Chidambaram faults Budget for absence of big ideas, ‘lauds’ Jaitley for his ‘moderation’

Former Finance Minister P Chidambaram on Thursday said the government had retreated from carrying out reforms as it was “demoralised by demonetisation”.

Raising questions about the estimates for the nominal GDP for 2016-17, the senior Congress leader said the growth rate had taken a hit and the period of lower growth would extend to 2018-19.

Describing the Budget as a “damp squib” which contains no big reform ideas or welfare measures, Chidambaram presented ten points of criticism. The Budget, he said, had not pushed through bold reforms, revived aggregate demand and growth or devised new strategies for job creation.

He said the GDP growth rate had taken a hit due to the global situation, inadequate policy measures and the “ill-conceived” demonetisation.

“The Economic Survey resorted to a sleight of hand when it claimed that there will be a reduction of 0.25 to 0.50 per cent ‘relative to the baseline of estimate of about 7 per cent’. That’s a convoluted way of saying that the growth rate will be 6.5 to 6.75 per cent against the forecast of 7.6 per cent at the beginning of 2016-17! Actually, it will be worse. It will be worse not only in 2016-17 but the period of lower growth will extend to 2017-18 and 2018-19. There is absolutely nothing in the Budget that points to measures to revive flagging growth,” the former Finance Minister said.

He said the distress caused by demonetisation had not been addressed and vast sections, especially farmers, have been let down. The former Finance Minister said one can only be thankful that the government has at least refrained from doing anything “reckless”.

“There are a few positives in the Budget and I am happy, and I shall refer to them in the course of my interaction…The most important positive is that the government seems chastened after the debacle of demonetisation and has not done anything reckless or disruptive. I compliment the Finance Minister on adopting a tone of moderation,” said the former Finance Minister.

While measures related to political funding also came in for praise, as also the crop insurance scheme, additional capital expenditure on Railways and Roads, Chidambaram hit out at the “wasted opportunity” that the Budget reflects. The former Finance Minister has a serious issue with the GDP numbers.

“What is the correct nominal GDP number for 2016-17? According to last year’s Budget documents, the nominal GDP for 2016-17 was estimated at ₹150,65,010 crore. According to the CSO’s press release dated January 6, 2017, the Advance Estimate is ₹151,92,588 crore. According to the Budget presented yesterday, the Revised Estimate is ₹150,75,429 crore. Which number should we believe?” Chidambaram asked.

He said it was obvious that demonetisation and its inevitable consequences have “demoralised” the government. It has retreated from reforms and has no answers to the severe challenges faced by the economy.

“The sections of the people most affected by demonetisation were the farmers, farm workers, manual labourers, the self employed, artisans and micro, small and medium businesspersons. They lost crores of rupees in the form of wages, income and capital. There is absolutely nothing in the Budget for these sections. We had demanded that the Government offer them compensation in some form. But the Government has cruelly neglected them,” Chidambaram said.