Economy is weak, needs bold, structural reforms: Chidambaram

The Union Budget 2019-20 does not chalk out a clear roadmap to take India on the path of high economic growth and lacks bold steps and structural reforms, Congress leader P Chidambaram said on Thursday (July 11) in Rajya Sabha.

Participating in the debate on the Budget, the former finance minister said the country’s economy is weak and requires bold steps to take it forward on fast growth track, which Prime Minister Narendra Modi should take.

He also termed Finance Minister Nirmala Sitharaman’s speech as ‘insipid’ and said the budget does not have any steps to propel investment and savings.

Chidambaram downplayed the Modi government’s call of making India a USD 5 trillion economy by 2024-25, saying the economy itself doubles due to the “magic of compounding” in six to seven years and does not require a prime minister or finance minister.

He sought to corner the finance minister, saying she did not present macro-economic data, including receipts from revenue, in her Budget Speech in Lok Sabha on July 5.

Chidambaram said the Finance Minister should have mentioned figures in her speech as people deserve to know broad numbers as they do not go through annexures and other Budget documents.

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“I cannot recall a Budget Speech so bereft of macro data,” he said, and urged the Finance Ministry to ensure important data gets mention in the Budget Speech in future. “There is this goal of a 5 trillion dollar economy. Good, very good. I will give you better goals.

In 1990-91 India’s economy was 320 billion dollars, it doubled to 618 billion dollars in 2003-04. “Then UPA government came and from 618 billion dollars, it doubled to 1.22 trillion dollars in four years. It doubled again to 2.48 trillion dollars in September 2017. It will double to 5 trillion dollars in the next five years. It does not require a Prime Minister or a Finance minister. It will double. That is the magic of compounding,” he said, adding that any money lender or borrower knows this.

He said if the nominal growth of economy is 12 per cent, it is double in 6 years and if it grows at 11 per cent, it will double in 7 years.

“So please don’t put this pie in the sky before people of the country saying 5 trillion dollars is equal to Chandrayan landing on the moon. 5 trillion dollar is simple arithmetic. So don’t put this pie in the sky. Come down to reality. The economy is weak. The budget speech is insipid. The weak economy needed a bold approach. I think the prime minister has enough will and determination to take bold decisions,” he said.

Chidambaram said it is not necessary to say everything in the budget speech and expected this government to come back and tell what structural reforms and what bold steps they will take on how they will improve investment, which is the only engine available to spur India’s growth to 8 per cent this year and to 10 per cent the next year.

“I am afraid, this budget does not inspire us to believe that this will happen. I can only appeal to the government to pay serious attention to what we are saying, in the spirit of genuine friendliness to get our economy going. Please ensure that bold structural reforms are done to boost economic growth,” the senior Congress leader noted.

He also rued that there was no clarity on the exact projections on the GDP. Chidambaram said at one place the GDP growth has been projected at 7 per cent and at other place it is 8 per cent.

“One per cent makes a huge difference,” he said, adding the government, CGA, and Chief Economic Advisor could not present a unified picture for the current fiscal. He further said structural reforms were a must for achieving economic growth, but the Budget does not talk about it. “Show me on one structural reform. There is not one,” he said.

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He also took a jibe on the government’s claim that India would be a $5 trillion economy. The size of the economy is currently estimated at USD 2.7 trillion and is growing at a nominal growth.

Pointing out that there was stagnation in gross fixed capital formation in the country, Chidambaram said huge investments are required for firing engines of growth. And for investments domestic savings are pertinent.

“There is nothing in the Budget to improve domestic savings,” he said. He also asked the government to fix realistic targets for revenue collection for achieving expenditure goals.

In an apparent jibe at former finance minister Arun Jaitley, Chidambaram said Sitharaman inherited a “wobbly economy” and accused the government of waiving corporate loans worth ₹5.55 lakh crore during the NDA-1 government.

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