Post-Budget LIVE: FM dismissed inflation ‘in 10 words’: Chidambaram in RS

Lok Sabha MP and NCP(SP) leader Supriya Sule on Wednesday criticised the Budget, saying it has failed to address various issues facing the country, including agrarian distress.

Participating in the general discussions on the Budget for 2024-25 in the House, she appealed to the government to hold Assembly elections in Jammu and Kashmir.

If the Centre can hold general elections in Jammu and Kashmir, why can it not hold Assembly polls there, as people there deserve to make their own decisions, she asked.

Sule added that four engines of growth for a robust economy are investments, consumption, exports, and fiscal spending.

Corporate tax rates have been reduced in the pretext that it would help in attracting investments, but that is not reflecting in the numbers the government has given, the Baramati (Maharashtra) MP said.

“Was it too little too late to reduce the corporate tax? Is that one reason why investments are not coming and I think the government needs to introspect that's why the investment environment is not as good as it should be?” she said.

On consumption, the MP said it is not good as there is an agrarian crisis in the rural economy.

The government needs to accept that there is an “agrarian crisis in this country”, she said, adding the big FMCG companies have started the concept of “shrinkflation” and this government is denying that there is a price rise.

Shrinkflation, she said, is a marketing activity for all the big companies that directly impacts jobs.

On exports, she said Make in India was a “wonderful sloganeering”, but “has it converted into jobs?” India is also not able to take advantage out of the “China plus one” strategy, she said.

“What went wrong with the Make in India? All need to introspect,” Sule said.

On fiscal spending, Sule asked if the fiscal deficit is going to stop at 4.9 per cent.

“My concern is that once the supplementary demands come... it will probably go up to 5.6 per cent is the rough estimate,” Sule said.

She added that there was no talk about holding census in the Budget.

She also demanded for delimitation as constituencies today are large — “23-24 lakhs”.

For this, “we are getting only Rs 5 crore (under MPLAD funds)...Either you increase MPLAD or stop it,” she said, adding that this is not a sufficient amount.

Sule also pointed out that after the production-linked incentive (PLI) scheme, now the government has come out with ELI (employment-linked incentive). “So PLI is already failed, now is this ELI also going to fail?” she asked.

“You have already failed even in the fiscal deficit. Thanks to the RBI, you are safe. So where is this economy going?” Sule asked.

If there is no good discipline of finances, the country will be in an economic crisis, Sule said.

Union Housing and Urban Affairs Minister Manohar Lal said on Wednesday that in the 2024-25 Budget presented by Finance Minister Nirmala Sitharaman a day earlier, there is a provision to fund one crore houses in cities.

“In the Union Budget, several schemes have been announced for the welfare of every section of society. The Budget has also focused on infrastructure. Allocation has been made for construction of one crore houses,” Manohar said.

On Tuesday, the government announced central assistance of Rs 2.2 lakh crore over the next five years to meet the housing requirement of one crore urban poor and middle-class families under the Pradhan Mantri Awas Yojana-Urban and proposed interest subsidy to provide loans at affordable rates.

According to the government, under the PM Awas Yojana Urban 2.0, housing needs of one crore urban poor and middle-class families will be addressed with an investment of Rs 10 lakh crore.

Talking about budgetary allocation for cities, the minister said in the Budget, the government has made provision for several projects for holistic development of urban areas.

He said the government has also announced a transit-oriented development plan for 14 large cities with a population of over 30 lakh in its Budget for 2024-25.

Former finance minister P Chidambaram on Wednesday cautioned the government against taking inflation lightly, saying every family is hit hard by price rise and asked why the RBI has not reduced bank rates for 13 months if it was low as claimed.

Initiating discussion on the Union Budget 2024-25 in the Rajya Sabha, the senior Congress leader also asked if the proposed employment-linked incentive (ELI) has been mooted as the existing production-linked incentive (PLI) schemes have failed to generate employment while mocking Finance Minister Nirmala Sitharaman for lifting ideas from the Congress manifesto for the ELI scheme.

He said the finance minister in her Budget speech “dismissed the subject in just 10 words”.

“Is inflation such a trivial subject (that) you can deal with it casually and dismiss it in 10 words?” he asked, arguing that in the interiors and hinterland of India, “inflation is much higher” than data collected mostly from towns and villages that are along national and state highways and district roads.

Chidambaram also took exception to the statement by the Chief Economic Advisor in the Economic Survey that India’s inflation continues to be low, stable and moving towards the 4 per cent target.

“It has been moving for the past four years. When will it arrive at the 4 per cent target?” the Congress leader asked.

He further said, “I think what the Chief Economic Advisor said in the Economic Survey is the injury, and the honourable finance minister dismissing the subject in ten words is adding insult to injury.”

