SHRI SHASHI BHUSAN BEHERA (ODISHA): Sir, I lay my speech on the Budget on the Table. My focus is on disinvestment of NALCO and 'Special Category' status to the State of Odisha, which has been a long-pending demand. The hon. Finance Minister may kindly clarify the criteria being adopted for awarding 'Special Category' status to States.
DR. YOGENDRA P. TRIVEDI (MAHARASHTRA): Sir, I lay on the Table some of my constructive suggestions. But, in the meanwhile, I congratulate the Finance Minister for a very realistic Budget.
SHRI ISHWARLAL SHANKARLAL JAIN (MAHARASHTRA): Sir, I was supposed to make a speech in the House.
THE VICE-CHAIRMAN (DR. E.M. SUDARSANA NATCHIAPPAN): You lay it on the Table.
* Spoke in Tamil
SHRI ISHWARLAL SHANKARLAL JAIN:Yes, Sir. I lay my speech on the Table of the House.
SHRI A. ELAVARASAN (TAMIL NADU): *
SHRI Y. S. CHOWDARY (ANDHRA PRADESH): It is unfortunate, Sir, but I lay my speech on the Budget on the Table of the House.
THE VICE-CHAIRMAN (DR. E.M. SUDARSANA NATCHIAPPAN): Dr. M. S. Swaminathan. He is not here.
DR. ASHOK S. GANGULY (NOMINATED): I lay my speech on the Budget on the Table of the House, Sir.
THE VICE-CHAIRMAN (DR. E.M. SUDARSANA NATCHIAPPAN): Ms. Anu Aga.
MS. ANU AGA (NOMINATED): Sir, I have nothing to lay on the Table.
SHRI BIRENDRA PRASAD BAISHYA (ASSAM): Sir, I lay my Budget speech on the Table of the House.
SHRI KUMAR DEEPAK DAS (ASSAM): Sir, I lay my speech on the Table.
* Spoke in Tamil
श्री रघुनन्दन शर्मा (मध्य प्रदेश) : सर, मैं अपनी बजट स्पीच सभापटल पर रखता हूं।
SHRI RAJEEV CHANDRASEKHAR (KARNATAKA): Sir, I lay my speech on the Budget on the Table of the House.
SHRI ANIL DESAI (MAHARASHTRA): Sir, in view of the paucity of time, I lay my Budget speech on the Table of the House.
SHRI D. RAJA (TAMIL NADU): Sir, my Party's opposition to the neo-liberal economic and fiscal policies of the Government is well-known. I lay a copy of my speech on the Table of the House for the consideration of the Government.
DR. BARUN MUKHERJI (WEST BENGAL): Sir, I lay a copy of my speech on the Table.
THE VICE-CHAIRMAN (DR. E.M. SUDARSANA NATCHIAPPAN): Dr. Vijay Mallya. Not present.
श्री राम कृपाल यादव (बिहार) : सर, मैं 2013-14 के बजट के लिए अपनी स्पीच ले करता हूं।
SHRI A. V. SWAMY (ODISHA): I have a comment to make, Sir. It is good that you are asking us to lay on the Table speeches which are supposed to be made on the floor of the House. Anyway, I expect the Finance Minister to answer each one of the speeches that we are laying on the Table.
श्री रणवीर सिंह प्रजापति (हरियाणा) : महोदय, मैं अपनी बजट स्पीच सभापटल पर रखता हूं।
SHRI NARESH GUJRAL (PUNJAB):Sir, while the Government should have been laid on the mat for destroying the economy of this country, I am constrained to lay my speech on the Table of the House.
श्री बिश्वजीत दैमारी (असम) : सर, मैं अपनी बजट स्पीच ले करता हूं।
(FOLLOWED BY KGG/1G)
THE BUDGET (GENERAL) 2013-14,
THE APPROPRIATION (VOTE ON ACCOUNT) BILL, 2013,
THE APPROPRIATION BILL, 2013,
THE APPROPRIATION (NO. 2) BILL, 2013 (CONTD.)
** M. VENKAIAH NAIDU (KARNATAKA) :
Mr. Chairman, Sir, I could not complete my speech while initiating the discussion on the Union Budget 2013-14 on 18/03/2013 because of the lunch break. Thereafter, the House could not transact any business till today because of disruptions. Sir, it is very unfortunate that today I have to lay it on the Table of the House and, with a lot of agony, I am herewith laying my remaining speech on the Table of the House.
Food and primary articles have shown higher annual price rise of 11.38% and 9.70% respectively. Common man’s food items have all become dearer. Onions went up by 154.33%, rice by 18.84%, wheat by 21.63%, cereals by 19.19%, fruits by 8.93% and milk by 4.57%.
** All speeches laid on the Table.
The Government is sitting on stocks of 70 million tonnes of grain, yet the key component of inflation this year is food grains, which is 17% in the third quarter.
Indian national capital, Delhi, has 50% malnourished children which means every second child is malnourished. It ranks 27 out of 29. What a shame?
Vegetables compared to last year has risen by 26%; sugar by 13%, edible oils by 15%, cereals by 17.4%. The proposals made by the Railway Minister will further escalate inflation because he has declared that every six months there will be revision of tariff linking transport charges with oil prices. Food grains, cooking gas, cement, coal, iron & steel – all products will go up.
When people are reeling under unprecedented inflation, they expect relief. Instead, the Government is offering them deregulation of fuel products and a further dose of higher prices, taxes and service charges. Diesel prices have been raised by Rs.5 in one go and then by Rs.10 in monthly instalments of 50 paise each. This attitude indicates that you have no concern for the common man.
