 "Former finance minister P Chidambaram. Photo: PTI")
Congress leader and former finance minister P. Chidambaram on Monday lashed out at Finance Minister Arun Jaitley over the Union Budget 2018-19.
"If I was in Jaitley's position, I would have resigned. He is perhaps in the unenviable situation of having to read a budget speech written by others, written in other places," Chidambaram said at an interactive session on India's fiscal reforms at Bharat Chamber of Commerce.
Explaining the context and purpose of any budget, Chidambaram said, "A budget has a context and a budget must have a purpose. The context is set by a number of objective factors, many of them external to India, some of them internal to India. But by and large, these factors are objective factors. The purpose of a budget is subjective. That would depend upon who is in the government, what is the philosophy of that party, and what are the goals of that party for itself and for the country. A budget must reflect both the context and the purpose".
According to Chidambaram, the first context in which the Union Budget was presented was an upswing in the world economy.
"Now what is the context in which budget 2018-19 was presented? The context is a growing world economy. For the first time, we have good news from abroad. Beginning 2016, growth in the world's economy has picked up. 2017, is expected to have recorded a growth of 3.7 percent. 2018 will record a growth of 3.8 or even 3.9 pe rcent. So it is an upswing in the world economy. After many years, in fact after 10 years, after the 2008 financial crisis, this is the first period of two to three years where we see an upswing in the world economy," he said.
The second important element, according to him, was reasonable crude oil prices.
"I still remember a day in July 2008, when crude oil prices were $143 dollars a barrel. Throughout the 10 years of the United Progressive Alliance (UPA) government, the average price of crude oil was never below a $100 dollars a barrel. The National Democratic Alliance (NDA) was very very lucky. Within months of coming to office, crude oil prices dropped to below USD 40 dollars a barrel," he said.
Chidambaram also attributed the growth achieved under the NDA government to the support from the Opposition (Congress).
"The third element of the context is a broad consensus between the ruling party and the opposition party that we must go forward with reform. It was not so in 1991 when Dr. Manmohan Singh was finance minister, there was fierce opposition to reform. It was not so in 1996. It was not so in 2004, and it was not so in 2009 either. The Goods and Services Tax (GST) was stopped until 2014-15. But that is not so today. The opposition, which is represented largely by the Congress is willing to cooperate with the government in pushing through economic reforms," Chidambaram said.
He also questioned the reforms undertaken by the Prime Minister Narendra Modi-led NDA government.
"After 30 years, we have a government with a single party absolute majority in the Lok Sabha. Therefore, any financial sector reform can be pushed through without any difficulty. The Bharatiya Janata Party (BJP) came to office promising bold, radical reforms. They accused the previous government of policy paralysis, appeasement and a number of other sins. So, one hoped that the new government will not commit any sins and will not be paralysed by policymaking. But, what did we get in the last four years?" asked Chidambaram.
The former finance minister concluded by saying that the country will pay the price this year and in the next year, on accounts of the government failing them.
"On the test of fiscal consolidation, the government has failed the people of this country. Instead of consolidating fiscally, this government has slipped badly on fiscal consolidation and we are going to pay the price this year and next year," he concluded.
