SK/1A/11. 00 The House met at eleven of the clock, mr. Chairman in the Chair. OBITUARY REFERENCE mr. Chairman



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SHRI K. N. BALAGOPAL (KERALA) :

Sir, I come from the state of Kerala. Kathakali is the famous classical dance form of Kerala. A few days back the famous kathakali Maestro Ramankutty Aasan died. He was an expert in Pakarnattam. That means performing two bhavas at the same time. Like acting as both hanuman and Rakshasinat at the same time in lanka dhahana. It is a difficult exercise. Before the presentation of this year’s Budget, the general feeling was, Mr Chidambaram will try to perform Pakarnattam . At the eve of an election, he would aim to address the issues of the common man and at the same time try to satisfy the global credit agencies and global capital. But sorry to say that, our Finance Minister has failed to perform thus. This Budget is a Budget only for the international credit agencies and global capital.

This Budget as Sitaram Yechuri correctly wrote in The Economic Times is neither growth-oriented nor `inclusive’. Rather than reversing the current economic slowdown, these proposals may well make it worse. The economy is facing a serious crisis. While introducing the new economic policy in his 1991 July Budget speech, the then Finance Minister Dr Manmohan Singh was worried about the Current account deficit and Fiscal deficit. At that time the CAD was 2.5% of the GDP. Now we have completed two decades of NEP with a current account deficit of 4.5% of GDP, which is the highest in our history. The economy is facing four problems simultaneously, that is CAD, Fiscal deficit , inflation and the depreciation of our currency. This shows the period of globalization did not help to resolve these issues but led to a deeper and more complex crisis of the economy.

Have these policies helped the country to become a trade surplus economy? Certainly the answer is no. The last time India enjoyed a trade surplus was in 1976-77. India’s share of world exports fell from 2 percent at the time of Independence to 1.1% in 2007.

In the Budget speech the Finance Minister openly declared the Mool mantra, that is high growth rate. Will the reforms give a big momentum to the Growth of Indian economy? India was growing at 5-6 percent between 1974 and 1990. Now the predictions are same as the pre reform period. These features show the reforms which have growth as their mool mantra of growth leading the economy to a deeper crisis.

The Finance Minister has criticised some growth-oriented States and stated that the UPA govt gives emphasis to improving human development indicators. But what is the reality?


When the reforms began in 1991, India was ranked 123rd among countries around the world in terms of the Human Development Index. In 2011 it had slipped to the 134th place. In 1991 the then Finance Minister stated that the fundamental objective of reforms is to bring about rapid and sustained improvement in the quality of life of the people of India. Is this the improvement, Sir,?

While reading the Budget speech, we could not find out a single reference to ‘Inequality.’ Intensifying inequality is one of the major consequences of reforms. In 2006 the UN published a comprehensive global study on personal wealth. As per that report the top 10 per cent of India’s population owns 53% of the country’s wealth. The bottom 10% controls a mere 0.2%. Now this difference has further widened. The Directive Principle of the Constitution of India, number 39c, clearly States that the operation of the economic system should not result in the concentration of wealth. That means the reforms are clearly against the Directive Principles of the Constitution of India. Sir, inequality is against the concept of growth. If the income of the majority is squeezed to feed a rich minority, how can they contribute to the growth processes? ‘The Economist’ weekly recently published a special issue on inequality. It stated that “the inequality has reached such a stage when it can be inefficient and bad for growth”.


Without increasing the purchasing power of the people and strengthening the domestic market, we cannot improve the situation. I am totally against the mythology of the fiscal deficit cut. It is recommended by international financial agencies. According to me, in a recession period, the Government should stimulate the economy by increasing public spending. As China did, the Government should invest more in infrastructure and other sectors. It will create employment and increase the purchasing capacity. This will give momentum to the economy. But the Finance Minister is still following the contrary path. Sir, the Finance Minister has stated that foreign investment is imperative.


