CHENNAI: Former Union Finance Minister P Chidambaram on Friday flayed the Centre for making a “terrible and cardinal mistake” by not cutting indirect tax that was key to revival of investment and demand.
Delivering a lecture on the Union Budget-2017 organised at the Loyola Institute of Business Administration (LIBA) here, he said, “To revive investment and demand is to cut indirect taxes across the board. You cut excise tax, customs duty and service tax. But the government made a terrible and cardinal mistake by not cutting indirect tax and by cutting direct tax.”
Explaining the advantages of having a slash on the indirect tax, Chidambaram hoped it would result in costs coming down giving a boost to demand.
Terming the November 8 demonetisation as an “ill-conceived” decision, a surgical strike on money, he said it had made people more “impoverished” and the Budget offered nothing to the worst affected sections.
Criticising the Union Finance Minister Arun Jaitley on the issue of restricting fiscal deficit by 3 per cent of the GDP, Chidambaram said the combined fiscal deficit of all States is under 3 per cent but the Centre could not do.
“The Finance Ministers and the secretaries of all States are prudent whereas the Union Finance Minister and the Secretary are playing truant,” he ridiculed.
Crying foul over the failure of the government to come out with measures to trigger investments, he said that according to the Gross Fixed Capital Formation, the investment rate had gradually dropped from 4.9 per cent in 2014-15, 3.9 per cent in 2015-16 to - 0.2 per cent in 2016-17. The credit growth too hit a 40-year-low of 5.1 per cent.
Arun Jaitley’s Union budget does not have any substantial measures to encourage employment generation.
The Prime Minister had promised to create two crore jobs but failed to do so as the figures indicate. In the last 32 months, only 1.50 crore jobes were created during 2015-16 and July-September in 2016-17 accounted for just 77,000 jobs, of which 50,000 are in the government sector, Chidambaram noted.
He also expressed concern over the poor allocation, Rs 77,000 crore for defence capital expenditure and Rs 75,000 crore for sectors including social welfare.
Strongly affirming that the growth rate would be flat on 6.5 per cent for 2017-18 and 2018-19, the Congress think-tank said the Budget had left disappointment on several counts.
Chidambaram said, he was disappointed because huge opportunities were wasted and that new strategies were not devised to generate employment. He noted that nothing was done to address acute stress in farm sector, with even 200 people ending their lives in the State.