Budget 2020

Budget 2020 | Government has given up reviving economy or accelerating growth rate, says Chidambaram

Senior Congress leader and former finance minister P. Chidambaram (R) addresses a press conference on the Union Budget 2020-21, at AICC headquarters in New Delhi, on Saturday.

Senior Congress leader and former finance minister P. Chidambaram (R) addresses a press conference on the Union Budget 2020-21, at AICC headquarters in New Delhi, on Saturday.   | Photo Credit: PTI

“I am at a loss to understand what was the message intended to be conveyed by Budget 2020-21.”

Reacting to the Union Budget, Former Union Finance Minister P. Chidambaram said the government had given up on reviving the economy or accelerating the growth rate, and former Congress president Rahul Gandhi stated that there was no strategic idea or anything concrete in the Budget to counter the growing unemployment rate.

At a press conference at the Congress headquarters, Mr. Chidambaram said, “The government has given up on reviving the economy or accelerating the growth rate or promoting private investment or increasing efficiency or creating jobs or winning a greater share of world trade,” 

When asked to rate the budget on a scale of 10, he said, “There is both 1 and 0 in 10, you can chose between the two.”

Ms Sitharaman's speech completely missed the mark, he said. “The government is in complete denial that the economy faces a grave macro economic challenge and the growth rate has declined in six successive quarters. There is nothing in the Budget that leads us to believe that growth will revive in 2020-21. The claim of 6 to 6.5. per cent growth next year is astonishing and even irresponsible.” 

The Indian economy was demand constrained and investment starved and both these challenges have not been acknowledged by Ms. Sitharaman. “I think this budget is also done nothing for three job creating sectors - mining, construction and manufacturing,” Mr. Chidambaram said.

There was nothing in the budget to tackle Consumer Price Index inflation, which is currently over seven per cent and food inflation, which was over 10 per cent since subsidies on food and fertiliser had been reduced. “The government does not believe in reforms and certainly not in structural reforms, The FM has outright rejected every — and I repeat, every — reform idea contained in the Economic Survey. Did the FM read the Economic Survey? Was the Chief Economic Adviser privy to the contents of the Budget speech? I think the answer to both questions is in the negative,” he said. 

Ms. Sitharaman's budget speech that was two hours and 40 minutes long had “multiple themes, segments and programmes” leaving the listener dazed and confused. “I am pretty certain that even the most loyal BJP MP or supporter cannot latch on to any idea or statement in the Budget speech and take it to the people,” he said. If the ongoing programmes had failed the people, how can throwing more (or in some cases less) money into the ongoing programmes change anything, he asked. 

The income tax relief offered in the Budget were merely “crumbs” thrown at those in the lower tax bracket. The proposed disinvestment in Life Insurance corporation was highly debatable and it was wrong to assume that every public sector must go through a process of disinvestment. 

He said that since conditions in external markets were not favourable and a global slowdown was predicted, tax exemptions on Sovereign Wealth Funds would have a negligble impact. He also criticised the government for abolishing Dividend Distribution Tax. “It was undoubtedly one of the most efficient taxes levied by the Government of India. There was no scope for innovation. It has been abolished as a sop for corportates and now they will have to go after the recipient of the dividend. Will they succeed in collecting all the taxes is a moot point but I'm pretty certain there will be a loss of revenue,” he added.

It was hollow: Rahul Gandhi

Mr. Gandhi told reporters, “The main issues confronting this country today are unemployment and the situation as far as the economy is concerned. I did not see any concrete idea, any strategic idea that would help our youngsters get jobs. I saw a lot of tactical stuff, redundant things, I did not see any central idea.” The Budget described the government quite well, which was of “all talking” and nothing concrete. “The government's approach is visible in this budget. It did not have anything in it. It was hollow.” The Finance Minister did not give any details on how growing unemployment rate would be tackled, he stated. 

In a tweet, Mr. Gandhi said, “Our youth want jobs. Instead they got the longest budget speech in parliamentary history that said absolutely nothing of consequence. PM & FM both looked like they have absolutely no clue what to do next”.

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Printable version | Feb 24, 2020 10:04:50 AM | https://www.thehindu.com/business/budget/budget-2020-government-has-given-up-reviving-economy-or-accelerating-growth-rate-says-chidambaram/article30712287.ece

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