The Budget was a letdown like never before

Shri P. Chidambaram said- Good Afternoon! The Finance Minister flattered me by quoting the same couplet from Tirukkural that I had recited in one of my early budget speeches:

Iyattralum, eettalum, kaathalum kaatha Vakuthalum vallathu arasu

She flattered only to deceive. She deceived the people of India, especially the poor, the working class, the migrants, the farmers, the industrial units that had been closed down permanently, and those who had lost their jobs, both regular and informal, and are still looking for jobs.

She deceived those who were listening to her speech, especially the MPs, who had no clue that she had imposed cesses on a large number of products including petroleum and diesel: Rs. 2.50 on petrol per litre and Rs. 4.00 on diesel per litre is a cruel blow to the average citizen, including the farmers. It was a vengeful act against the thousands of farmers who took out the longest tractor rally in history. It was also a cruel blow to federalism because the states do not get a share of the revenue from cesses.

There are other important matters that the FM did not mention in her speech. For example

• She did not mention Defence at all, as if the Chinese had vacated occupied Indian Territory. She did not mention that Defence expenditure in 2021-22 will see no rise. It is flat at Rs. 3,47,088 crores, almost the same as the Rs. 3,43,822 crores in the current year. • The FM gave out a mind-boggling figure of Rs. 223,846 crores for Heath, a breathtaking “rise” from the BE of the current year of Rs. 94,452 crores. As I had warned, it was a conjurer’s trick. She added the one-time cost of vaccination ((Rs. 35,000 crores) and the Finance Commission grants amounting to Rs. 49,214 crores. • She also included the allocations to the Department of Water and Sanitation. Shorn of these add-ons, the allocations for Health were Rs. 72,934 crores in 2020-21 and Rs. 79,602 crores in 2021-22.

Given inflation, the increase is practically nil.

However, on page 10 of the Budget at a Glance, the two numbers are Rs. 82,445 crores and Rs. 74,602 crores — which means a reduction in expenditure from the level in the current year. What kind of additional health infrastructure can be built with this parsimonious allocation?

Hence, on the two non-negotiables that the Congress party had listed on 28th January (at the Press Conference), the government has miserably failed the people of this country.

Fiscal Situation in a Mess

The fiscal numbers show that the fiscal situation is in a mess. The Revenue Deficit (7.5%) and the Fiscal Deficit (9.5%) in the current year have exceeded every prediction, including the Government’s. In 2021-22 the government estimates it will borrow about Rs 3.42 lakh crore less, but nobody is willing to believe the government. The ‘borrowing’ number has been under-stated by assuming that there will be disinvestment revenues of Rs. 1.75 lakh crores. The record of this government on disinvestment is poor. The government has also assumed that tax revenues will increase by 15 per cent — another questionable assumption.

The RD (5.1%) and FD (6.8%) numbers for 2021-22 will send alarm signals to the rest of the world, especially the investors and international lenders. Their apprehensions should have been allayed by laying out a credible fiscal correction path, year-by-year, until the year when the FD will be 3 per cent or less. Nothing of that sort was attempted by the FM. On the contrary, her target was 4.5 per cent by 2025-26. Investors and lenders will bristle.

Total Expenditure

There was a huge expectation that there will be a significant increase in government expenditure to offset sluggish private investment and private consumption. The numbers show that total government expenditure will see a paltry rise from Rs. 34,50,305 crores to Rs. 34,83,236 crores.

Farm Sector

The Farm Sector has been short changed.

• The budget allocation from ‘Agriculture and Allied Activities’ has been reduced from Rs. 1,54,775 crores (BE) to Rs. 1,48,301 crores. (BE). Of total expenditure, the proportion has been reduced from 5.1 per cent to 4.3 per cent. • The budget allocation for Market Intervention Scheme and Price Support Scheme has been slashed from Rs. 2,000 crores to Rs. 1,501 crores. • The budget allocation for PM KisanSamman Nidhi has been reduced from Rs. 75,000 crores to Rs. 65,000 crores.


MSMEs were dismissed in one sentence: an allocation of Rs. 15,700 crores. This is like providing a fistful of oats to a hungry elephant. Nothing was mentioned about providing liberal, low-interest loans, working capital or moratorium. Nothing will be done to revive closed units or to recover the millions of jobs that were lost. The FM seems to be unaware that thousands of MSMEs — especially micro and small units — have been closed permanently.

Public Sector Banks

A meagre sum of Rs. 20,000 crores has been set apart for recapitalization of Public Sector Banks, when the requirement is several times more. At the same time, the government intends to privatize two PSBs. The intent of the government is clear: let the PSBs bleed slowly so that they can all be privatized in the short term. Let us see the reaction of the public to this unconcealed desire to sell-off all public sector banks.

