Points made by Shri M. Venkaiah Naidu on the union budget 2013-14 in Rajya Sabha

21-03-2013
Press Release

POINTS MADE BY SHRI M. VENKAIAH NAIDU, MP WHILE INITIATING THE DISCUSSION ON THE UNION BUDGET 2013-14 IN RAJYA SABHA ON 18/03/2013

Mr. Naidu strongly protested against the absence of Finance Minister, Shri P. Chidambaram, in the house at the time of initiation of the discussion.  He began his speech under protest and made the following points:-

  • What are the highlights of the budget?

  • It is uninspiring and Deceptive.
  • All-round disappointment.  Every section is equally unhappy.
  • Chidambaram’s policy seems to be injustice for all and appeasement to none.
  • Broken promises and token allocations
  • Deficit…Deficit…..Deficit everywhere. No solution anywhere.
  • Words for the poor and deeds for the rich
  • Take away from the poor and give away to the rich
  • No big and bold ideas
  • One FM proposes – the other FM disposes
  • Failed to address major challenges
  • Silent on violent corruption and black money
  • The devil is in details.

  • The budget failed to address the two main issues – One is corruption which is eating into the resources of the country and the other is inflation which is breaking the backbone of the poor and middle class.

  • Slow growth rate, growing unemployment, agriculture crisis and presence of black money within the country and stashed abroad.  FM couldn’t address any of these challenges.

  • There is no mention about corruption in the entire budget speech.

  • The last budget had returned the country to pre-reforms growth rate of 5%.  This budget also has the potential of carrying forward the same.
  • It is not clear how the fiscal deficit of 4.8% will be bridged.  There are only two ways – to print new notes or to borrow.  The first will increase inflation and the other will lead to insolvency.
  • FM criticized his predecessor when he says “in the Budget for 2012-13, the estimate of plan expenditure was too ambitious and the estimate of non-plan expenditure was too conservative”.  There is no continuity in the government.
  • FM should have compared his budget estimates with that of previous years’ budget estimates. Instead he started comparing his budget estimates with previous year’s revised estimates. This is nothing but deception.  Credibility of the budget system is lost.
  • The Central Plan outlay BE for next year (2013-14) is 5,55,322 crore.  It was 5,21,025 for the current year.  RE for the current year is 4,29,187 crore.  If you compare RE for the current year with BE of next year, it is up nearly 30%!  If you compare Budget Estimates for the current and the next financial years, the increase is a mere 34,297 crore i.e., 6.58% which is lower than the rate of inflation and hence a fall in real terms.  It is the same story with education, health and so on.  In most cases, the increase in terms of BEs barely covers inflation or is even less.
  • The gloomy situation is the making of the UPA only.  Earlier, our PM and FM were assuring us that “India will not be affected by the slow down and our fundamentals are strong.” And FM himself said in a HT Conclave that ‘India well insulated from US financial crisis, no cause for alarm’.  What went wrong then?
  • Even the IMF says India’s problems are domestic and largely of its own making.  It reasoned that the slowdown is mainly led by falling infrastructure and corporate investment.
  • Earlier, the UPA blamed the Left for creating road blocks.  Now that the Left has left the UPA, what are the right things this government has done to set right the economy.
  • After completely denying many a times about any slowdown, the government is now using global slow down as an alibi to cover up the consequences of its own mismanagement of economy.
  • For the first time, the external debt is more than forex reserves.
  • Mismanagement of economy and policy paralysis have led to the present situation.
  • Even a soft spoken and noted industrialist, Sri Kumar Mangalam Birla, openly complained of the country’s inconsistency and lack of transparency in business policies.
  • Even in the face of adverse external environment, 48 countries grew faster than India in the year 2012. (27 grew faster than 7%, 10 grew faster than 9%). All that required is prudent economic management, good governance and revival of domestic policies.

  • May I remind you that the growth rate target for the present year was 7.6% but achieved was only 5%.  Even you couldn’t reach your own mid-year review target of 5.7 – 5.9%!  Going by your governance and performance records, it is very hard to achieve the projected growth rate of 6.1% to 6.7% next fiscal.

  • Morgan Stanley and HSBC downgraded India’s growth rate to 6% for 2013-14.  Earlier their estimate was 6.2%.

You had inherited a robust economy

  • UPA assumed office with the economy growing at 8.1%, the fastest in 14 years.  In 2012-13 the rate fell to 5%, the slowest and the lowest in the decade.
  • The present FM, while presenting UPA’s first budget in July 2004, himself accepted that the “economic fundamentals appear strong and the balance of payments is robust.” Who brought nation’s economy to such a pass?
  • Even the initial higher growth under the UPA was because of the good work done, foundations laid, schemes initiated by Shri Vajpayee led NDA.
  • UPA government has miserably failed to build on BJP’s growth initiatives and destroyed the country’s reputation and credibility with policy paralysis and corruption scandals.

Inflation – The UPA has given up ‘Aam Aadmi’

  • Inflation was targeted to be around 6.5%, but it remained above 7% for the most part of the year.  Food inflation February figure is 10.91%.

  • The prices of almost everything are skyrocketing – be it electricity, water, gas, diesel, petrol, pulses, wheat, rice etc.  This budget offers nothing for home makers.

  • Price rise - in case of LPG during February price rise was 26.21% as against 4.28% in January.  In case of petrol price rise was 6.25% as compared to 3.77% in January.

