Chidambaram likens Budget to box office flop

P. Chidambaram

P. Chidambaram  

Ex-FM says it does little to stimulate demand

Former Union Finance Minister P. Chidambaram said the Union Budget was like a movie which bombed after the first show, as it did not address the key challenges faced by the economy and did not take steps to stimulate demand by putting more money in the hands of poor people.

Speaking at a session organised by Southern Indian Chamber of Commerce and Industry, he hoped that the government would make some adjustment in the Budget after a debate in Parliament.

“After 160 minutes of Finance Minister’s Budget speech, there was no narrative in the Budget. The government is still in the denial mode about the challenges faced by the economy,” Mr. Chidambaram said.

The former Union Minister began by saying that he would speak for 160 minutes taking cues from the Finance Minister, much to the delight of the audience.

He said the two key challenges for the economy was people were not buying (demand constrained) and both domestic and foreign investors were not making investments. The obvious solution to address the challenges were to increase government spending on schemes which would have directly put money in the hands of the poor who would have started spending on goods and services.

Mr. Chidambaram said the government could have deferred or slashed expenditure that had a long gestation period like the river cleaning project or building 100 more airports under Udan scheme and instead increased allocations for Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) scheme and PM Kisan scheme.

“The FM could have allocated ₹1 lakh crore to MGNREGA and told the States to pay the arrears. Instead the allocation has been ₹71,000 crore for 2019-2020 in the revised Budget estimate and cut to ₹61,500 crore for 2020-21,” he said.

Mr. Chidambaram said similarly PM Kisan was a reasonably good scheme where ₹6,000 was given to farmers every year.

“Either the amount given should have been increased to ₹12,000 or its scope should have been extended to cover tenant farmers. Out of the earlier budgeted amount of ₹75,000 crore under PM Kisan, the government would spend ₹54,000 crore in 2019-2020. The next year allocation was again ₹75,000 crore,” he said.

On the domestic and foreign investments not taking place, Mr. Chidambaram said one of the steps was tax incentives. The other one was through trust and former Prime Minister Manmohan Singh used to say that investment was an act of faith, he added. Mr. Chidambaram pointed out that there was a breakdown of trust between the government and the investor as the government had empowered enforcement agencies with all powers, including attaching and selling property even before the trial was over.

“The government now talks about the charter of rights for taxpayers. First, it should take back the rights given to the officers,” he added.Mr. Chidambaram said he was okay with the government selling stakes in public sector firms.

However, on the announcement on plans to sell partial stake in LIC, he said his party was yet to take a stand. “We will ask them the reasons for selling stake in LIC. If there are no good reasons and just to raise money, we will oppose it,” he added.

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Printable version | Mar 30, 2020 2:10:22 PM |

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