Since 1991 onwards, we are trying to attract FDI. What is the reality? 44% of the FDI came from a small country, Mauritius. Less than 10% of FDI has come from EU Countries, 7% from the USA, 5% from UK and only 4% from Japan. FII investments are the major component in the foreign capital coming into the country. They are not creating any employment, or any assets in this country. They are floating from one country to another country for more and more profit. They first arrived in India in 1993. By 2006 they were engaged in transactions worth Rs 28, 55,000 crore which was over one third of the country’s GDP and more than six times the value of primary transactions.
If we are considering FDI, the main component is equity, which is also drawing more and more profit from India. For example, the American private equity firm Warburg Pincus invested 292 million dollars in Bharati Tele Ventures between 1999 and 2001. It sold its shares in 2004-05 for one billion dollars retaining a stake of 700 million dollars. The implicit return calculated over a five year period is almost 500%. FDI is not playing any role in Indian investment. India’s investment is financed almost entirely from domestic savings. But still we are giving more and more concessions to FDI. In his July 1991 Budget speech, the then Finance Minister gave the justification for the opening up of the economy. According to him the entry of the foreign capital would increase domestic investment. But two decades of reforms show this is not true.

On the contrary, Indian big business groups have grown to be a new class of TNCs, while their contribution to the Indian economy is less. According to our Commerce Minister Indian bug business has created not less than 300,000 jobs in the US during 2004-07. Is the US giving any tax concessions to Indian companies. NO. Yet, they are also doing much business in developed and developing countries. Despite that, this Budget also fails to present concrete plans for utilizing Indian capital for investment but gives more benefits to volatile FII. Sir, the next choice for investment is the remittance of NRIs. The remittance from NRIs is higher than the FDI inflow into our country. But, as usual, this Budget has forgotten this sector completely. We cannot find any schemes for the welfare of NRIs. Sir, we have other sources of capital for investment . As per the Public Enterprises survey, PSUs had a surplus reserve of Rs. 5,60,203 Cr in 2010-11, which has increased to 6,13,949 crores in 2011-12 showing, or by 9.5%. Why is the Government not ready to utilize this for further investment and employment generation? Instead of this, the Government will mobilize Rs. 25,000 crore through disinvestment of PSUs. This is totally illogical. During this period, The contribution of CPSEs to the Central Exchequer by way of different taxes has increased by 2.58%. The move of the Government to kill these milk giving cows is totally anti-national.


If this Government is following the philosophy of fiscal deficit reduction, why are they concentrating only on cutting expenditure? Why does this Government keep silent on the revenue part? Yes the FM repeatedly mentions the world’s lowest TAX GDP ratio. But still he is doing nothing to improve this.

While comparing the BE with the RE of 2012-13, the only sector in revenue collection which shows an increase is the Securities Transaction Tax. And there is a strong demand to increase this tax all over the world. But for giving more benefits to corporates the Finance Minister has reduced the Securities transaction tax. This will result in revenue loss and can also promote speculative transactions.


The Parliament of India has amended the rules for implementing GAAR and retrospective Taxation. But when Mr Chidambaram took over this portfolio, then he constituted a one-man committee and postponed the Parliament approved decision on this matter for three years. This is totally arbitrary and amounts to favouring global capital. While giving his reply to the last year’s Budget discussions, the then FM stated in this same august House that countries like the UK had already implemented retrospective amendments in 2008 dating back to 1987. If they can then why can’t we? This is a shameful situation. How can the Govt depend on a so-called tax specialist’s one-sided opinion for overruling the unanimous decision of the Indian Parliament? This is an attack on the supremacy of Indian Parliament. The undermining of Parliament is also reflected in other areas such as Aadhaar, Pension Fund etc.


The Indian rich are now one of the lowest taxed segments of the global rich. We have abolished estate duty. More than 148 countries still have it. India is also the country which gives more and more tax exemptions to the super rich.

