean no disrespect to anyone — that the economy that she inherited was a wobbly economy,” he said.
Attacking the government on the unemployment front, he said unemployment is 7.8 per cent and the workforce shrunk by 4.7 crore people.
“For 62,907 khalasi posts 82 lakh people applied out of which 4,19,137 were B.Tech. graduates and 40,751 had a Masters in Engineering. This is the economy that you inherited.
“I don’t blame her for that. But taking note of the reality, you should have been bold. The government has a superb mandate. You have a mandate of 303 and with your allies, you have a mandate of 352. Having inherited this situation, why don’t they take bold measures?” he asked.
On government’s claim of reducing NPAs by Rs one lakh crore, he said the government should also say that in the five years of Modi-1, Rs 5,55,603 crore rupees was written off for corporates.
“You reduced NPAs of one lakh crores but you write off Rs.5,55,603 crore only for corporates. You won’t write off farm loans, you won’t write off education loans, you won’t write off loans for micro and small industries. But, you would write off Rs.5,55,603 crores,” he said.