Opposition tries to corner govt in Rajya Sabha over budget FY21
Opposition parties on Monday accused the
administration of Prime Minister Narendra Modi of presenting a directionless
budget for FY21 and questioned the various fiscal projections during a debate
in Parliament, highlighting the government’s limited spending power amid an
Congress leader P. Chidambaram, who initiated the budget discussion in the
Rajya Sabha, accused the government of “living in denial" on the economic
problems and for being predisposed towards protectionism and a number of
“outdated philosophies". The economy has decelerated for six consecutive
quarters, Chidambaram pointed out.
minister Nirmala Sitharaman had on 1 February presented the Union budget for
FY21, projecting a slippage in fiscal deficit of 0.5 percentage points of gross
domestic product (GDP) from the 3.3% projected earlier for this financial year
and a similar deviation for the next fiscal from the 3% projected earlier. The
budget scaled down the spending estimate for the current financial year by more
than 3% from the ₹27.8 trillion projected earlier, but the government is
expected to spend more than projected earlier on asset creation while slashing
revenue spending. The budget also sought to shift the tax on distributed dividend
from the company to the shareholder and offered lower income-tax rates for
individuals who do not seek tax exemptions.
and his party colleague Jairam Ramesh said fear of tax officials was
discouraging businesses from investing.
Vinay Sahasrabuddhe, a Bharatiya Janta Party (BJP) parliamentarian from
Maharashtra, accused the Opposition of fear mongering.
Sen, a Trinamool Congress member of Parliament from West Bengal, said it was
unwise to sell profit-making central government entities for short term gains,
while Naresh Gujral of the Shiromani Akali Dal said the government should scale
up allocations for the rural job guarantee scheme.
highlighted the reduction in spending and questioned the allocations made for
FY21. “I don’t believe your numbers. We have an economy perilously close to
collapse. It has to be attended to by very competent doctors. In the last few
years, we have found that the doctors are not so competent. We are living in
denial and we are ignoring the two big elephants in the room. One is rising
unemployment and the second is falling consumption," said the finance
minister of the United Progressive Alliance (UPA) era.
obvious solution, he said, is to revive aggregate demand and incentivize
investment. “I have found nothing in the budget that will revive the demand.
The way to revive demand is to put money in the hands of people, not in the
hands of the classes," said Chidambaram. The Congress leader also
questioned the wisdom of the corporate tax rate cut announced last September.
The move, as expected, has not led to new investments, he said.
said the assumptions made in the budget about the next fiscal’s revenue
collections were not realistic. He also alleged that the government has not
diagnosed the economic ills properly. “The fundamental diagnosis of the ills of
the economy was absent throughout the budget speech," he said.
most important reason for GDP growth declining is the decline in investment
growth. Economic growth comes from investment and investment comes from
savings. The most serious problem in India that is not recognized in the budget
is the falling savings. I would urge the finance minister to pay attention to
the fall in household savings," said Ramesh.
government should switch from cash-based accounting to accrual-based accounting
for the sake of more transparency in its financial statement, he said.
Sitharaman is expected to respond to the budget debate
in Parliament on Tuesday before the House breaks for recess.
This story has been
published from a Live Mint feed without modifications to the text.