‘Budget estimates will be a conjurer’s vision’

A fresh fiscal stimulus, increased capital expenditure, rescue plan for MSMEs and cutting tax rates are among the few palliatives in a ten-point prescription for the economy by former Prime Minister Manmohan Singh and his erstwhile Cabinet colleagues P Chidambaram, Jairam Ramesh and Mallikarjun Kharge even if they believe the government to be “impervious to advice” and “exceptionally obstinate”.

Releasing their statement, Chidambaram said an already sagging economy has been pushed into the abyss after the pandemic and quoted the IMF Chief Economist Gita Gopinath to aver that Indian economy is not likely to be back to pre-pandemic growth levels before 2025. “The year 2020-21 will end in negative growth. None of the numbers estimated at the beginning of the year will be achieved. The revenue targets will be missed by a large margin, capital investment will take a hit, the revenue deficit will be close to 5 per cent and the fiscal deficit would exceed 7 per cent. There is no point wasting time over the Budget of 2020-21. It was a disaster to begin with and will be a catastrophe at the end of the fiscal year,” said Chidambaram, predicting that the FM would present a dressed-up Revised Estimates for 2020-21 and attempt to build and attractive narrative for 2021-22.

‘Conjurer’s illusion’

“The Revised Estimates for 2020-21 will be a set of false numbers and, therefore, the Budget Estimates for 2021-22 will be a conjurer’s illusion,” said the note prepared by the former PM, FM and their Cabinet colleagues.

The BJP, on its part, immediately contradicted Chidambaram, asserting that the economy is on the revival mode. BJP spokesperson for economic affairs Gopal Krishna Agarwal held a press conference and asserted that corporate results of various sectors like IT, auto, pharmaceutical, FMCG, banking and finance have been upbeat and the economy is on a sharp revival path.

“The economy is already experiencing widespread recovery and the Budget will be a game changer for the country. Modi government was not elected to maintain status quo but to bring transformative changes. The government has been walking on the path of strong reforms. IIP figures on eight core sectors show healthy growth. Labour force participation, too, in the post-Covid era, has seen 87 per cent recovery in mobility,” Agarwal said.

‘Slow and painful’

Chidambaram maintained that the Congress does not see a ‘V’ shaped recovery and in the party’s estimation, it will be “slow and painful”, more like the letter K during which millions of households will struggle to survive, inequality will increase and those who are behind will be pushed back further.

He said even when the government is unwilling to accept the Opposition’s counsel, the Congress would still urge them to consider the ten-point charter to revive growth. The first imperative in the process, he said, is to give a fresh fiscal stimulus to the economy and put money in the hands of the people by direct cash transfers. Revival of the MSMEs, he said, should also be a top priority.

Increasing capital expenditure, reducing tax rates, especially GST and other indirect tax rates on petrol and diesel, recapitalising public sector banks and formulating sector-specific packages for telecommunication, power, mining, construction, aviation and tourism and hospitality were among other recommendations made by the Congress leaders.

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