Budget has missed an opportunity to drive economic growth: Chidambaram

The Budget has missed an opportunity to drive economic growth and is leading India along a relatively low growth path, according to former Finance Minister P Chidambaram.

By the year-end, he estimates that GDP growth would be about 6.5 per cent and will remain the same for the next couple of years. Chidambaram was addressing students at the Loyola Institute of Business Administration here on Friday.

In this period, he regretted, there will not be more jobs for educated youth or better prices for farmers.

The Budget does not provide for growth, employment generation or investments. Credit growth in the industry is at an all time low of 5.1 per cent, he said. “I am disappointed that a huge opportunity has been wasted, disappointed that indirect taxes have not been cut to increase demand, MSMEs have been have been left to fend for themselves and money denied to social sector and defence,” he said.

Even as of mid-2016, India was among the fastest growing large economies while the global environment was in flux. Europe was hit by Brexit, US elections were in the offing and the sentiment was moving ‘rightward and protectionist’, China was shifting from export-led growth to domestic market focus and the world was yet to recover from the financial crisis of 2008. The government should have been looking at ways to sustain growth but had opted for demonetisation which has had a negative impact on the economy. Its impact will be felt for two more years, he said. Even with the financial year coming to a close, Finance Minister Arun Jaitley is unable to predict what the income tax and corporate tax revenues will be and the Budget Estimates and Revised Estimates continue to be the same at 3.53 lakh crore and 4.93 lakh crore respectively, Chidambaram pointed out. “My deepest regret is that the government has done nothing to compensate for the worst hit” such as the daily wage earners, and the micro, small and medium enterprises. The income tax cut for the lowest slab translates to an average of ₹5,000 per income tax payers. Even the 5 per cent cut in corporate tax will cover just a fraction of the profit-making SMEs that have a company structure. Proprietorship and partnership concerns are left out, he said.

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