Budget lacks bold, structural reforms: P Chidambaram
The Union Budget 2019-20 does not chalk out a clear roadmap to take India on the high economic growth path and lacks bold and structural reforms, former finance minister and Congress leader P Chidambaram said on July 11 in Rajya Sabha.
Participating in the debate on the Budget, he also downplayed the Modi government’s call of making India a USD 5 trillion economy by 2024-25, saying economy itself doubles due to “magic of compounding” in six to seven years.
He also tried to corner Finance Minister Nirmala Sitharaman, saying she did not present macro economic data, including receipts from revenue, in her Budget Speech in Lok Sabha on July 5.
Chidambaram said the Finance Minister should have mentioned figures in her speech as people deserve to know broad numbers as they do not go through annexures and other Budget documents.
“I cannot recall a Budget Speech so bereft of macro data,” he said, and urged the finance ministry to ensure important data gets mention in the Budget Speech in future.
He also rued that there was no clarity on the exact projections on the GDP.
Chidambaram said at one place the GDP growth has been projected at 7 percent and at other place it is 8 percent.
“One per cent makes a huge difference,” he said, adding the government, CGA, and Chief Economic Advisor could not present a unified picture for the current fiscal.
He further said structural reforms were must for achieving economic growth, but the Budget does not talk about it.
“Show me on one structural reform. There is not one,” he said.
He, however said “the Prime Minister has enough will to take bold steps” for achieving economic growth.
“Tell us what structural reforms he will take to propel India’s growth and take it to 8 per cent this year and to double digit next year,” he asked.
He also took a jibe on the government’s claim that India would be a USD 5 trillion economy.
The size of the economy is currently estimated at USD 2.7 trillion.
He said if the economy is growing at a nominal growth rate of 12 per cent, it will double in 6 years even without a finance minister. If the growth rate is 11 per cent economy will double in 7 years.
“It will double (due to) magic of compounding. What is this great number 5 trillion dollar. Please don’t put a pie in the sky for people,” he said, and cited data to support his point.
Pointing out that there was stagnation in gross fixed capital formation in the country, Chidambaram said huge investments are required for firing engines of growth.
And for investments domestic savings are pertinent.
“There is nothing in the Budget to improve domestic savings,” he said.
He also asked the government to fix realistic targets for revenue collection for achieving expenditure goals.
In an apparent jibe at former finance minister Arun Jaitley, Chidambaram said Sitharaman inherited a “wobbly economy” and accused the government of waiving corporate loans worth Rs 5.55 lakh crore during the NDA-1 government.