The revenue forgone due to exemptions/ deductions/ incentives in the Central Government tax system is estimated to be Rs. 5,29,432 crore in 2011-12. This is 6 % of GDP. Sir, this is higher than our fiscal deficit. The Govt is weeping about subsidies which are only 2% of the GDP? As per the calculation done by well-known journalist Sainath, since 2005-06 taxes and duties for the corporate world and the rich have been written off at the rate of Rs 7million a minute on average. While the Finance Minister complains about the passion for gold, he writes-off in this Budget the customs duties on gold, diamonds and jewellery that are worth Rs. 61,035 cr.

The Finance Minster is not ready to tax the super rich. Yes, in this Budget the Minister has declared a new cess on the super rich. But the impact of this on total tax collection is very small. Secondly, why is the Finance Minister not ready to increase the tax rate instead of imposing a cess? Sir, in the case of a cess there is no provision for distribution of a share of the revenue to the States; if it is in the form of a tax then it is the constitutional responsibility of the Centre to share it with States. Sir, India is a federal republic. But the rights of the States are being eroded day by day.


The state of inflation is alarming and food inflation is very high. The majority of the people are struggling to meet their daily needs. As per the answer given to me, the per capita food grain availability has declined by 57 gms in between 2000 and 2010. The rate of growth of foodgrains production (2.5% annum on average) exceeded the rate of population growth till the time the reforms began in the early 1990s. Since then the rate of growth of food grains production has fallen sharply to 1.25 while population has continued to grow at 1.6-1.9% per annum. Besides this, the main reason for the decline in per capita food grain availability is the declining purchasing capacity of the majority of the people. But the Budget fails to address this issue. Food Subsidy has been pegged at Rs. 90,000 crore in 2013-14 (BE), which is a small increase relative to the Rs.85,000 crore in 2012-13 (RE)
This allocation of Rs. 90,000 crore for 2013-14 includes an amount of Rs. 10,000 crore that the Government expects to be the incremental cost due to the implementation of the National Food Security legislation. This implies the lack of a sense of urgency in implementation of this. Universal distribution of rice and/or wheat and millets under PDS in the country would require additional funds to the tune of Rs. 148,471 crore.
Sir, now the Minister has proposed to levy a CTT on future trading in non-agriculture commodities. This is a good step. But the exclusion of agricultural commodities will further increase the future trade in this sector which will increase food inflation.

The outlay for Petroleum Subsidy has been reduced significantly from Rs. 96,880 crore in 2012-13 (RE) to Rs. 65,000 crore in 2013-14 (BE), which would further increase the prices of petroleum products and affect price rise all round. This is coupled with Government’s agenda to deregulate the pricing of petroleum products under the cover of Parikh Committee recommendations, which would further aggravate inflation.


The pricing mechanism of petroleum products is the main cause of the increasing burden on account of subsidies. The production cost of diesel and petrol is, more or less, same as the market price. But the oil companies determine the price of petrol as per the parity with international price of petrol and diesel. India is not importing petrol or diesel, we are importing crude oil. The refining cost in India is the cheapest in the world. Why is the Government still hesitating to reconsider the pricing mechanism? The Budget failed to incorporate the recommendation of the Standing Committee to remove the import duty on crude and reduce the excise duty. This approach of the Budget will add fuel to the inflation.