Prices of petroleum products were increased before and after the Budget; in all 30 times, apart from putting a cap on LPG Cylinders, since the UPA came to power. Railway fares were hiked this January, a month before presenting the Budget. Also, fertilizer prices have gone up 14 times. Then what is the sanctity of Budget?
The air-conditioned restaurant is the symbol of the urban middle class’s aspirations. You have taxed them also.
Deficit ….. Deficit ……deficits everywhere. Fiscal deficit, revenue deficit, current account deficit and, above all, trust deficit.
As someone rightly said, the macroeconomic indicators – Fiscal Deficit, Trade Deficit and level of inflation are equivalent of the system’s Pulse Rate, Blood Pressure and Temperature. All of these are higher than normal under UPA.
The Fiscal and current account deficits are almost as bad as 1991. The rate of growth is lowest in the decade.
Current Account Deficit has risen to unacceptable level of 5.4% of the GDP. Even a young student of economics knows that such a situation is akin to consuming the resources of the future generations to meet one’s current liabilities. While the Budget acknowledges this as a major challenge, it did not propose any concrete measures to address the same.
Fiscal Deficit was 2.5% in 2007-08 and now at 5.2%, and you hope it to be brought down to 4.8% next year. Where is the roadmap?
Because of increase in Current Account Deficit and Fiscal Deficit, the rupee has fallen by more than 20% in the last one year. A continuous fall in the rupee value will result in further increase of fiscal deficit, thus nullifying the effect of key announcements made in the Budget. It will also result in the import bill going up, leading to a rise in inflation and the Current Account Deficit.
The FM was able to achieve the 5.2% fiscal deficit number largely because of the massive cut on spending and deferment of payments on fertilizer and other subsidies. FM shaved off Rs.91,838 crore from the budgeted Plan expenditure of Rs.5,21,025 crore for the current fiscal in the backdrop of a growing fiscal deficit.
FM reduced Budget allocations and expenditure by almost 18%, the steepest cut in expenditure comes from unspent funds allocated to various Ministries last year. For example, in BE FY 13, Ministry of Agriculture was provided Rs.16,121 crore; however, RE is Rs.13,787 crore. HRD Ministry’s BE was 61,427 crores, the revised is 56,223 crores. RD Ministry which implements various flagship programmes was provided Rs.76,376 crore, but the actual expenditure has been cut to Rs.55,000 crore. In total, the exercise helped the FM save Rs.91,838 core in the Plan Outlay this year.
Words for the poor and Deeds for the rich Withdrawal of subsidies – The poor and farmers are doomed
In the current financial year, the total subsidy is expected to rise to Rs.2.47 lakh crore against the Budgetary target of Rs.1.79 lakh crore. Subsidies on petroleum products is expected to be more than Rs.96,880 crore against the Budgetary target of Rs.43,580 crore.
The fertiliser subsidy at Rs 65,971 crore in 2013-14 is almost the same as what was spent in 2012-13. Prices of fertilizers are increasing but the subsidy remains the same.
Much of the increases in outlays will be absorbed by the likely increase in prices, particularly subsidies.
What happened to your aam aadmi slogan? I have no hesitation in saying that your policy seems to be words for the poor and the deeds for the rich.
But in contrast, the additional giveaways from 2008-09 corporate sectors have caused a tax expenditure of Rs. 7.5 lakh crore between 2009-10 to 2013-14. Corporate profits rose from 11.9% of GDP in 2008-09 to 12.7% in 2009-10 and 12.15% in 2010-11. In actual terms, the corporate profits rose from Rs.6.68 lakh crore in 2008-09 to Rs.8.24 lakh crore in 2009-10 and to Rs. 9.89 lakh crore in 2011-12. The giveaways have risen from Rs.2.85 lakh crores in 2007-08 to average Rs.5 lakh crore every year, totaling Rs.25 lakh crore for the last 5 years. Even the Economic Survey mentions about this.
In 2012-13 alone, the aggregate revenue forgone from Central taxes on account of tax concessions to the rich and the corporate sector are projected to be Rs.5,73,627 crore. If one adds the Rs.5,33,583 crore of forgone tax revenue in 2011-12, the total is a whopping Rs.11,07,210 crore. The bluff of deficit reduction through slashing subsidies must be called.
According to a study, revenue foregone since 2005-06 under Corporate Income tax, Excise & Customs is Rs.31,11,169 crores.
NPAs under the CORPORATE CATEGORY as on 31.12.12 constitute 53.68% amounting to nearly 1,00,000 crore. Total Income Tax arrears as on 31.12.12 iare Rs.4,18,696 crores and the Government is not able to recover this huge sum for reasons best known to them.
Lowest Defence Budget
Lowest Defence Budget increase in over 30 years : pegged at 1.79% of GDP, with several major modernization projects set to be affected.
The allocation of the Defence has been reduced by 4903 crores under revenue segment and 10,000 crores under capital in the revised estimates. While speaking in Rajya Sabha on 6th March, 2013, the Defence Minister said and I quote “I fully share the sentiments of the Members. India is facing various challenges. Security situation around is very volatile. We have to be watchful 24x7. We have to strengthen our armed forces and give them the most modern equipment”. And you reduced the allocation.
It is disturbing to note that India remains the world’s biggest importer of weapons during 2008-2012. India’s imports were 109% higher than that of China and China becomes the 5th largest exporter. We need to develop our weapons indigenously. How do you do that when you reduced allocations?
This year China has increased its defence Budget by 20%.
Former Defence Chief, Gen. Malik, said that the allocation to defence, not even 2% of the GDP, is not adequate keeping in view the present security environment whereas China and Pakistan are providing 3.7% and 4.2% of their GDP.
Meagre allocations Women’s safety
Allocation of Rs.1,000 core fund for women’s safety and welfare is far from adequate in covering the rehabilitation and medical costs of survivors of gender violence. Where is the money for speedy justice, fast track courts, filling up of vacancies in judiciary?
