Budget has no ‘Big Idea’: Congress

The Congress on Monday dismissed the Budget as a “no Big Idea” document, with former Finance Minister P Chidambaram asserting it has been a “wasted opportunity”.

“After listening to the Budget speech and after reading the text, what is the one big takeaway for the average citizen — it is that there is no Big Idea,” said Chidambaram, giving his first impressions.

The former Finance Minister asked the Centre to clarify how much the real GDP growth in 2016-17 would be.

“The Economic Survey was restrained in assuming a growth rate of about 7 per cent. The Budget papers have given the GDP figures for 2015-16 and 2016-17, and calculated the nominal growth at 11 per cent. If these are the Centre’s numbers, I would like to ask how much will be the real GDP growth in 2016-17?” he asked.

Accounting for the RBI’s inflation targets, Chidambaram indicated a very “moderate” growth rate of about 6 per cent. “We know the RBI’s target for inflation in 2015-16 is 4-6 per cent. It would be a pity that all this elaborate exercise yields, ultimately, a moderate GDP growth of about 6 per cent,” he said.

“This is the third budget of the NDA government. The Prime Minister had promised that he would “reform to transform”. Reform means reform of factor markets or product markets. There is little evidence of such reform in the Budget,” said Chidambaram.

According to the former Finance Minister, even the much-touted focus on agriculture gives no indication of a fair and remunerative MSP. “I am happy that the UPA schemes are being continued, but the crucial signal is ‘Price’. The Centre reneged on its promise to give cost plus 50 per cent. It did worse last year by giving meagre or nil increases in MSP. The budget speech makes no promise of a fair and remunerative MSP. Nor is there any major initiative to increase productivity in crucial crops,” said Chidambaram.

He said the Centre seems to be unaware of the problems faced by core sectors such as power, steel, coal, mining, cement, construction and oil and gas. Additionally, he said, the budget speech shows an indifference towards the export sector.

“In these sectors, many projects are stranded and there is little new investment. Besides, there is the problem of high interest rates,” he said. “Except for one bland sentence in paragraph 86, there is no mention of exports. I think, after 14 successive months of negative growth, the Centre has given up on the export front.”

Chidambaram said he was happy that the government had “spurned the advice of the Chief Economic Adviser” and stuck to its own fiscal consolidation path for 2016-17. Chidambaram said the Centre has belied the promise of a predictable tax regime.

“There is no major relief to the tax payer or the middle class or the small and medium businessperson. The reduction in the corporate tax rate for a very limited class from 30 per cent to 29 per cent is laughable. Besides there are new ceases and surcharges,” he said.

According to Chidambaram, a majority in the Lok Sabha should have encouraged the Government to repeal the retrospective tax on capital gains.

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