Sir, in his Budget speech, the Finance Minister gave stress to inclusive growth. For inclusiveness, a Government should focus on social sectors and should give more allocations to the deprived sections of the country. But the reality is far away from that. In 2008-09 expenditure from the Union Budget on social services was 2% of the GDP. But in this Budget, the allocation is only 1.9% of the GDP. Going by last year’s experience, the actual expenditure may be less than 1.7% of the GDP. The revised estimate for the current fiscal year shows that plan spending was nearly 20 percent below the Budget Estimates for 2012 -13. In this Budget, the FM has resorted to a clever exercise by comparing the Budgetary allocation with the Revised Estimate for 2012-13. It had directed ministries to cut expenditures relative to the previous year’s Budget allocations and is now making comparisons with that reduced figure to claim that it has increased allocations The UPA’s promise reiterating the Kothari Commission recommendation of 1966 remains unfulfilled even in 2013-14; the Union Govt’s allocation for Education in 2013-14 stands at 0.69% of the GDP. This is one of the lowest in the world. The situation in health is the worst. The Centre’s total expenditure on Health & Family Welfare as a proportion of the GDP shows stagnation at 0.3 % in 2013-14. If we are combined both the state and central expenditures it is below 1% of GDP. This is the lowest in the world. Now the Ministry has announced the extension of the National Rural Health Mission to urban areas also. But the allocation is not sufficient. According to well known economist Jayati Ghosh India is the only country where public delivery of essential social services is presented as Government schemes that are gifts from the state to the people rather than the rights of its citizens. If we are considering the rural economy in totality the situation is the same. Rural expenditure includes expenditure on Agriculture and allied activities, Rural development, Special Area programmes, Irrigation and flood control and Village and small industries. The allocation to the Rural economy has declined from 2.3% of the GDP in the Revised Estimate for 2012-13 to 2.2% in the BE for 2013-14. As a proportion of total expenditure from the Union Budget, the expenditure on Agriculture and allied Activities shows a decline from 11.8% in 2011-12 (actual) to 10.4 % in 2013-14 BE. Expenditure on Agriculture and allied activities as a proportion of the GDP has also dipped from 1.7% in 2011-12 (actual) to 1.5% in 2013-14 BE.

This shows the Government is not concerned about the Agrarian Sector and the rural economy. UPA-II2 is forgetting the words of Mahatma Gandhi who said ‘India lives in the villages’. Are these allocations to the Agricultural sector sufficient in a country where 2.5 lakh farmers had committed suicide in between 1995 and 2010? Is this sufficient for a sector on which half of the labour force depends for its means of living?
The allocation for the MGNREGA is same as last year’s. Last year the actual expenditure was far below of the allocation. This shows the interest of the Government in this flagship program is declining. In this Budget, the Finance Minister announced the next stage of PMGSY. But, Sir, the current Budget allocation for PMGSY has declined to Rs.21,700 crore from Rs.24,000 crore in 2012-13 (BE), which is a perceptible decline.

Sir, the working class is suffering miserably. As per the Economic Survey 2013, 95 per cent of the working class is in the informal sector. Contractualisation and casualization have increased. The share of wages in GDP has in fact halved since the 1980s and is in now the lowest in the world. Now a new category is emerging of people working for an honorarium. Nothing has been mentioned about the ASHA workers, anganavadi teachers etc.

Irrespective of political differences,, the working class in the country resorted to a two day strike. It was a historic movement. Crores of workers participated in this two days’ strike. This is the largest mobilization in the history of anti-globalization strikes in the world. But this Budget reflects the same anti-working class attitude of the Government. Tokenism in the form of a crude joke is reflected in the Budget through an allocation of only Rs. 1000 crore for social security of 47 crore unorganised sector workers.

Sir, are the allocations in this Budget sufficient to include the SC and ST and Minority? The share of SCSP (Schedule Cast Sub Plan) in the total Plan allocations has fallen from 10.20% in 2012-13 (RE) to 9.72% in 2013-14 (BE). There has been a decrease in the share of TSP in the Total Plan Allocations in the Union Budget from 5.77% in 2012-13 RE to 5.75% in 2013-14 BE.

Four important schemes which were initiated in 2012-13 for development of minorities have been scrapped in 2013-14. These include Scheme for promotion of education in 100 minority concentration towns/cities (out of 251 such town/cities identified as backward), Village Development Programme for Villages not covered by Minority Concentrated Blocks (MCBs) / Minority Concentrated Districts (MCDs), Support to District Level Institutions in MCDs and Free Cycles for Girl Students of Class IX. These figures show that this Government is against the interest of the marginalized sections of the country.

Sir, the President of India in his speech declared the formation of a new department for disabled persons. But there is no separate demand for grants for the Department of Disability Affairs indicating that the commitment to have a separate department is only on paper. The inclusive agenda excludes persons with disabilities. An outlay of Rs.110 crore has been announced for ADIP scheme under the Department of Disability Affairs. However, the analysis of the demand for grant document revealed an outlay of only Rs. 96 crore.