What kind of ‘dignity for women and girl child’ are you talking of? See the plight of the girl child. They are deprived of even as basic an amenity as a separate toilet for girls in schools. It is shameful to note that half of the schools in the country are without toilets for girls.
Justice Verma Committee suggested provision of adequate safety measures and amenities in respect of women. With a mere 1,000 crores under the so-called Nirbhaya Fund, how this is possible?
The UPA Government has allocated a mere Rs.1,000 crore for skill development. Contrast to this, see the Rs.800 crore that just one State, Gujarat, has allocated for skill development. Madhya Pradesh allocated 476 crores. If one State gives 800 crores, then what is 1000 crores for the entire country. You boast it as a major initiative for growth.
The 12th Five year plan makes a lot of promises for the disabled on various counts – education, habilitation and rehabilitation, health, barrier-free environment and this has not been reflected in the Budget. The outlay for the Inclusive Education for the Disabled at the secondary stage has been reduced from Rs.63 crore in 2012-13 to Rs.45 crore in this Budget.
Planning Commission member on Task Force, Dr Mihir Shah, says pension for aged and widows should be Rs.1950 per month. As per Tendulkar Committee, it should be Rs.950 minimum on the basis of increased inflation. But just a pension of Rs.200 per month is being given for old people, physically challenged and widows. See your concern for the poor and disabled.
One Women’s Bank
You tried to play to the gallery, of course, unsuccessfully. Because people have learnt to read between the lines. How is that one bank in one corner of the country going to help or empower the women-entrepreneurs?
Should we understand that the other banks are absolved of their responsibilities towards women? The concern of gender bias in loan appraisals could well be addressed by increasing the share of loans to women.
Instead of creating one bank for the entire country, you could have taken steps for incorporating women within the existing public and private banking systems. A nationwide bank is less effective than enhancing the existing banking services to ensure ease of access.
Just compare the market valuation of the SBI (one bank) at Rs.1,47,000 crore and the promised 1,000 crore investment for the women-only bank. The difference in scale is evident.
Agriculture is basic culture of the country. In 1950-51, agriculture used to contribute 53% of GDP; now it is at 14%. From 19% in 2004-05, it dropped to 18.3% in 2005-06 and to 17.4% in 2006-07. It further dropped to 16.8% in 2007-08, 15.8% in 2008-09 before reaching 14% in 2011-12.
Agriculture is a vital sector from the point of view of subsistence to food security. But it has become a victim of your systematic negligence in the planning process and policy initiatives.
From 19 percent in 2004-05, the percentage share of agriculture & allied sectors in GDP dropped to 18.3 percent in 2005-06 and then to 17.4 percent in 2006-07. Reuters
Agriculture employs more than 60% of the population. It is in a state of deep distress. Terms of trade in UPA regime have always gone against farmers.
Why mum on Swaminathan Commission’s recommendations? The key recommendation that MSP should be cost of production + 50% has not been implemented so far.
Mismatch between MSP & cost of production
The latest calculation of Commission for Agricultural Costs & Prices (CACP) is testimony to this reducing margin for the farmers. Input costs like cost of seeds, pesticides, fertilizer, diesel, power, water have all gone up. According to Haryana Government, the cost of producing one quintal of paddy in the State is Rs.1,566. The Government buys paddy at 1,280 per quintal. So, the Government does not even pay the cost of production, let alone profits, to the farmers.
It is true that MSPs have been hiked. What you forgot is the fact that cost of production has also gone up by 300% thereby even surpassing hiked MSPs.
Sir, I have an interesting table which compares 2011-12 cost of production with 2012-13 MSP and cost of production + 50% figures. This table throws at us very surprising figures. These figures are even higher than the 2012-13 MSP for almost all crops.
There has been abnormal and manifold rise in the prices of agriculture inputs like fertilizers, pesticides, diesel and labour wages.
Prices of DAP, the most widely used fertilizer after Urea, in April 2010 was Rs. 9,350/- a tonne. Today it is Rs.24,000/-. Even the hike between two seasons last year was 31.8%.
The prices of MOP (Muriate of Potash) was Rs.4,455/- a tonne in April 2010. It has gone up to Rs.17,000/-. Hike between the last two seasons is 41.6%.
Fuel prices have also been increased a number of times.
Government is not focusing on providing uninterrupted power supply to farmers causing heavy losses to them.
Between January 2008 and January 2012, prices of crucial farm inputs went up sharply, impacting cost of cultivation across States. Yet, the Government announced MSPs are lower than the cost of Production of the most kharif crops.
Farm power 20%
Diesel (pumpsets) 44%
Diesel (tractors) 34%
What happened to Hooda Committee’s recommendation of Rs.10,000/- compensation to farmers for loss of crops?
The UPA’s Nutrient Based Subsidy scheme for fertilizers has fuelled the prices of all non-subsidized fertilizers thereby defeating the very purpose of the scheme. Farmers are experiencing short supply of fertilizers and resultant back market.
A massive loan waiver scam has been unearthed by C&AG. More than 34 lakh farmers who were eligible for loan waiver were not benefited on account of the faulty implementation of the scheme. More than 24 lakh ineligible farmers became beneficiaries.
Farmer suicides have continued unabated during your regime. 19000 farmers committed suicides in 2011 and 14000 in 2012. This Budget fails to address any of these farmers’ problems. Now we are getting reports from AP that the distress farmers are selling their organs to come out of agriculture debt trap.
If the country’s agriculture is growing at 3.5% for which the hon’ble President patted the Central Government, it must be noted that the average of agriculture development in BJP and NDA ruled States is double of national average.
