Ever since Finance Minister Arun Jaitley presented the Narendra Modi government’s last full Budget on 1 February, the country has been divided over the effectiveness and practicality of the Union Budget 2018.
While some hailed the Budget for introducing schemes such as the National Health Programme and reintroduction of the long term capital gains (LTCG) tax, there are others who are calling it an eyewash.
Former Finance Minister and Congress leader P Chidambaram, who had earlier in an interview to The Quint’s Sanjay Pugalia called the Budget a jhumla, launched a fresh attack on the Modi government’s annual Budget.
Amid uproar in Parliament, Chidambaram posed 12 questions to the Modi government over the annual Budget.
- The Economic Survey said that there are two macro economic vulnerabilities – the fiscal account and the current account. Budget 2018-19 has made the fiscal deficit worse, as against the target of 3.2 percent, you have made the target 3.5 percent. And next year, as against the target of 3 percent, you have fixed the target at 3.3 percent. While we know the fiscal deficit number for the current year, I want to know what is the current account deficit number for the current year and next year.
- Every deficit target has been breached for the Budget. Will the impact of these deficits be inflationary? Currently, WPI stands at 3.6 percent. The consumer price index in December stood at 5.2 percent. What is the government’s estimate of average WPI and average CPI in 2017-18 and 2018-19?
- The RBI said that from April to December 2018, inflation will rise to 5.6 percent. Treasury bonds have increased rapidly in the past six days. On 31 January, the interest rate was 7.43 percent. On 7 February, the ease on treasury bonds rose to 7.57 percent. I cannot recall a six-day period in which the treasury bond yield will rise by 14 basis points. Is this a signal that interest rates across all the sections are going to rise? Is this a signal that we are will face an inflation in the next six to 12 months?
- What is your assumption of the crude oil price in the Budget? Every Budget must assume that crude oil prices remain at a particular level. I remember when crude oil prices thrust $147 a barrel. Currently, crude oil is $67 a barrel. Suppose the crude oil price rises to $70 or $ 75 a barrel, what will be it’s impact in the Budget estimate? When crude oil prices rise, will you reduce the excise duty rather than increasing the price of petrol and diesel?
- By increasing the fiscal deficit, from 3.2 to 3.5 percent in the current year, you have additionally borrowed Rs 48,000 crore. Adding to that, the Rs 37,000 crore that ONGC borrowed on your behalf. Totally, Rs 85,000 crore have been borrowed. Where did this Rs 85,000 crore go in the Budget? What did you do with it?
- What is your capital expenditure? According to the Budget estimate, in 2017-18 capital expenditure was Rs 3,09,000 crore. According to the revised estimates, capital expenditure is Rs 2,73,000 crore. There is a shortfall of Rs 36,000 crore. What are the schemes and projects that have been hit by the reduction in capital expenditure?
- Nominal GDP in 2017-18 according to the Budget is estimated to grow 10.5 percent. Real GDP will grow 6.5 percent. For next year, you say nominal GDP will grow by 11.5 percent. Will this additional 1 percent be reflected in real GDP growth or in inflation?
- Before you assumed office, you promised two crore jobs a year. According to the International Labour Organization (ILO), a proper job is employment that is certain, regular and reasonably secure. What is your definition of a job? How many ILO-defined jobs have you created in the past four years? Will you now recommend the ILO that selling pakodas is also a job?
- In the Budget estimate, customs duty for the current year was supposed to be Rs 2,45,000 crore. In the revised estimate, it was Rs 1,35,000 crore. For next year, customs duty estimate is Rs 1,12,500 crore. Why is it coming down?
- You have taken credit for service tax and excise duties up to 30 June 2017 and for excise revenue on non-GST goods. The GST came into effect on 1 July 2017. The GST revenue collection for 2017-18 is estimated at Rs 4,44,631 crore. Then you say GST revenue collection is Rs 4,44,631 crore. My calculation says this is for nine months. The Finance minster says the calculation is for 11 months. How is the GST for 11 months? Please explain the mystery of these numbers.
- Dr Arvind Subramanian says that two things are worrying him – the fall in savings and the fall in investments. The Finance minister did not acknowledge this in the Budget speech. But corporate savings haven’t fallen, they are more or less constant. As a result, gross fixed capital formation (GFCF) has fallen 5 percent during your tenure. From a high of 35 percent, it is now around 29 percent. Please explain.
- Corporation tax is expected to grow next year by 10.15 percent. Income tax is expected to grow by 19.88 percent. But GST is expected to grow by a whopping 67 percent. Income tax and corporate tax are direct taxes, GST is an indirect tax. Direct taxes are progressive and you must increase them and indirect taxes are regressive and you must give relief in indirect taxes. But you have increased taxes on individuals and given relief to the corporate sector. Should we tell the people that the philosophy of the NDA government is burdening the poor and patting the rich?
Arun Jaitley was not present in the session when Chidambaram posed the 12 questions. The Congress leader also targetted the government over the agrarian crisis, unemployment, and other issues. He dubbed the NDA government’s economic policy as a "betrayal" of the country’s trust, PTI reported.
Video Producer: Srishti Tyagi
Video Editor: Mohd Ibrahim