BUDGET SPECIAL: from Anil Nair in Mumbai
If Shri Yeshwant Sinha called the Union budget presented by Palaniapan Chidambaram a facile attempt at ??fooling all the people all the time??, he had good reasons to say so. At a packed auditorium at KC College in south Mumbai on Wednesday, he listed out the reasons for his disappointment at the Budget which was hailed as the work of the ?dream team?.
??It is Chidambaram'sintellectual honesty that I am questioning. Yesterday the stock market went up by nearly 150 points and that was considered as to be its endorsement of a dream budget. But today the markets are again in the dumps??, Shri Sinha said while adding that he can point-by-point prove that the Union Budget is nothing but a hoax.
The Congress will even grudge the NDA government'sbrilliant growth strategy on the grounds that good monsoon had helped in higher GDP growth rate during its regime. ??But when it comes to the performance of the current government, Chidambaram chooses to blame liquidity overhang, high global petroleum and commodity prices and 13 per cent deficiency in rainfall??, which led to severe investment constraints in the country.
The Economic Survey introduced by the Union Finance Minister last year in the Parliament had clearly said that the inflation was low and the economy was resilient, then why had the growth floundered, Shri Sinha asked the audience of mainly Mumbai'soffice-goers. By the time Shri Sinha started his speech police had to be called in to control the crowd.
??This year Chidambaram announced setting up of the special purpose vehicle (SPV) for infrastructure financing with a borrowing limit of Rs 10,000-crore. But what happened to last year'sinter-institutional group.
Shri Sinha quoted the revised estimates of the deficits given by Shri Chidambaram which would actually burgeon. ??Revenue collection, Union excise duties, corporate tax and income tax are estimated to rise unusually high in the last quarter so as to meet the target. Collection of corporate tax, for example, up to December 2004 has only been 51.31 per cent. How will the rest 50 per cent (Rs83,000-crore) come in the next three months???, he asked. The collection story remains the same for all the other levies ? central excise collection has been 54.8 per cent till December 2004, 65 per cent in case of customs duties targets, 66 per cent in case of income tax and average of all of about 57 per cent.
In case of indirect taxes, Shri Sinha pointed out that most of the changes which Shri Chidamabarm brought about in the Budget will be admittedly revenue neutral, which means that it will have no impact on receipts. ??He has gone ahead with various concessions in corporate tax and yet set higher targets??. In the accelerated irrigation financing programme he made a claim that the government would employ Rs2,800-crore. Shri Sinha pointed out that the same programme has been mentioned in the last year'sUnion Budget.
| Tax the taxed! Idiocy at play, Yashwant Sinha'ssuavity and sophistication might have endeared him to the office-goers in Mumbai who came to hear him but his unusual sense of humour left them mostly thoughtful. ??If I go to the bank and issue a bearer cheque for Rs10,000 to withdraw cash, I end up paying Rs10 more, which according to the FM will help tracking black money. But there must be millions of such transactions conducted everyday, the account of which will all end up at his table. How is he going to track the black money? It is just beyond my comprehension. It will be like searching for a needle in a haystack??. Hmmm? the audience said in unison. Why did the journalists who interviewed Shri Chidambaram never asked him this question. Similarly, the Finance Minister has introduced new taxes on branded jewellery, which are high on quality. Is the government not taxing quality while exempting the unbranded, often unscrupulous jewellers. This Budget from the dream team has only one intention, and that is to trick the whole nation. ??A very dishonest effort??, he added in characteristic understatement. |
The total loss in revenue because of the steep cuts in peak customs duties from 20 per cent to 5 per cent would be about Rs 3,000-crore. Shri Sinha suggested that the cuts should always be brought gradually down so that domestic industry does not suffer. The Indian capital goods manufacturing sector has been doing well and has even exported machinery to several foreign countries. It will take a direct hit because the custom levies have been brought down drastically. On the other hand, the squeeze on the state loans will have deleterious effect on the economy, he warned.
This year'sUnion Budget strangely does not account for all the promises made in the last year'sBudget. ??I had started this practice of reporting to the Parliament of all the promises made and achieved in the subsequent years. This year no such documentation has been done for obvious reasons??.
Last year Shri Chidambaram had announced the food stamps programme. There is no mention of it in the current Budget. He had announced Rs100-crore water irrigation programme ? probably work is yet to start on it. He had also proposed to collect Rs16,000-crore in tax arrears last year, no mention of that too in this Budget.
??Chidambaram had with a flourish stated in the Union Budget that he rejected jobless growth. But who had encouraged any jobless growth in the first place. Our programme were all well designed and charted out like the national expressway/ highway project, rural roads, food for work etc. We also had stipulated the amount to be spent and kept a tab of how the work was progressing. Today we see that the Congress government has stopped all that development work. Machinery on the expressway are lying idle and roting,?? Shri Sinha said while adding that Chidambaram is trying to suggest that all the NDA'sprogrammes led to jobless growth.
Even the rural employment guarantee scheme which Shri Chidambaram alludes to in his Budget speech has dangerous implications. The programme actually needs Rs 40,000-crore for implementation. The finance minister has only allocated Rs 11,000-crore for the project. No one knows where will the rest Rs 30,000-crore come from. ??After the passing of the Bill rural youths will be entitled to seek dole and if the rural unemployed take the government to court for non-payment because of non-allocation think what will happen??.
Almost all the programmes that Shri Chidambaram mentioned in his speech were launched by the NDA government, yet he presented them as if they were the original idea of the ?dream team? of Manmohan Singh-Chidambaram-Montek Singh Alhuwalia. Several other programmes mentioned in the last year'sBudget like the massive fruits, vegetables and horticulture programme announced with so much of fanfare has not even charted out a roadmap as promised. The same has been the fate of the Kisan Credit Card programme which has been distributed to over 4-crore farmers with a revolving credit of Rs1-lakh-crore. There is no mention of it in this year'sBudget of how the farmers left out of the scheme will be approached.
Another example of the Union Finance Minister'sdeceitful ways of budgeting is the infrastructure inter-institutional group announced last year. ??This year Chidambaram announced setting up of the special purpose vehicle (SPV) for infrastructure financing with a borrowing limit of Rs10,000-crore. But what happened to last year'sinter-institutional group which he claimed will be constituted jointly by IDBI, ICICI, SBI, BoB, PNB and several other financial institutions. He had said that Rs40,000-crore will be made available for infrastructural development by this group. There is no mention of it in this Budget??. Shri Chidam-baram probably thinks public memory is short and hence he could go on announcing newer programmes for infrastructure every year without having to do anything on the ground.
On the changes brought about in the direct taxes Shri Sinha explained that middle class will actually pay more tax than before because earlier exemptions have been withdrawn and the new sops don'tamount to much.
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