Look at the BJP-ruled States. Karnataka came with a separate ‘agri Budget’ which was extremely innovative. Madhya Pradesh showed a double digit agri-growth at 18.2%, the highest in the country. Gujarat is growing at 10.8%.
What are the steps taken to ensure lower interest rates on agriculture credit? Swaminathan Committee recommended credit to be given at 4%. Some of the BJP ruled States are giving at the rate of 0% interest, and some at 1% or 2%. Then the States with their limited resources can provide loans at lower interest rates, why not the Centre? This speaks of your attitude towards agriculture and welfare of farmers.
PM claims that credit flow to agriculture sector has increased by many folds. Even according to the Rangarajan Committee Report, out of 11 crore farming community of the nation, only 1/4th are getting agriculture credit from the banks and the remaining are forced to borrow from private lenders.
Industry & Investment Climate
Government should know why the investments have fallen. Land acquisition, rehabilitation and clearances are a few of the other main reasons. The coal linkage problem is also affecting Rs. 5 lakh crore investment proposals.
Stable tax policy is essential to encourage investments in the businesses. However, investors have lost confidence due to repetitive retrospective amendments.
As per the World Bank and International Finance Corportion’s Doing Business 2013 data, India is ranked a lowly 132 out of the 185 countries analyzed. In the category of “Paying Taxes”, India’s ranking is further low, at 152 which has worsened from 149 in the year 2012. This clearly indicates that India is loosing out on its competitiveness vis-à-vis other countries.
People were expecting an announcement of cut in interest rates. The need for interest rates to come down for boosting growth has been forcefully conveyed in the Economic Survey. “Lower interest rates could provide an additional fillip to investment activity for the industry and services sectors”.
The main reason for collapse of country’s growth is fall in private investment from 14% to 10% of the GDP. What is the strategy for its revival? Nothing!
Infrastructure has received mere lip service. The problem in infrastructure is of clearances, administrative bottlenecks and interest rates. So, all infrastructure sectors, like National Highways Development programme, telecom, ports and roads will continue to languish and so will critical sectors like power and civil aviation.
37 projects sanctioned under BoT in the last three years are yet to take off. Nobody is coming forward due to lack of resources, banks and financial institutions are not providing adequate loans. Last year, NHAI wanted to award contracts for 11 projects for expansion of 4-lanes to 6-lanes, but nobody came forward to bid!
During the NDA regime, construction of highways achieved a level of 11 kms. per day. Today it stands at an abysmal low of just 3 kms. per day despite their tall promise of building 22 kms. every day.
The East-West and North-South corridors still remain a distant dream. Even the Gram Sadak Yojana has slowed down.
Power generation which was targeted at 78,000 MW in 11th plan actually achieved was only 54,000 MW. The performance of other sectors of infrastructure like rail, ports, oil and gas is also lack luster.
With all round failure to address the power sector’s pervasive and crippling problems, the UPA Government is succeeding in pushing the country to kerosene lantern days again. I remember the days when I studied under lanterns. Do you want the same situation to arise? Many States are facing serious power problems and my own state, Andhra Pradesh, you will be surprised to know that from 6.00 am to 6.00 pm there will be no power! Andhra Pradesh has now become Andhera Pradesh.
The power crisis has had rippling effects in the economy with many industries both small and large highly impacted.
No measure to retrieve black money which was put at Rs.25 lakh crore two years back. If 20% of this money is retrieved, we can enjoy tax holiday for one year.
All of us were suggesting that firm action should be initiated to minimize the presence of black money in the national economy and to bring back huge amount of black money stashed in Swiss Bank accounts and tax havens, and use it for infrastructure development and social welfare schemes. There is no meaningful movement forward.
When UPA-II came to power in 2009 PM promised to bring back black money in 100 days. But nothing has moved since then. Many such 100 days have gone by.
You are silent even on your Government’s ‘White Paper on Black money’ (presented to Parliament in May last year). Let me quote your predecessor FM : “The success of an inclusive development strategy critically depends on the capacity of our society to root out the evil of corruption and black money from its very foundations.“ He also promised a more effective policy response as we move forward. Certain strategies were also suggested. Where is the more effective policy response?
In view of the fact that savings have declined in the last five years from 37 per cent of the GDP to less than 30%, the Finance Minister should have taken more determined steps to encourage savings by giving concrete concessions in income-tax to the savers. He has failed to do so.
Deposits are going down. Credit Deposit Ratio is alltime high 78.86%. Deposits growth is 12.71%. Growth in advances is 16.1%.
Economic Survey says India will face a shortage of about 17 million non-agricultural jobs by 2020 if labour reforms and high-growth policies are not taken up immediately. It further says that this massive shortage – about six times the current numbers – could trigger social unrest.
The 61st round of NSSO survey reveals faster increase in employment during 1999-2005 as compared to 1983-94 (source : Economic Survey 2006-07)
The BJP-led NDA could create 12 million jobs in its tenure, the UPA could create only 2 millions. What the UPA so far offered the country is “jobless growth”.
17 lakh applications for 1500 posts in SBI! 2 lakh applications for 100 posts in DRDO! Today the headlines in Economic Times is disturbing - 13 IIMs unlucky for placements. Even in IIMs that is the situation.
Economic Survey warns that by 2020 India could be faced with upto 16.7 million ‘missing jobs’.
Flagship programmes are flagging.
The approach of the UPA Government to the poverty alleviation is entitlement and not empowerment. While empowerment is a productive and sustaining strategy, entitlement makes people permanently Government depended.
The UPA’s flagship scheme, MNREGA, originally provided for Rs.40,000 cores, In the past two years, this amount has been reduced to Rs.33,000 crores.
