The Congress economic policy makers Manmohan Singh, Pranab Mukherjee and Debiprosad Pal yesterday set the stage for their party to oppose the Union budgets more bravura reform features as being pro-rich and short-sighted.
Addressing party MPs at a meeting of the Congress Party in Parliament, they lamented the total lack of concern about infrastructure and social sectors, CPP secretary Prithviraj Chauhan told reporters. They stressed their fears about inflation.
The CPP discussion on the budget is to continue next Tuesday and the party will only decide thereafter how far to take its criticism. Party leaders indicated yesterday that they would make their opposition clear, try to force some modifications but not vote against the budget.
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The budget errs on the side of extravagance, Manmohan Singh told the MPs, saying that even industry had not asked for corporation tax to be cut from 40 to 35 per cent. He described it as a panic reaction to the stock market slump, which had been caused by the minimum alternative tax, which he called unwise.
While justifying the moderation of the tax rates and the broadening of the tax base, Singh reiterated his view that there was no justification for a reduction of the maximum personal income tax rate to 30 per cent in a poor country like India.
The euphoria over the budget would not last once the government tackled the oil pool deficit, Singh predicted. So, this could only be called half a budget. Most political leaders expect the government to raise petroleum products prices, since the deficit is estimated at Rs 15,500 crore, equivalent to 1.23 per cent of GDP.
The three former finance ministers severely attacked the voluntary disclosure scheme, holding that the 30 per cent tax rate on black money disclosed was too low. It should be at least 40 per cent. Black is beautiful as never before, quipped Singh.
Singh said the fiscal deficit was down to five per cent of GDP only because Rs 1,000 crore had been saved on development expenditure. Nor was there any commitment for primary education, agriculture, rural development, irrigation and various infrastructure areas like energy, power, coal and petroleum.c0Members were very unhappy that Congress schemes such as the free midday meal for school children, national social assistance programme and housing for the poor under the Indira Awas Yojana had been totally neglected, Chauhan reported.
The three former ministers reported that the economy was not in good shape. The growth rate was slipping, industrial growth slow and inflation could ride into double digits.
He attributed the inflation to the Rs 16,000 crore monetisation the budget estimated, the Rs 12,600 crore money supply increase which the cut in CRR would cause, and the recent price increases for coal, wheat, sugar, urea, postage, energy, railway frieght and transport operators.