Sir, children are the most ignored section in this Budget. Children, who represent 42% of the population of the country, have been earmarked allocations worth 0.67% of GDP in Union Budget 2013-14 (BE). Total allocation for children has decreased from 4.8% of the Union Budget in 2012-13 (BE) to 4.6% of the Union Budget in 2013-14 (BE). In his Budget speech the Finance Minister gave importance to youth. The allocation for skill development is a good step in the right direction. But where will these skilled youth go for getting employment? The reforms are intensifying unemployment in the country. It is reflected in the jobless growth phenomenon. Between 1983 and 1994, when economic growth was 4-5% every year, employment in the organized sector grew at 1.2%. Between 1994 and 2005 when growth increased to 5-6%, employment growth turned negative at -0.3%. In the pre-reform period the rate of growth of employment was higher than the rate of growth of population. But in the post reform period the opposite has been the case. 10 % growth in manufacturing sector is the pre requisite for 1% employment growth in that sector. The Budget terribly failed to address the real issues of the youth in this country. The workers in the organized sector are also facing retrenchment. An estimate suggests that anywhere from half million to possibly ten million workers may have lost their jobs since September 2008, most of them in export sectors and export related areas of the informal economy. This Budget does not have any specific plans to address this phenomenon. The Minister gave priority to women and he has announced an exclusively women’s bank. Is it sufficient for addressing the exclusion of women? According to the Indian Human Development study, 80% of the women in India have no bank account. Barely 13% of the rural women have bank accounts and only 28% in urban areas. Several women are in key position in banks and other institutions. But Sir, only 19% of the women between 15 and 59 years earn any cash income. Is a separate women-run women-focused bank is sufficient to overcome these hurdles? Definitely not. If the Ministry is concerned about women’s banking, why is the ministry not giving clearance to the long pending demand for postal banking?

The allocation for Implementation of the Protection of Women from Domestic Violence Act has increased from a meagre allocation of Rs 20 crore in 2012-13 to Rs 67.5 crore, whereas the recommended outlay for the scheme by the Steering Committee on Women’s Agency and Empowerment was Rs 90 crore annually. It must also be noted that the entire allocation for 2012-13 remained unutilized. FM has announced Nirbhaya, but there is no proper allocation to the concerned Ministry. Sir, this is a Budget for FDI not for Indian citizens. This proves that this is a Government of the corporates, for the corporates, and by the corporates. If the Govt is not ready to consider the discontent among a majority of the people, the consequence would be unpredictable. I urge the Govt to reconsider the existing policy. (Ends)



SHRI SUKHENDU SEKHAR ROY (WEST BENGAL) :

Sir, when we look at this Budget, we find an element of Alchemist as well as Fortune Teller, in our Finance Minister as he said and I quote, “Our goal is higher growth leading to inclusive and sustainable development. That is the mool mantra” (unquote). But, Sir, the mool mantra sounds like bhool mantra. Inclusive Growth and Sustainable Development have been proved to be merely slogans or rhetoric for public consumption.

On a careful analysis of this anti-people Budget, one will find that in the name of reducing fiscal deficit, it fails to raise social sector expenditure which is badly needed for the poor. The Budget fails to stimulate growth and it makes relative economic stagnation and high inflation. The Govt’s bias towards foreign capital has become more brazen. When a quantum speeding leap is needed to make foodgrains available at affordable prices through a Universal Public Distribution System, the food subsidy is raised to laughable Rs 5000 crores over last year’s revised estimate. MNREGA has been frozen at last year’s level of Rs. 33,000 crores and well below its peak allocation of Rs. 40,000 crores. Allocation to Health and Family welfare is raised by a paltry 8% which is less than the inflation rate. This will lead to further impoverishment, ill health and miseries to poorer section of the society. Allocation for Pradhan Mantri Gram Sarak Yojna has also been reduced to half, which will affect road expansion in the Rural India.