Pradhan Mantri Gram Sadak Yojana (PMGSY) got 24,000 crore in the last Budget but could spend only Rs.10000 crore.
The new flagship programme touted by the UPA is the Direct Benefit Transfer (DBT) scheme. All the 26 schemes covered under the scheme have a Budgetary allocation of Rs.5595 crores. Till today, the actual expenditure is only Rs.5.38 crore. This scheme, according to UPA, is a game-changer of Indian politics; finally, it will end as regime-changer!
Over 28,78,41,507 Aadhaar numbers have been generated as on February 28, 2013. That means less than 25% of the population have been issued Aadhaar cards. Even within that 25%, the direct benefit transfer is only a token. In the pilot project of kerosene in Alwar, people do not get subsidy for months together. Even in the pilot project for transfer of cooking gas subsidy, only a token transfer of cash into their account. Aadhar is not going to enhance your Janadhar. It will make you Niradhar.
The estimated requirement of food subsidy in the Government’s National Food Security Bill was Rs.1,17,000 crore for distribution of 7 kg. of foodgrains per person per month. The Parliamentary Standing Committee projected a subsidy demand of Rs.1,12,000 crore for the distribution of 5 kg food grains per person per month. They suggested a coverage of 67 per cent of the population.
As per the present Food Security Bill, subsidy involved is 1,35,000 crores. The total food security subsidy for this year is 90,000 crores. That means …………………..
Rajiv Gandhi Drinking Water Mission : Allocation in 2012 was Rs.10,500 crores. 11,000 crores in 2013. Token increase.
Rajeev Gandhi Grameen Vidyuteekaran Yojana : Allocation for 2012 was 4,900. For 2013 it is 4,500 crore. Reduced.
Grameen Telephony : Allocation for 2012 was 3,000 crore and it is the same in FY 13. No change.
Rural Irrigation Project : Allocation for 2012 was 1,081 crore. For 2013 it is 1,207 crore. A meager hike only.
Either the allocations were reduced or remained stagnant. Even if hiked, they are nominal.
UPA-II has done worse than UPA-I in social sector spending
Average Annual Growth in Budget Allocations
Women & Child Development
Source : Budget at a glance, Ministry of Finance 2004-2013
Sir, this Budget is totally disappointing, lacks direction, does not inspire confidence and does not add to growth. I conclude by saying that Mr. Chidambaram seems to have followed BJP’s policy, of course, in reverse – we say ‘appeasement of none and justice for all’ and his motto seems to be ‘injustice for all and appeasement of none’.
DR. BHALCHANDRA MUNGEKAR (NOMINATED) :
Thank you Dy. Chairman, Sir, for allowing me to participate in the debate on the Annual Budget, 2013-14, that I strongly support.
Sir, I patiently heard the speech of Shri Venkaiahji Naidu of the principal opposition party. I thought that he would raise some substantial issues, but I was disappointed. He described the Budget as ‘deceptive’, ‘non-inspiring’ and ‘disappointing’. I totally disagree with him. His criticism sounded like poetry in the form of prose. Anyway, I shall certainly react to some issues of relative importance . But, Sir, before I do that, I need to make some broad observations by way of compulsion.
Sir, in the fast changing globalizing world economy in which Indian economy is getting integrated, it would be grossly erroneous and even inexcusable to overlook the factors that have a bearing on the nature and the structure of the Budget for 2013-14.
Sir, let me begin with the global conditions in the background of which this Budget is prepared. These factors include: i) global banking/financial crisis of 2009-10; ii)Eurozone or sovereign debt crisis facing all Euro countries that are our major trade partners; iii) several countries are finding extremely difficult to overcome the effects of these crises as the entire world economy is slowing down; iv) in August, 2011, the S&P downgraded the US economy from AAA to AA+, that had its consequences for the world economy. Though I have my own views of such credit rating, it is the fact of life; iv) advanced countries experienced deleveraging by banks, financial institutions and households; escalating the fear about sovereign debt; rising cost of sovereign borrowing; the loss of confidence of currencies and stock market, and persistently high prices of commodities; v) world trade volume contracted from 12.8 per cent in 2010 to 7.5 per cent in 2011 and further to 5.8 per cent in 2012. This adversely affected demand for India’s exports that fell by 4.9 per cent in this year over the preceding year; vi) the Current Account Deficit ( CAD ) has increased to the unsustainable level of 4.6% of the GDP, India’s sustainable level of the CAD being about 3.0 per cent.
These factors are certainly not the making of the Government of India.
Let me now turn to the domestic factors. These include: i) Gross Domestic Saving ( GDS ) as % of GDP declined from 36.8 per cent in 2007-08 to 30.8 percent in 2011-12; ii) Gross Domestic Capital Formation (GDCF) as % of GDP declined from 38.1 per cent in 2007-08 to 35.per cent in 2011-12; iii) corporate sector investment declined from 17.3 per cent in 2007-08 to 10.6 per cent in 2011-12; iv) the rate of growth decelerated to % to 5 per cent from 6.2 per cent in the last year. I shall come to the growth story shortly and reply Shri Venkaiah Naiduji; v) this affected the revenue collection of the Government; vi) inflation has been within the range of 7 to 8 per cent ; and vii) low growth and relatively high inflation rate is the present day syndrome.
Sir, under such difficult economic conditions, probably nobody could have presented better Budget than the one we are debating. The Hon. Finance Minister has prepared a balanced, responsible and inclusive Budget that shall help revive economic growth, for which I congratulate him.
Sir, under the able guidance of Smt Sonia Gandhiji, the UPA Chairperson and the Congress President, and Dr. Manmohan Singhji, Hon. Prime Minister, since it came to power in 2004, after the NDA miserably failed to ‘shine’, the UPA has stood committed to inclusive and broad-based growth.