Tax Changes

The tax reliefs and the tweaking of provisions of the tax laws completely by-passed the tax paying working class and the tax paying middle class. Each one of the measures announced by the FM will benefit only the taxpayers among the richer classes.

There was no cut in GST rates. The mess of multiple rates remains.

The saga of protectionism continues. Customs duties have been increased on a number of items in the wrong belief that a stiffer dose of protectionism will help Indian industry.

Election bound states

As expected, the FM has paid special attention to election bound states. She announced large capital outlays for Kerala, Tamil Nadu, West Bengal and Assam. People are not fools; they know that the proposals are only outlays and the actual expenditure will happen only after the schemes are approved and over a period of several years depending upon the pace of implementation.

10-point test

On the 10-point test that we had suggested on 28th January, the Budget fails on Points 1, 2, 3, 4, 6, 7, 8, 9 and 10. It barely passes on Point 5.

A Budget like Never Before!

The FM had promised a Budget “Like never before”. Her mandate was to present an annual statement of revenue and expenditure for 2021-22. What she did, however, was to estimate expenditure over 2 years or 3 years or 4 years or, in one case, over 5 years. She made a reference to the Hon’ble Prime Minister 14 times and to the farmers 11 times. A good 40 minutes before she read para 141 of her speech, Bloomberg put out the Fiscal Deficit and RD numbers for 2020-21! Since the CBI and Enforcement Directorate are under worked, may be this matter should be referred to them.

The Budget was a letdown like never before. ‘It is not a budget like never before, it is a letdown like never before.’ This Budget, like the previous one, will unravel sooner than you think.

Shri Randeep Singh Surjewala said that if this budget of the Modi government is summarized in one word as Chidambaram said, then the name of this budget is - fraudulent budget. The essence of this budget is ‘Fraud’ or ‘Deception’. It is based on deception and as he said about disinvestment, it can be described in two lines as ‘Everything will be sold, and nothing will be left now’. This is the essence of this budget.

This budget betrayed the poor and the jobless people. It betrayed the workers, peasants, small industries and also the MPs who were listening to the budget speech of the Finance Minister. The Finance Minister did not even discuss the things which were necessary for the security and identity of the country. For example, you said about the defence budget related to the national security of the country. Not a single rupee was raised in the defence budget. At a time when China has been occupying our land, not even discussing the defence budget indicates the priority and the weakness of the government of this country.

Health, which is the second most important aspect during the times of Corona, is also based on deception and its figures were given by Shri Chidambaram that if the Finance Commission and Cost of Vaccination are ruled out, a failed attempt of presenting elusive data has been made by including the budget for drinking water and sanitation into the budget for health.

The way the fiscal deficit and the financial deficit have reached about 9.5–10 percent, it is a big alarm for the investors and for the country’s economy. Not raising a single rupee in government expenditure that would have generated both the economy and the employment, this in itself shows the misplaced priority of this government.

The biggest fraud was done with farming. The farming budget was cut down by about 6 percent. The market intervention scheme was reduced from Rs. 2,000 crores to Rs. 1,500 crores and the PM Kisan scheme, which is discussed repeatedly, was cut down by 13 percent. A meagre amount of Rs. 15,700 crores was announced, giving a big blow to small scale industries. It is just like you suggested about the hungry elephant who is given a fistful of grass to satiate its hunger.

An attempt was made to lockout all the government banks, which are the basis of relief for the poor of this country. The working people and the middle-class people were cheated in a big way. They were not relieved at all. Whatever provisions were given in it, they will only help a few rich people.

As you said that this budget has failed at every front, and the essence of this budget is in one word - Fraud, deception! That is what this budget is.

On a question about Bloomberg announcing FD and RD numbers before the FM read the paragraph 141, Shri P. Chidambaram said- Paragraph 141 gives the FD and RD numbers, 40 minutes before she read the paragraph 141 Bloomberg had already put out the numbers, that is the point. How? I don’t know, I am asking you, I ask the question, how?

On another question about the FM announcing various schemes for the election going states like Assam, West Bengal, Shri Chidambaram said- The voters are not fool as I said. They know that these are outlays and these outlays will not be backed by any money in this budget. I challenge the Government to show me one line entry in the expenditure budget providing one rupee for these programmes. It will not be there, because, first of all, they have to give proposals. It has to go through several stages of approval. The scheme must be approved and only then money will be allocated, these are outlays, these are intentions, people know that. I mean, for an example- an over bridge, a road rail over bridges is being built in my constituency for the last 10 years. It must have been announced some time, but these outlays that she has announced, road from X to Y in Tamil Nadu to Kerala. It is not going to happen before the month of May. Not one rupee will be spent before the month of May. There has to be a scheme, there has to be a proposal, it has to be approved by the expenditure finance committee. Money has to be allocated, cabinet has to approve it and then land acquisition will start. I mean, not one rupee will be spent. Let the states know that not one rupee out of the many programs that she has announced will be spent in this year i.e. 2021-22.