Sir, Dr. Manmohan Singh and Sri P. Chidambaram have managed Finance portfolio for 14 years between them. But nothing has changed. The key concerns remain. Our economy is reeling under slowing growth rate, rising inflation, skyrocketing prices of essential commodities, widening current account deficit and the Govt. has undertaken a peculiar mechanism of cuts in subsidies like fertilizer, food and petroleum. This fiscal fundamentalism is not accidental, but is dictated by the views prevalent among credit-rating agencies, multinational companies and our corporate honchos. This is why I say time and again that this Govt. has surrendered to crony capitalism and it is transforming into a `Govt of the Chiselers, for the Chiselers and by the Chiselers.Govt is driven an urge to attract foreign investment at any cost as the F.M. believes that foreign investment is an imperative. The Govt does not believe in raising the tax GDP ratio which has fallen to 10%, lowest for any large developing country. India’s upper crust are among the lowest taxed people as they pay an average of 20% compared to 50% plus in the UK, Spain, Bulgaria or Sweden. Govt. claims that 10% surcharge has been raised on incomes above Rs 1 crore to reduce inequality. If we take 42,000 individuals in this class as per Govt’s calculation, the surcharge will yield an estimated Rs. 15,000 crores which is less than 1% of the projected total revenue increase.

Sir, the Govt’s pro rich bias is writ large everywhere in this Budget .Revenue to the extent of Rs. 5, 73,630 crores were foregone in 2012-13 through tax write-offs and exemptions and this figure is 130% higher than in 2006-2007. This amount is larger than the entire fiscal deficit .And pursuant to this Budget, the poor must bear the burden from reduced social spending and higher indirect taxes on the commodities of mass consumption like kerosene, clothing and footwear. The Non–Performing Assets of PSU Banks rose to Rs 2,25,000 crores in Dec’12. Who are the top 50 Wilful defaulters? Govt. has taken refuge to RBI Rules not to disclose their names. More than Rs. 13000 crores have been diverted by a number of Big Companies for the past 3 years in contravention of the External Commercial Borrowing Scheme.

No punitive action has yet been taken by the Reserve Bank. Why and at whose instance? This is another scam. And this is the real picture of Aam Admi Sarkar.

Darkness and darkness is all around.

Sir, opening up Multibrand retail, aviation and Direct to Home Services to FDI, in addition to petroleum, power and real estate is not enough for the super greedy capital. It always wants more and our Govt. has invited foreign capital and suspect investment through tax havens or double taxation avoidance treaty like Mauritius and Finance Minister’s declaration that Indian tax authorities will ask proof of income through routes like Mauritius proved to be a hoax since the next day of his Budget speech it was withdrawn following loss of 291 points in the Sensex. The implementation of GAAR has also been deferred in supersession of the Budget announcement of his predecessor-in-office. The McKinsey Global Institute Report has estimated global capital flows were 13% lower in 2012 than 2011 and 61% below the peak of 2007. Hence, bank on FDI substantially would be suicidal for our alarming economic situation. If we do so, India will be a big Casino for the foreign players.

Sir, the FM has referred in his Budget that India ranks 10th among economically advanced countries. While I look at the UNDP’s Human Development Report 2013, I find the HDI Profile of India is at 136 among 187 countries, 53.7% Indian live in Multi Dimensional poverty and another 16.4% are vulnerable to multiple deprivations. Only 29 countries do worse in this field than India. Maternal mortality rate per 1 lakh live births is 200 and Children under 5 mortality rate per 1000 live births is 63. Hence, insofar as the Human Development Report is concerned, we share our position with Equatorial Guniea, a country, name of which is hardly known to people. What a shame! Perhaps, this is why renowned social activist and a Member of NAC Smt. Aruna Roy has commented and I quote “the truth is: the Budget perpetuates what it claims to tackle centuries of neglect, discrimination and deprivation……” (Unquote). She has also deplored the so-called success story of Aadhar-based Direct Cash Benefit Transfer in most districts and has claimed no impact. More than 60% of our people do not get banking services. How will the benefits reach them within one year?