Dy Chairman, Sir, as I shall explain, I am tempted to say, and that too in all fairness, that the real problem of the principal Opposition party and for that matter, I am sure, all opposition parties is not the architecture of the Budget, but the fact that all sections of the society have accepted and appreciated the Budget. It has addressed concerns of all sections of the society. The following allocations will make my point clear.
Sir, though agriculture contributes only 14% of the GDP, it employs 55% of the total labour force of the country. The FM has allocated Rs 27,049 crore to agriculture and Rs. 3,415 crore for agricultural research. What is most significant is, the supply of agricultural credit is sought to be enhanced from Rs 5.75 lakh crore to Rs 7.0 lakh crore. Rs 1000 crores are provided for the technological development of the Eastern States, viz. Bihar, Odisha, West Bengal, Assam etc. with RKVY—Rs 22,250 crore.
Sir, small and marginal farmers constitute about 80 per cent of the farmers in the country. They are most vulnerable in every possible sense. I congratulate the FM for providing Rs. 5,387 crore for integrated watershed development programme for these farmers.
Rural Development is provided with Rs.80,194 crore, i.e. 46 % increase over the last year. The Mahatma Gandhi National Rural Employment Guarantee Scheme ( MGNREGS ) is given Rs 33,000 crore, PMGSY---- Rs 21,700 crore, and IAY----Rs. 15,184 crore.
Sir, the SCs and the STs are the most disadvantaged sections of our population. There are two special programmes for these communities : the Scheduled Caste Sub-Plan and the Tribal Sub-plan. These schemes are allocated Rs 41,561 crore and Rs 24,598 crore, respectively. This makes a rise of 12.5% and 31% in the BE and RE, respectively. The Women and Child Development Deptt. has got Rs.20,350 crore.
Sir, the UPA Govt. is committed to the welfare of the Minorities that constitute about 20 per cent of the of the total population. Sir, I must mention that in the light of the Justice Sachar Committee’s Report, the Muslim community is economically the most backward, in addition to their perception of discrimination. Therefore, the Ministry for Minorities is provided with Rs 3,511 crore. The assistance to the Disabled amounts to Rs 110 crore.
Sir, all-round human development is the commitment of the UPA Government. Though the country has made a steady progress on the front, it is not satisfactory. In view of this, a sum of Rs 65,867 crore is provided to the education sector. This makes the total expenditure on education to 4.0 per cent of the GDP, from 3.5 per cent, which is still less compared to the 6% of the GDP as recommended by the Kothari Commission in 1966. Of this allocation, the SSA / RTE shall get Rs 27,258 crore and the Mid-Day Meal scheme shall get Rs. 13,215 crore. Similarly, the health sector shall receive Rs. 37,330 crore, of which medical education will get Rs4,727 crore and six AIIMS-like institutes will receive Rs.1,650 crore.
Sir, it is the moral responsibility of the Govt. to provide food security to the people, particularly the poor and needy sections of the society in enough quantity and at affordable prices. The proposed legislation on National Food Security seeks to cover 75% of the rural and 50% of the urban population, that makes about 67% of the total population. The Budget has provided Rs 10, 000 crore for this scheme in addition to the regular food subsidy Budget. Sir, I congratulate the Govt. for this scheme and particularly, the Congress President and the UPA Chairperson, Smt Sonia Gandhiji for steadfastly insisting upon this scheme.
Sir, there is a fashion among one section of the mainstream economists who ridicule the help to the poor as ‘populism’ and even non-affordable benefits to the privileged as ‘incentives. Each one of these economists has criticized MGNREGS as wasteful expenditure. But what would have happened to Inclusive growth in the absence of providing employment to nearly 5.5 to 6.0 crore rural households every year?
I also congratulate the Govt. for the proposed scheme of National Right to Homestead providing about 4,000 sq. feet area to about 8 million landless agricultural labourers out of about 13 to 18 million landless agricultural labourers with all amenities.
Sir, over a period of time, infrastructure bottlenecks have seriously affected the performance of the Indian economy. In view of this, the Budget has given the railways a support of Rs. 26,000 crore. The 12th Plan has projected the required investment in the infrastructure to the tune of US $ 1 trillion ( Rs 55,00,000 crore ), of which 47 per cent is expected to come from the private sector. The issue of tax-free bonds in 2013-14 is expected to bring Rs. 50, 000 crore. NABARD – RIDF’s corpus shall be raised to Rs 20,000 crore.
The resource mobilization measures of the Government include tax deduction at source ( TDS) on transfer of ceratin immovable property (other than agri. Land), additional income tax on distributed income by company for buy-back unlisted shares, basic custom duties on passenger cars exceeding the value of US $ 40,000 shall be raised from 75 to 100 per cent, and amnesty scheme for non-filers and stop –filers.
Sir, now let me now react to some of the points raised by Hon. Member from the opposition.
He mentioned that some countries have achieved a higher rate of growth. I do not know from where he discovered these countries, maybe with 2 to 3 million population. Let us talk of the major countries that matter for India and for the world economy at large.
In 2012 and 2013, the growth scenario in some major countries was as follows:
USA, 2.3 and 2.0 per cent, Germany, 0.9 and 0.6 per cent, Italy, -2.1 and -0.10 per cent, Spain, -1.4 and -1.5 per cent, Japan, 2.0 and 1.2 per cent, UK, -0.2 and 1.0 per cent, Canada, 2.0 and 1.8 per cent, and France, 0.2 and 0.3 per cent. Only china is expected to grow at 8.2 per cent in 2012 and India at 5.9 per cent. Actually, for India , the growth rate is revised to be 5.0 per cent.