On another question about the Defence budget, Shri Chidambaram said- You can always take one figure and give it a twist. If the printed document were available, I can show you the printed document. Now, take for example, the budget at a glance. Look at page 10 of the budget at a glance. Now, come to page 12 of 19. Now, against defence, pension is the first item. Defence- the numbers are revised estimate for 2021 is Rs. 3,43,822 crores. Budget estimates for 2021-22 is Rs. 3,47,088 crores, these are the numbers. That is an increase of Rs. 3,266 crores! Rs. 3,43,822 crores to Rs. 3,47,088 crores….unless these numbers are wrongly printed.

On another question about defence budget, Shri Chidambaram said- I know that, that is not the point. Total defence expenditure is only increasing by Rs. 3,266 crores. They are showing a sharp reduction in pension, how can that happen, I don’t know. We will see it at the end of the year, but total defence expenditure has been increased by only Rs. 3,266 crores. Go back in the last 15 years, has ever defence expenditure been increased by only Rs. 3,266 crores? The Finance Minister should at least print enough copies for MPs. Even if it’s not available to the general public, how do you debate based upon your instrument and the internet, which is dependent upon the Commissioner of Police’s pleasure, isn’t it?

On another question about increase of Petrol and Diesel Cess increase, Shri Chidambaram said- next time you fill your two-wheeler or car with either petrol or diesel, tell yourself, I am not affected, I am a consumer, the Finance Minister has told me that Rs. 2.50 and Rs. 4 per litre increase will not affect me and then fill your tank.

On another question, Shri Chidambaram said- But you should ask her that question when she was addressing a press conference. How does paying Rs. 2.50 per litre or Rs. 4 per litre more means that the consumer will pay less? How does more become less?

On a further question about Petrol and Diesel prices, Shri Chidambaram said- on Petrol and Diesel, no adjustment has been made. On petrol and diesel no change has been made in the basic structure. They have been simply added Rs. 2.50 and Rs. 4 to the price that is prevailing today, which is the highest ever, isn’t? Rs. 95 and 85 on petrol and diesel! Tell that to the farmer who fills his tractor with diesel. Tell that to the average employee, who rides his two-wheeler 25-35km a day and he fills it with diesel or petrol.

On another question about increasing FDI limit in insurance sector, Shri Chidambaram said- See, they have done two things on the insurance sector. One is, they have increased the FDI from 49 to 74 per cent, which is inevitable I suppose, because if you want fresh capital that kind of capital is not available within the country, but, I remember the day in 1997, when the BJP voted against the bill introduced by the Government of the day allowing 20 per cent FDI in insurance. 20 per cent FDI in insurance - they voted down the bill on that ground and Prime Minister Gujral had to withdraw the bill at that time. Today, they have done a full circle and they are allowing 74 per cent FDI in insurance, which is okay in terms of capital, but they are also going to privatize one of the four nationalized insurance companies. I would like to see what the reaction of the people of this country is! I would like to see what the reaction of the employees of the insurance companies is!

On another question about infrastructure, Shri Chidambaram said- Infrastructure, yes, if spending takes place on roads and ports, big businesses will benefit. They will get contracts; there will be demand for steel. There will be demand for electricity, but that is good. We are not saying that you should not spend on infrastructure. You should spend on infrastructure, we welcome spending on infrastructure, but at the same time, you must understand that after 8 quarters of slow down and 4 quarters of a pandemic year, after 12 quarters, the kind of emphasis you give to infrastructure, equal emphasis should have been given to the poor, the working class, the migrant, the agricultural labour, the daily workers. That is completely missing in this budget! This budget may have had a mind behind it, but there is certainly no heart behind it.

On another question that it is being said by the government that we have announced to implement the report of the Swaminathan Commission? Shri Surjewala said that either the Finance Minister and the Government are the liars or their affidavits in the Supreme Court are. If you look at the affidavit given by the Modi government in the Supreme Court, if you read it, they say that out of about 135 Swaminathan Commission recommendations, if I remember correctly, more than 85 recommendations were implemented by the UPA Government. And what is the demand of the farmers - abolish the three black laws and keep intact the Minimum Support Price i.e. MSP, Government procurement, Public procurement and public distribution system, ration distribution system. But this government is egoistic and does not see, hear or think anything. Now they will have to give up their stubbornness and instead of paying lip-service, they should actually start comforting the farmers. Only then will the matter be able to move forward.