Hence, ’Aap Ka Paisa Aap Ka Haath’ is essentially a pre –election slogan like ‘Garibi Hatao’ to ensure ‘Aap Ka Vote Congress ke Haath’ .Lekin Desh Ki Janta Ki Awaz aap shun nahi pa rahe hai.Janta bol rahi hai ‘Hamne ki thi unse bafa ki ummid/ Jo nahi jante bafa kya hota hai’.

Sir, India’s trade imbalance is 11% of GDP. In terms of Fiscal Deficit, India’s position is 148 among 150 countries. Import is more than Export-61% of GDP. External Debt is 25% more than our Foreign Exchange Reserve. Employment generation is 0.41% in 2011-2012 compared to 2.08% during 2004-2005. Inflation in Vegetables, Pulses etc. is about 11% at present. Yet the Govt. is happy with Moody’s assessment. The Govt. has no assessment about the mood of the people. People feel themselves alienated. Fears abound that if India does not grow continuously at the rate of 8%, there will be danger to basic equilibrium that keeps India united. Derek Scissors of the Washington based think tank, Heritage Foundation has commented on our Budget saying (quote)” The proposal for the year is a triumph of hope over courage: spending is to increase by 17%,yet the deficit is to fall to 4.8% of GDP. This won’t happen. Govt. revenue and GDP will continue to disappoint, deficits will continue to be high and consumers will continue to suffer. This is the path India remains on.” (Unquote) What a mess the mandarins of North Block and Yojna Ayog have created.

Sir, there is no whisper in this Budget about recovery of Black Money since the Govt. has willfully neglected and deliberately failed to recover Black Money from within and outside our country. Report of Washington based Global Financial Integrity of Nov 2010, shows that between 1948 and 2008, i.e. 60 years of Indian Independence, illicit financial flow in our country was 213 billion US Dollars and it rose to 462 billion dollars in 2010, a rarest of the rare achievement that the UPA-II Govt. can claim. The underground economy of our country, as per the Report, was 640 billion US Dollars at the end of 2008. As per 2012 Report of Transparency International, India ranks 94 among 174 countries in Corruption Perception Index. So, Black Money also does not grow on trees, but blooms underground.

Sir, the National Commission to Review the Working of Constitution recommended inter alia in 2002 for doing away with surcharges as part of the Union’s fiscal armoury. Yet in this Budget,10% surcharge has been imposed on a section of private individuals, etc and additional 5% surcharges for domestic companies and 3% increase for foreign companies. Well, this is another way to deprive the States in revenue sharing since under Article 271 of the Constitution whole proceeds of such surcharges shall form part of the Consolidated Fund of the Union. The enhanced surcharge ought to have been in the direct tax net.

Sir, examples are galore in regard to financial dictatorship of the centre. I am citing only one example. Take the case of West Bengal. A Govt. ruled and ruined Bengal for long 34 years; nowhere in the world this has happened. After the change of guards at Writers’ Building in 2011, the newly elected Govt found that more than 2 lakh Crores of loan had been thursted upon it. Ms. Mamata Banerjee, the Hon’ble C.M of Bengal urged upon the Central Govt. not for any dole or package, but to put a Moratorium on this huge loan amount for a period of only 3 years and restructuring of the interest amount accordingly. But no murmur is heard as yet in response to the appeal of Mamataji. Even XIIth Finance Commission characterized West Bengal as most debt stressed state. Why such indifferent attitude? Why Govt. has turned deaf ears? Is there any state in this country which has inherited from its previous Govt. a debt burden of Rs. 2 lakh crores? Then why Bengal should not be declared as a Special Category State? Does Bengal exist outside India? The Centre, as a part of political vendetta, has intentionally put an economic blockade to West Bengal which has not been taken kindly by the 8 crore people of the State. But I assure the Govt. that the voice of Mamataji can neither be throttled nor the demands of 8 crore people of Bengal can be ignored. She is Leader of the masses, rose like a finix and is committed to do justice to all her people, come what may.