Sir, by end of September, 2011, China’s total foreign exchange reserves stood at $ 3, 201.7 ( $ 2 trillion ) as against India’s $ 311.9 billion ( Today India’s income is about $1.8 trillion). This meant China’s FERs stood at 1.75 times higher than India’s total national income.
Sir, Shri Naiduji was talking about high growth story during the NDA rule. What is the real fact? Let me mention about the growth performance of the Indian economy since Independence. The rate of growth in the 1950s was 3.6 per cent; during the 1960s, it was 4.0 per cent; during the 1970s, it was 2.9 per cent; 5.6 per cent during the 1980s; 5.8 per cent during the 1990s; and 7.2 per cent during the 2000s. The growth rate during the 10th Plan was 7.6 pent and during the 11th Plan, it was 7.9 per cent. This means, only during the 11th plan, the growth rate of the Indian economy was about 8.0 per cent.
Sir, during the five-year rule of the NDA, the average rate of growth was 5.9 per cent. During the preceding five years, it was 6.5 per cent and during the succeeding five years, it was 8.42 per cent. This means during the relevant 15-year period, the growth rate was the lowest during the NDA rule. What growth is Shri Naiduji talking about? Hereafter, we should permanently stop discussing about the growth performance of the NDA. Sir, fortunately for this country, the BJP-led NDA ruled only for five years.
Sir, inflation is always a cause of serious concern to the poor. About 85% unorganized workers comprising agricultural labourers, small and marginal farmers, industrial workers etc. are most adversely affected by inflation, because it erodes their meagre purchasing power. Sir, the NSS data show that 45% expenditure of the poor is incurred on food, as against 8-9% in the advanced countries. Therefore, inflation in general and food inflation in particular is the enemy of the poor.
But we cannot neglect the factors that contributed and continue to contribute to the inflationary pressures in the economy. These include: stimulus packages for revival of growth amounting to 2.1 per cent of the GDP between 2007-08 and 2010-11 and were estimated to be 3.2 per cent in 2011-12; continuous increase in the minimum support prices to the farmers to mitigate the rise in the cost of cultivation; growing purchasing power in the hands of the rural poor due to several welfare schemes such as the MGNREGS, that has been adding to their incomes, that is a sign of development; shift in the consumption pattern even of the poor resulting in higher demand for fruits, vegetables, meat, eggs, fish etc., that is again a welcome sign; import of nearly 65 per cent of crude oil at higher prices causing non-food inflation; and lastly the demand-supply mismatch is a major reason.
Sir, I must draw serious attention of the Government to the fact that Rs.50,000 crore worth foodgrains, fruits and vegetables are annually wasted due to lack of inadequate storage facilities and the lack of cold chains. This is unacceptable. Govt cannot depend on FDI in multi-brand retail trade, as not a single proposal has so far been received probably due to conditions of 30 per cent procurement from the domestic manufacturers and investment of US $100 million with 50 per cent in backward linkages. Govt must invite the domestic industrialists in this sector. Food inflation particularly, the rise in the prices of rice and wheat, is simply unjustifiable in view of the huge stocks of foodgrains with the Government. The PDS must be restructured to deliver what is expected of it.
Sir, having said this, let us look at the problem of inflation in the changed scenario. Prof Harry Johnson, a noted monetary economist, has written an article entitled: “Is Inflation Inevitable for Economic Growth?” Prof Johnson acceptable 1.5 per cent inflation for the advanced countries due to almost full employment and 3.0 per cent for the developing countries--this was in the 1960s. The situation has dramatically changed since then. Sir, I should not considered extravagant, but I think that 6.0 per cent inflation could be consistent in a growing economy. This does not, I repeat, does not at all mean that the Govt. is exempted from taking every possible step to ensure that the inflation does not cross this Laxman Rekha.
Dy Chairman, Sir, continuous increase in employment is one of the most useful instrument of securing inclusive growth. Therefore, all-out efforts need to be made for securing faster rise in gainful employment with decent living conditions. This is particularly true when the elasticity of employment across the sectors of the economy is declining over a period of time.
Sir, Shri Naiduji was talking about failure of the UPA Govt. to control unemployment. What was the situation during the NDA rule? According to the NSS, between 1999-2000 and 2004-05, that covers four years of the NDA, the rate of unemployment measured by the UPS marginally increased from 2.2 per cent to 2.3 per cent. But with CDS, that is the most inclusive measure of unemployment, it increased from 7.3 per cent to 8.2 per cent. Contrary to this, during the UPA-I i.e. between 2004-05 and 2009-10, the UPS unemployment declined to 2.0 per cent and the CDS to 6.6 per cent.
Sir, Shri Naiduji also referred to the Govt.’s inability to control the fiscal deficit. There cannot be two opinions about the necessity of controlling the fiscal deficit. But what is the real picture? The FD declined from 4.3% to 2.5% in 2007-08 of the GDP. It increased to 6.0 per cent in 2008-09 and further to 6.5 per cent in 2009-10. It again fell to 4.8 per cent in 2010-11, but increased to 5.7 per cent in 2011-12( Provisional). It is estimated at 5.1 per cent for the year 2012-13. Sir, what is gratifying is, the revenue deficit as % of the fiscal deficit and the GDP is showing a downward trend. It was 5.2 per cent of the GDP in 2009-10, while it is estimated to be 3.5 per cent in 2012-13.
But when some criticize the Govt. for not controlling the fiscal deficit, and like opposition parties, some economists are in the forefront, is it not necessary to closely look into the factors that lead to rising fiscal deficit?