On another question about Corona vaccination and Health outlay, Shri Chidambaram said- See, whatever is required to be spent on the vaccination, should be spent. If it will cost eventually more than Rs. 35,000 crores, Congress Party believes that money must be spent. We have no quarrel with the Government footing the bill for vaccination. In fact, our case is that everybody should get the vaccine free of cost. If a very small number wants to buy the vaccine that is a different matter, but, the worst majority, the overwhelming majority of the people of this country must get the vaccine free, it is the Congress Party’s position. My accusation is, you include that one-time expenditure on vaccinations and then say my health infrastructure, health expenditure budget is going up. You have to compare apples and apples, oranges and oranges; similarly, you can’t plug in the Finance Commissions grants and then show just number of two lakh twenty-three. Look at page 37 for the Finance Minister speech, take out these add-ons and the comparison is what I told you, a very small increase in Health expenditure, which is there in my statement.

On another question about arrest of journalist Mandeep Punia by Delhi Police & registration of cases against other senior journalists, Shri Chidambaram said- Who knows, for asking the question- You and for answering the question- I, may be arrested tomorrow. Any criticism of the police is sedition. A tweet is anti-national, and FIRs will be filed in five states. These are condemnable actions. It shows a Government living in mortal fear.

On a further question about suspension of Twitter handles & action against journalists, Shri Chidambaram said- We condemn it, we condemn these anti-farmer, anti-journalists, anti- media actions taken by the Government through the police, we condemn it in the strongest terms. We condemn the FIRs against Shri Shashi Tharoor, Rajdeep Sardesai, Mrinal Pande and what is this country coming to? In another country, 4,400 supporters of the opposition leaders have been arrested. What is the difference between that country and India?

On another question about expenditure on MSP, Shri Chidambaram said- Total expenditure on MSP will increase year after year after year, because the MSP itself is being increased and the procurement is steady. Ask me this question 3 years from later, the number will be more than this year’s number. Ask this question 7 years later, the number will be more than the number 3 years, I mean, these are... What is the first budget presented by R.K. Shanmukham Chetty? The first budget was about Rs. 197 crores and he apologized to the country for a fiscal deficit about Rs. 23 crores or something. So down the line, every number will increase. What did the Finance Minister make a big song and dance about the number increasing, 3 years down the line, the number will be more, 5 years down the line and the numbers will be even more.

In response to a question regarding the increase in SENSEX, Shri Surjewala said that there is a difference between the figures and the reality. The poor peasants of this country, the poor scheduled castes and backward classes, the employed and middle-class people, the people running small and medium industries are the real index of this country’s budget. They will decide whether the budget is right or wrong and as Chidambaram Ji said, the essence of this budget is in one simple word, it is a fraudulent budget.

Shri Chidambaram added that take the economic survey, there is whole chapter devoted to the stock market numbers. That is the answer to your question. The stock market rises and falls for very different consideration. What has that got to do with the working class of this country, with the poor of this country? There is a whole chapter in the economic survey, which is a complete answer to your question.

On another question about Congress Party’s stand on privatizing public sector banks, Shri Chidambaram said- No, who said so? No, not at all. In fact, we say public sector banks must be strengthened, at the same time, we have no objection to private sector banks also growing and foreign banks also having a presence. We must have a multi-sector banking industry. Public sector banks, private sector banks and foreign banks in competition with each other. What this Government is attempting to do is to completely sell off the public sector banks, so that there will be only private sector banks and foreign banks. There will be no role for public sector banks.

Now, if there are no public sector banks, how will the Government or the next Finance Minister, whoever the Finance Minister is, have the opportunity to announce that agricultural lending will increase to 16 lakh crores? If there are no public sector banks, how will you say that we will give education loans? If there is no public sector bank, how will you say that we will have a RIDF fund? The point is, public sector banks, whatever their strengths and weaknesses, are apivot around which, a number of programmes are evolved and implemented in this country.

If there are weaknesses in the public sector banks, strengthen the banks, remove the weaknesses. The answer is not wholesale privatization of public sector banks. They have started with two, and I don’t know they have got, I think, two more budgets, by the time they finish the term, they may have sold off all public sector banks. Let us see what the reaction of the people of this country to selling public sector banks will be! Selling a public sector bank is very different from allowing a private sector bank to function and grow, both can be there.

The example we have got SAIL, a steel company, we have got private steel companies, both can compete with each other but, what if tomorrow, the Government proposes that Steel Authority of India will be sold to the Tata’s or to the Jindal’s, that is the question. Congress Party’s position is very clear, we are not against the private sector, but we want the public sector and the private sector, in at least the key sectors to compete against each other and banking is a key sector.