He argued that if inflation is low, stable and moving towards the 4 per cent target, why has the RBI not revised downward the bank rate fixed in June 2023? “Bank rate is a good measure of where inflation is moving. If inflation is moving towards the 4 per cent target, why is the RBI keeping the bank rate at 6.5 per cent for the last 13 months? Why is the MPC, the Monetary Policy Committee, not willing to revise it downwards?” Chidambaram said.

He asserted that inflation is a humiliating situation because every family is hit by inflation. “I warn this government, you are taking inflation not so seriously.”

The results of the last set of by-elections in which the INDIA bloc won 10 out of 13 seats was a “punishment (and) warning administered” by the people to the NDA for high inflation, he said.

“If you don't take inflation seriously, you will be punished more. If you want to suffer, you are welcome to suffer the punishment,” Chidambaram added.

While acknowledging ELI is an interesting idea, he expressed doubt that it will be able to place 290 lakh people under it. “It should not turn out to be another election ‘jumla’ like your 2 crore jobs a year,” Chidambaram said.

On the tax relief proposed for individuals in the Budget, he said the benefit will be only for only 2-3 crore people and asked what relief has been given to those in irregular jobs and daily labourers.

Highlighting the income disparity across the population, he also said India continues to languish in the global hunger index. “The action that the government has taken, namely giving free food grain to 81 crore people, is a tacit admission that on the hunger index we are very, very low...your own action shows that people cannot afford food,” Chidambaram said.

The senior Congress leader also attacked the government for destroying federalism by picking and choosing among states for grant of relief.

“I don't grudge at all that you are giving relief to Andhra Pradesh, or Bihar, but what about the other states? We are a federal country. This is the death knell of federalism if you pick and choose among states. You are the Union of India, you are the Union government, you are the government of all the states. You cannot pick and choose one state and deny relief to another state,” Chidambaram asserted.

The abolition of Angel Tax for all classes of investors will act to “prompt” innovators and venture capitalists to better invest in startups and any instances of money-laundering there will be taken care of by the existing legal mechanism, CBDT Chairman Ravi Agrawal said on Wednesday.

He said the removal of this tax will act to boost the startup ecosystem in India. He would urge the community to “please come forward, please invest as the country is waiting for your investment, initiatives and innovations”, Agrawal told news agency PTI.

Asked how would a possible case of money laundering through investor funds be tackled after the removal of the Angel Tax, he said if such a violation is found or it is detected that the fund has come through “undisclosed” sources, there are provisions in the respective statute and that will be taken care of.

The ‘Vivad se Vishwas’ scheme announced in the Budget for the settlement of pending direct tax appeals will be launched this year and its notification apart from relevant FAQs would be issued soon, CBDT chairman Ravi Agrawal said on Wednesday.

The head of the direct taxes administration in the country told news agency PTI that a “substantial” number of income tax appeals are logged at the appellate stage in different forums and it is expected that a “reasonable” number of taxpayers will avail the new scheme.

The first Vivad se Vishwas scheme for cases under the direct taxes or income tax category was brought out by the government in 2020 and, according to the CBDT chief, it was “quite successful”, with about Rs 75,000 crore revenue being garnered and about a lakh taxpayers using the scheme.

“The first date is (going to be) 31st of December by when we the taxpayer is supposed to actually opt for the scheme (Vivad se Vishwas 2024). Very soon, we will notify this scheme along with the FAQs and all those things...,” Agrawal said.

National Conference vice-president and former chief minister Omar Abdullah on Wednesday claimed that there is nothing in the Union Budget for Jammu and Kashmir, terming it as a “Coalition bachao Budget” with focus on Bihar and Andhra Pradesh.

Abdullah said he thinks this is the first time that “coalition compulsions” are visible in the third term of the BJP-led NDA government.

“If you look specifically at Jammu and Kashmir, there’s nothing in this Budget. Considering the scale of problems that we face, we have among the highest levels of unemployment in the country; development wise, we have gone backwards.

“Investment was promised but we don’t see it on the ground anywhere. Today, people are screaming for water and electricity, so the sum total of our problems in Jammu and Kashmir has increased. The commitment from the government of India is absent,” he told PTI Videos.

As far as holistic all-India view is concerned, the NC leader said it has become very apparent that this is a coalition government and not a BJP government.

He added that perhaps due to “coalition compulsions”, the share that other states should have rightfully got has gone to Bihar and Andhra Pradesh.

“The legitimate share of other states is being denied to them so that two states can get money and the prime minister can continue to lead this coalition. It is nothing but a ‘coalition bachao Budget’,” he said.