Highlights of the press briefing of Shri P. Chidambaram, MP & former Finance Minister and Ms. Supriya Shrinate, Chairperson, Social-Media (Communication Deptt.) & Spokesperson, AICC address the media at AICC Hdqrs on July 23, 2024.

Shri P. Chidambaram said- You have listened to the Budget Speech of the Hon’ble Finance Minister as I did. The Budget documents were uploaded only about 3 hours ago, and it will take time to read and analyze the documents. On behalf of the Congress Party, I shall make a few observations and comments on the Budget for 2024-25, and my colleague Ms. Supriya Shrinate here will add more observations.

I have already tweeted that I am happy that the Hon’ble Finance Minister had an opportunity to read the Congress’ Manifesto after the LS 2024 elections. She has virtually adopted the ideas underlying our proposals on Employment-linked Incentive (ELI) scheme, the Apprenticeship Scheme with an allowance to the Apprentice, and on the abolition of the Angel Tax. I welcome her to borrow our ideas and I wish she had borrowed or adopted many more ideas from the Congress’ Manifesto.

This morning, I had created a template to comment on the Budget. In the first part of this statement, I have set out our expectations of the Budget. In the second part, I have noted the relevant statement in the Budget speech — whether there was a response in the Budget and, if so, what was the response. You will notice that on some matters there was no response at all.

1. Unemployment is the biggest challenge facing the country. For a few dozen vacancies or a few thousand posts, millions of candidates apply and write an examination or appear for an Interview. According to CMIE, the All-India unemployment rate is 9.2 per cent. The response of the government is too little and will have only little impact on the grave unemployment situation. The claim that the schemes announced by the FM will benefit 290 lakh persons is highly exaggerated.

She has given 3 numbers- 210 lakh, 30 lakh and 50 lakhs. Each one of the numbers is highly exaggerated.

2. Inflation is the other major challenge. WPI inflation is 3.4 per cent, CPI inflation is 5.1 per cent, and food inflation is 9.4 per cent. The Economic Survey (ES) has stated that the deflator for manufacturing has been assumed as 1.7 per cent- roughly half of the WPI inflation. The deflator(s) assumed by the government have been severely criticized by several knowledgeable economists. Unless the puzzle of the ‘deflator’ is resolved, it is not possible to unquestionably accept the claimed GDP growth rate of 8.2 per cent in 2023-24. Besides, the GDP growth rate is no answer to the huge challenge of inflation.

The Economic Survey dismissed the issue of inflation in a few short sentences. The FM dismissed it in ten words in para 3 of her speech. We deplore the casual attitude of the government. And nothing in the Budget Speech gives us the confidence that the government will seriously tackle the issue of inflation.

3. Education, especially school education, is widespread but of poor quality. Nearly one-half of the children are unable to read or write a simple text in any language and are numerically challenged. They are not fit for any skilled job. The central government must drive — and help — the states address these fundamental problems. The other issue concerning education is NEET and the scandal-ridden National Testing Agency. Several states have demanded that NEET should be scrapped and the states should be free to adopt their own methods of selecting candidates to various courses in medical education.

The budget has no response. I did not hear the finance minister refer to school education. Yet, the government is stubbornly clinging to NEET which, you will recall, NEET is an examination at the end of school education. Interestingly, against BE of Rs. 1,16,417 crores on Education, the government spent only Rs. 1,08,878 crores.

4. Healthcare is better but not sufficient. Public healthcare is growing quantitatively but not in quality. Out of pocket expenditure is still about 47 per cent of total health expenditure. There is a grave shortage of doctors, nurses, medical technicians, and diagnostic equipment and machines. The central government’s expenditure on healthcare has declined to 0.28 per cent as a proportion of GDP and to 1.9 per cent as a proportion of total expenditure until the last year.

In the budget speech there is no response. I did not hear the finance minister speak about the grave deficiencies in public healthcare. Moreover, against a BE of Rs. 88,956 crores, the government spent only Rs. 79,221 crores.

5. Wages have stagnated in the last 6 years after adjusting for inflation. Between 2017-18 and 2022-23, the average monthly earnings of workers were: self-employed/worker — Rs. 12,800 per month; casual/daily labour — Rs. 7,400 per month; and regular wage/ labour — Rs. 19,750 per month. We demand that the minimum wage should be fixed at Rs. 400 per day for every kind of employment.

While some relief has been given to the tax-paying citizen in the 0-20 per cent tax bracket, no relief — I repeat, no relief at all — has been given to the poorer sections of the people, especially those who are non-tax paying wage labourers and casual/daily labourers. The government seems to be blissfully ignorant of its own statistics that wages have stagnated in the last six years while inflation is raging. And such workers are not paid a decent minimum wage.

6. Farmers are mobilising to protest. One of their demands is that the MSP announced for an agricultural produce must be backed by a legal guarantee. The Congress had in its Manifesto promised to provide such a guarantee.

No response in the budget speech. Let’s wait to hear from the farmers.

7. Owing to massive unemployment, many students who had availed of Educational Loans have defaulted in payment of interest and/or repayment of the principal. There is a demand that the government should write off the unpaid balance of educational loans as a one-time measure of relief.

Response: the government has, unusually, spoken about giving education loans. They did not say that in the previous budget speeches, they are talking about giving education loans, But what about the huge burden of unpaid education loans? Students and their families were hoping that, given the acute unemployment situation, the government would give relief to the current borrowers. They must be bitter and disappointed.