In this regard, one can easily point out the following factors responsible for the rising fiscal deficit. a) A conscious decision of the Govt. to resort to financial packages to overcome the adverse impact of the global financial crisis and domestic factors; b) Lower receipts( that explain 58 per cent of total slippage) due to sharp deceleration of growth, particularly in the industry sector, elevated level of inflation, subdued financial market conditions, for generating required dis-investment receipts and overshooting of expenditure. If stimulus packages had not been given, growth would have further decelerated; c) Subsidies pose a major problem. We know that oil and petroleum subsidy, food subsidy and fertilizer subsidy are three major subsidies that drain the public exchequer. During April-December 2013, total under-recoveries of the OMC stood at Rs. 1,24,824 crore. Bulk of these subsidies are accounted only by diesel and LPG subsidies; d) When the Govt. tries to slowly align the prices of these products with the international prices since about 65% of them are being imported, is it not a fact that all opposition parties come to the streets and create havoc? Is it not a fact that war was broken when the Govt. reduced the number of the subsidized cylinders to six and was forced to make it 9. When 50% of the urban households use kerosene and more than 60 per cent rural households use fire fuel, that war was beyond my comprehension; e) Fertilizers subsidy amounted to Rs 32,490 crore in 2007-08, that increased to Rs.67,199 crore in 2010-11 ( RE ) and estimated to Rs.60,974 in 2012-13. I want to know which political party in this country will suggest and support rationalization of the fertilizer subsidy or not to raise the minimum support prices to the farmers.
Sir, I would now like to make the following suggestions for the consideration of the Govt.
First, agriculture needs a greater attention. Despite it being a state subject, the States are not doing enough. This is a serious matter. The Union Govt. should take initiative in sensitizing the States. Sir, we have been waiting for the Second Green Revolution for the last 40 years, that is too long a period. No major technological break-through is visible. That alone can shift the supply curve in agriculture upwards. Only about 1/3rd of the county’s farming is irrigated and 2/3rd is rain-dependent. We will have to develop in a major way the dry-farming technology.The agricultural universities must undertake frontier research in agriculture. Special problems of 80 per cent marginal and small farmers need to be urgently attended to make them viable and sustainable.
Second, the Micro, Small and Medium Enterprises ( MSMEs) have been provided with Rs. 2,977 crore assistance. It is too inadequate to for their development. 33 per cent of the MSMEs are in the services sector and 67 per cent in the manufacturing sector. They contribute 10 per cent of the GDP, more than 30 per cent of the exports and 17. 0 per cent of the total employment in the country. 84 per cent of the total manufacturing employment in the country comes from the MSMEs employing less than 8 workers. They need much better treatment. I am happy to know that the Govt. is revising their threshold limit, and also proposing to bring them under the priority sector lending. Sir, Pandit Jawaharlal Nehru talked about self-reliant growth. In the changed context, that is not possible. Let us replace ‘self-reliant growth’ by ‘domestic demand-driven growth’. And in that perspective, agricultural growth by making small and marginal farming sustainable, and also, the all-round development of the MSMEs have a unique role to perform.
Third, uneven regional development and the resulting imbalance is a perennial problem in the country. Due to different factor endowment and certain historical factors, some States developed faster, while some States remained economically backward. I therefore congratulate the FM for giving assurance in the Budget for reviewing the norms of backwardness so as to decide the level of financial assistance to such States.
Fourth relates to the financing of the development. Sir, every evidence shows that though growth has benefited all sections of the society, it has benefited and is benefiting the rich more than the poor. Therefore, the affluent and rich must bear a greater cost of financing the development. This is not borne out by the facts. For instance, the Gross Tax Revenue as the % of the GDP has stagnated between 10 and 11 per cent of the GDP; the direct taxes between 5.5 to 6 per cent and indirect around 4 to 5 per cent. The wealth tax is nominal, and yet it fell to Rs 950 crore from Rs 1,244 crore in the previous year. The services sector contributes about 62 of the GDP, but the service tax as a proportion of the GDP has stagnated only at one per cent of the GDP. This means that relatively higher growth is not getting reflected in the tax structure, that has virtually remained inelastic.
Fifth, the latest trend for gold import is very much disturbing. Due to inflation and relatively low rate of return on financial investment, people prefer gold as an asset. The demand for pure gold is rising faster compared to jewelry and other ornaments. This is a worldwide phenomenon. As a result, since 2008, gold prices denominated in dollar doubled and denominated in Rupee increased three times. It has two effects; one, since entire gold is imported, CAD has increased, and two, financial investment has fallen. The Government must regulate the gold import with strict measures.
Sixth, the estate duty is abolished. Sir, even the classical economists who believed in laissez-faire economic policy had recommended the estate duty with a view to reducing income inequalities. I think more than 100 countries in the world have gone for that. I do not know, why the India is dragging itsfeet.
Seventh, it is freezing to know that only 42,800 persons in the entire country have more than Rs one crore taxable income. ( I hope Ministers are included and the MPs are excluded). Sir, only persons in Pali Hill and Colaba in Mumbai, Banjara Hills in Hyderabad, Salt Lake in Kolkata, many areas in New Delhi, and affluent localities in banglore and Chennai alone might exceed this number by ten times.
Sir, economists are enamored by the logic of the Laffer curve that shows an inverse relationship between the tax rate and the compliance, i.e. tax collection. This is not borne out by the Indian conditions. It is high time that we rationalise the tax-structure, improve the tax compliance and punish tax evaders so that the major beneficiaries of growth also share the larger burden of financing the development.
Sir, on the whole, the Budget is realistic and down to earth. It is a balanced and responsible Budget. It is not extravagant in promises and does not entertain the sloganeering. It is not popular, and certainly not populist. Within the global and the domestic constraints, the FM has done a remarkably good job for the revival of the economy. Following the Hon. Prime Minister, I request my colleagues in the Opposition to share and strengthen this hope for the better future of the economy and that of the country.