Delhi: Former finance minister Chidambaram said that there is nothing in the Budget that leads one to believe that growth will revive in 2020-21. We have just heard the longest Budget speech delivered by a Finance Minister in recent years. It lasted all of 160 minutes. If, therefore, all of you are exhausted — as I am — I would not blame you. The only way I can help is by keeping the Opening Statement brief.
Addressing a press conference in New Delhi, Mr Chidambaram said, the Centre is in complete denial that the economy faces a grave macro economic challenge and it has given up on reviving the economy.
He said, the Indian economy is demand-constrained and investment-starved and the finance minister has not acknowledged these two challenges.
The take way from the Budget speech are the following:
- 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.
- There were multiple themes, segments and programmes, leaving the listener dazed and confused. It was a laundry list of old (that is current) programmes. 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. If the ongoing programmes have failed the people, how can throwing more (or in some cases less) money into the ongoing programmes change anything?
- The BJP government has been identified with debatable positions like self-reliance, protectionism, control and aggressive taxation. The Budget affirms those positions. The government does not really believe in a market economy, competition or higher trade intensity. The Chief Economic Adviser must be a very disappointed man.
- The government is in complete denial that the economy faces a grave macroeconomic 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 is demand-constrained and investment-starved. The FM has not acknowledged these two challenges, and that is a pity. Consequently, she has proposed no measures or solutions to those two challenges. If the twin challenges remain, the economy will not turn around and there will be no relief to the millions of poor and the middle class.
- Food subsidy has been reduced, Fertilizer subsidy has been reduced. Petroleum subsidy shows a marginal increase because of anticipated increase in oil prices. It appears that the people will not get any relief on the price front. Please remember that CPI inflation is over 7 per cent and food inflation is over 10 per cent.
- The Finance Minister failed miserably on marksmanship. In 2019-20 (the current year), she failed to meet any of the key BE targets — nominal GDP growth, fiscal deficit, net tax revenue collection, disinvestment revenue or total expenditure. There is no assurance that she will meet the targets set for 2020-21.
- 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.
So, that is your Budget for 2020-21. You did not ask for such a Budget and you did not deserve such a Budget for voting the BJP to power. But you have to live with it until the government is forced to revisit it as it did in 2019.