8. Several political parties, including the Congress, have demanded that the ill-conceived and discriminatory Agnipath scheme should be scrapped forthwith and the Armed Forces should resume the time-honoured methods of recruitment.

There is no response. The agitation to scrap the Agnipath scheme will continue.

So, I have listed major issues of our concern. I have not got into micro-economic analysis or sort of analysing the numbers, I am talking about the common citizen of India, the youth, the students, the farmers, the labourers, they have demands and those demands have been articulated by every political party in the recent elections. The Congress, those among the first party to carefully articulate those demands. I am afraid the first budget of the new government has left us very-very disappointed.

On another question that it feels like that they are giving more incentives perhaps to the new tax regime, to force people to move to it, if you were the Finance Minister today, would you have kept two tax regime, Shri P. Chidambaram said- See, two tax regime is a bad idea. If you want to introduce a new tax regime, you should have announced it well in advance and say, from this financial year, everybody has to move to a new tax regime. A two-tax regime is unacceptable and a bad idea. It will lead to tax arbitration and people will be confused, whether they should remain in the old regime or switch over to the new regime. I am told, it’s even more complicated that if you can switch once, you can switch back, but if you switch a second time, you can’t switch back, I mean, I am thoroughly confused. I don’t think they have given great incentives to switch over to the new tax regime in this budget; they did it in the earlier budgets. This time, they have only reduced the tax effect by enlarging the slabs, but that will benefit only people in the 0 to 20% tax bracket. I don’t think it benefits anyone above the 20% tax bracket. The answer to your question is, I do not and I would not support a two-tax regime.Onthe other question about long term capital gains, as I speak, there is total confusion. They have removed the second proviso to section 48, for the third proviso refers to the second proviso.

So, unless you go through the fine print of the finance bill and read it carefully, and analyze it carefully, I can’t come to any conclusion, but by and large the commentators on television seem to think, thatis, as far as real estate is concerned, the indexation benefit has been removed and any sale after 23rd of July, 2024, will be without the benefit in taxation. Now, a large number of people who have bought houses and the value is appreciated, will certainly suffer, but as I said, I would reserve my judgment on the effect of the tax changes.

On a question that what will be the effect of indexation being removed from long-term capital gain tax on real estate and will it be seen on inheritance tax? Smt. Supriya said that as Chidambaram ji said that there is a lot of confusion on LTCG. The government has removed the second proviso, but if it refers to the third proviso and second proviso, then it will have to be discussed a lot. But what is understood immediately is that indexation has been removed, people believe this.

There is a debate going on, on social media and TV and if indexation is removed, then if someone has an old house and sells it today, then he will have a huge tax liability because you are not allowing indexation and this is a big blow to the middle class. Earlier, if you bought a house for ten lakhs, and if you sold it for 50 lakhs, then you would have to pay tax on the index value minus the price at which you were selling it. But today, you will have to pay tax on the price at which you are selling it for and the value at which it was at that time. I think this will also affect black money and cash transactions that take place while buying a house. But we want to limit our comment on this because after reading both those provisions, we will give you a detailed comment.

On another question about legal guarantee of MSP, Shri P. Chidambaram said- Please understand, ten years ago, there was no clamor for a legal guarantee. So, why don’t you ask Finance Minister, if they were alive 20 years ago, why did you not give a legal guarantee? Every response has to be contextual. Today, there is a clamor for a legal guarantee. The government of the day must respond to that demand, either it should say, we accept the demand or we do not accept the demand, there is no point on asking, why did you not give a legal guarantee ten years ago? My answer is simple, ten years ago there was no demand, there was no widespread demand for a legal guarantee. Ten years later there will be another kind of demand. The government of that day will have to respond to that demand.

On another question, Shri P. Chidambaram said- Well, we think it’s feasible; we have put it on our Manifesto. It’s possible to give a legal guarantee for the MSP.

On another question that Andhra Pradesh has been given a special package, Bihar has been given incentives, do you think that opposition-ruled states have got a raw deal in this budget, Shri P. Chidambaram said- Simple, if those announcements have not been made Mr. Naidu and Mr. Kumar would withdraw support. These are what we call lifelines; Mr. Modi is saving the life of this government, unless you want his government to come to an end,you will appreciate him; he is now, bending down to Mr. Naidu and Mr. Kumar and says, I am saving my life, you have saved my life. So, please take whatever you want and if they make more demands, he will concede that demand.

On another question that earlier the Congress Party have made several demands regarding the railway safety but in this budget there is no such kind of announcements or something, which has been promised by the government, what is your response to that, Shri P. Chidambaram said- There are many-many demands relating to the railway, if there have been a separate railway budget, and there was a railway minister presenting a budget, these matters would have come up prominently. The finance minister has spent, has devoted a few paragraphs to talk about new railway projects, but there is no mention about safety of railway. Railway safety is at its lowest point, there is practically a railway accident every month and I think in the last two, three, four months, there has been one accident every month.

There is no mention of Kavach, there is no mention of the kind of expenditure that has been devoted to railway safety. There is no talk about the coaches and the bogies for the poorer classes being reduced; there is no talk about increasing railway fares, poor people are being pushed to buy higher price tickets for so-called ‘Premium trains.’ I think there is, a lot of issues about the railways, we have demanded a separate discussion on railways, but that was denied in the last occasion. Let us see, if in this budget session, the government will agree to a full-fledged discussion on railway, either in the demand for grants for railways or as a separate discussion.