Sir, the Govt. must take a lesson from history why the 22 Republics of the erstwhile USSR disintegrated. There were political upheavals. But the main reason was economic exploitation of the Centre towards the States. We are having an identical situation in India. For example, Centre is collecting revenue to the extent of more than Rs.40, 000 crores from Bengal every year. And how much we are getting? Only 2% or so of the total allocation among the States. Govt. is glorifying itself with Centrally Sponsored Schemes.. But the successive Commissions on the Centre-State Relations, namely the Sarkaria Commission and the Punchhi Commission inter alia recommended that ‘when the emphasis on the social justice, there is no escape from realignment of resources in favour of the States, because services and the programmes which are at the core of a more equitable social order come within the purviews of the States under the Constitution’. This is the Constitutional Scheme, Sir, If we still want to respect the first line of Article 1 of our Constitution, which says ‘India, that is Bharat, shall be a Union of States’, then we must come out of our age long obsession that India is more unitary than federal. As an ordinary student of Law and political science, I understand that it is the duty and obligation of the Centre to respect the spirit of federalism as embodied in our Constitution to fulfill the aspirations of 120 crores of our people living in different States to emerge and remerge as one nation under the Indian Federation. This Budget deviates from that goal. This Budget is Anti- Federal if not Unconstitutional.
Sir, the Finance Minister has assured that new Criteria would be devolved for future planning and devolution of funds, particularly to the Backward States. My pointed question is whether the Govt. would shirk off the vintage formula called Gadgil Formula for distribution of revenues among the States? Whether the Govt. will redefine the role of Finance Commission and Planning Commission vis-à-vis our Constitution based on the recommendations of Sarkaria Commission and Punchhi Commission. As per Articles 268,269,270,275,280,282 and 293, it is the Finance Commission which is the only Constitutional Authority to look into all aspects of financial relations between the Centre and States. Even though Planning Commission and different Ministries of the Govt. are allocating funds over the decades in the most arbitrary and unlawful manner. the Planning Commission has emerged as a robust extra constitutional centre of authority. Will the Govt. clip off the wings of Planning Commission and restrict its role to planning only? What about Plan and Non- Plan expenditure? Is there any such stipulation in our Constitution? Please try to look into these issues and redefine the status of a Special Category State only on the basis of economic backwardness.

Sir, We do not have any objection if any State is granted special relief within the framework of the Constitution. Our Leader Ms. Mamata Banerjee always says “let hundred flowers bloom”. In this Budget, not a single KM. road has been sanctioned for Bengal. No industrial corridor in the model of Delhi-Mumbai Industrial Corridor has been proposed for any area under the Eastern Region? Is this not discrimination? Not a single paisa has been allotted for development of Jute cultivation in Jute-growing States of West Bengal, Bihar, Odisha, Assam, Tripura or Meghalaya which encompasses 4 million jute growers. This has caused financial deprivation of the entire Eastern Region. Should we not express our agonies?

Sir, I would urge upon the Finance Minister and the Central Govt to rise above the regional and political bias, but act according to the Constitutional mandate as enshrined in Article 275 (ii) which guarantees equitable distribution of revenues and resources based on the principles of justice and fair play, as otherwise all your action or inaction will inflict grievous injury to the very root of our democratic structure endangering the unity and integrity of the nation. Centre must have a relook in continuous consultation with the States to remove the financial imbalances among the States and introduce a noble fiscal policy so that States march ahead in unison.

Sir, in fine I would like to quote the concluding sentences of the book titled “Under Cover Economist” authored by Tim Harford (over 1million copies of the book have since been sold worldwide). It says, “Faced with the costs and risks of trial and error, should you and I try to experiment and adapt more than we do? What price would we pay in our quest to succeed?”


With these words, I conclude. THANK YOU, Sir,

(Ends)




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