Former Finance Minister P Chidambaram Thursday tore into the BJP government for not announcing any “bold” decisions or “structural reforms” in the Union Budget to fast-track growth despite a huge mandate and ridiculed the government’s goal of making India a $5 trillion economy by 2024-25, saying the economy doubles due to the “magic of compounding” every six or seven years and it does not require a prime minister or a finance minister for the same to happen.
“So please don’t put this pie in the sky before the people and say 5 trillion dollars is equal to Chandrayaan landing on the moon. Five trillion dollar is simple arithmetic. It will double again and again,” he said.
Participating in the debate on the Union Budget in Rajya Sabha, the Congress leader said the government’s tax collection targets and projections were “completely unrealistic” and questioned the claim that domestic savings will increase which would, in turn, spur investment. There is nothing in the Budget that will improve either domestic savings or household savings and no incentive has been given to enthuse the middle class to save more, he said.
“If household savings don’t improve, domestic savings will not rise. If domestic savings do not rise, domestic investment will not rise. If domestic investment does not rise, the gross fixed capital formation (GFCF) will remain at about 29.5 or 30 per cent. If it remains at 29.5 or 30 per cent, how will you get 8 per cent growth. Please teach me… I am willing to be a student. Let the Finance Minister be a teacher and tell me how will growth rise if domestic investment and GFCF remain at about 30 per cent,” he said.
Chidambaram criticised at the government for not announcing any structural reforms in the Budget because of which the economy will be “status-quoist”, ambling along at the pace of about 6.5 or 6.8 per cent, which is not good for the country, he said. He said Sitharaman has inherited a “wobbly economy” from the previous tenure of the Narendra Modi government.
“Dr Manmohan Singh and I have exchanged notes. We wish we had a mandate of that kind in some time in our lives… He (Singh) worked with 145 people and then 206 people. You have a mandate of 303… why did you not take bold decisions… this is my grievance,” he said.
“A weak economy needed a bold approach… It is not necessary that every thing has to be said in the Budget speech. It can be done even after…But I expect this government to come back and tell us what structural reforms they will do, what bold steps they will take, how they will improve investment which is the only engine that seems to be available to them to spur India’s growth to 8 per cent this year and to raise it to double digit of 10 per cent,” he said.
On the Prime Minister’s goal to make India a $5-trillion economy, he said, “I will give you better goals. In 1991, India’s economy was 325 billion dollars. It doubled by 2003-04. Then the UPA government came. From 618 billion dollars, it doubled to 1.22 trillion dollars in four years. It doubled again to 2.48 trillion dollars in September 2017. It will double to 5 trillion dollars. It doesn’t require a prime minister or a finance minister. It will double. Why? That is the magic of compounding. Any money-lender knows this. Any borrower knows this.”
Chidambaram also questioned the tax collection projections. “Last year, income tax collections increased by 7.1 per cent. For the new year, the Finance Minister is projecting that income tax collections would rise by 23.25 per cent. If you achieve that, you would rank with the Olympian pole vaulter! Customs was negative by 8.6 per cent; projection is plus 32 per cent. Excise was flat, negative by a half per cent; projection is 15.55 per cent. Last year, GST increased by 3.38 per cent; projection is 45 per cent… I am afraid these are completely unrealistic projections and unrealistic targets,” he said.