  • Food and primary articles have shown higher annual price rise of 11.38% and 9.70% respectively.  Common man’s food items have all become dearer.  Onions went up by 154.33%, rice by 18.84%, wheat by 21.63%, cereals by 19.19%, fruits by 8.93% and milk by 4.57%.

  • Vegetables compared to last year has risen by 26%; sugar by 13%, edible oils by 15%, cereals by 17.4%. The proposals made by the Railway Minister will further escalate inflation because he has declared that every six months there will be revision of tariff linking transport charges with oil prices.  Food grains, cooking gas, cement, coal, iron & steel – all products will go up.

  • Prices of petroleum products were increased before and after the budget; in all 30 times, Also, fertilizer prices have gone up 14 times. Then what is the sanctity of budget?

Fiscal Deficit

  • Deficit ….. Deficit ……deficits everywhere.  Fiscal deficit, revenue deficit, current account deficit and above all trust deficit?

  • The Fiscal and Current Account Deficits are almost as bad as 1991.  The rate of growth is lowest in the decade.  Current Account Deficit has risen to unacceptable level of 5.4% of the GDP.
  • Fiscal Deficit was 2.5% in 2007-08 and now at 5.2% and you hope it to be brought down to 4.8% next year.  Where is the roadmap?

  • The rupee has fallen by more than 20% in the last one year.
  • The FM was able to achieve the 5.2% fiscal deficit number largely because of the massive cut on spending and deferment of payments on fertilizer and other subsidies and thus saved Rs.91,838 crore from the budgeted plan expenditure of Rs.5,21,025 crore for the current fiscal. FM reduced budget allocations and expenditure by almost 18%, the steepest cut in expenditure

Words for the poor and Deeds for the rich

Withdrawal of subsidies – The poor and farmers are doomed

  • In the current financial year, the total subsidy is expected to rise to Rs.2.47 lakh crore against the budgetary target of Rs.1.79 lakh crore.  Much of the increases in outlays will be absorbed by the likely increase in prices, particularly subsidies.
  • What happened to your aam aadmi slogan?  Your policy is words for the poor the deeds for the rich.
  • But in contrast, the additional giveaways from 2008-09 corporate sectors have caused a tax expenditure of Rs. 7.5 lakh crore between 2009-10 to 2013-14. The giveaways have risen from Rs.2.85 lakh crores in 2007-08 to average Rs.5 lakh crore every year, totaling Rs.25 lakh crore for the last 5 years. Even the Economic Survey mentions about this.

  • In 2012-13 alone, the aggregate revenue forgone from Central taxes on account of tax concessions to the rich and the corporate sector are projected to be Rs.5,73,627 crore. If one adds the Rs.5,33,583 crore of forgone tax revenue in 2011-12, the total is a whopping Rs.11,07,210 crore. According to a study, revenue foregone since 2005-06 under Corporate Income tax, Excise & Customs is Rs.31,11,169 crores.

  • NPAs under the CORPORATE CATEGORY as on 31.12.12 constitute 53.68% amounting to nearly 1,00,000 crore. Total Income Tax arrears as on 31.12.12 is Rs.4,18,696 crores and the government is not able to recover this huge sum for reasons best known to them.

Allocations

Lowest Defence Budget

  • Lowest Defence Budget increase in over 30 years. The allocation of the Defence has been reduced.  This year China has increased its defence budget by 20%.
  • India remains the world’s biggest importer of weapons during 2008-2012.  India’s imports were 109% higher than that of China. We need to develop our weapons indigenously.  How do you do that with reduced allocations?

Meagre allocations

Women’s safety

  • Allocation of Rs.1,000 core fund for women’s safety and welfare is far from adequate in covering the rehabilitation and medical costs of survivors of gender violence.  Where is the money for speedy justice, fast track courts, filling up of vacancies in judiciary?

  • Justice Verma committee suggested provision of adequate safety measures and amenities in respect of women.  With a mere 1,000 crores under the so-called Nirbhaya Fund, how this is possible?

Skill development

  • The UPA government has allocated a mere Rs.1,000 crore for skill development.  Contrast this with the Rs.800 crore that just one State, Gujarat, has allocated for skill development.  Madhya Pradesh allocated 476 crores.  If one State gives 800 crores, then what is 1000 crores for the entire country.  You boast it as a major initiative for growth.

Disabled persons

  • 12th Plan promised higher allocations for the disabled persons.  The outlay for the Inclusive Education for the Disabled at the secondary stage has been reduced from Rs.63 crore in 2012-13 to Rs.45 crore in this budget.  See your concern for the poor and disabled.

One Women’s Bank

  • How that one bank in one corner of the country is going to help or empower the women-entrepreneurs?  Should we understand that the other banks are absolved of their responsibilities towards women?
  • Instead of creating one bank for the entire country, you could have taken steps to incorporating women within the existing public and private banking systems.  A nation-wide bank is less effective than enhancing the existing banking services to ensure ease of access to women.

Agriculture

  • Agriculture is basic culture of the country.  In 1950-51, agriculture used to contribute 53% of GDP now it is at 14%.  From 19% in 2004-05, it dropped to 18.3% in 2005-06 and to 17.4% in 2006-07.  It further dropped to 16.8% in 2007-08, 15.8% in 2008-09 before reaching 14% in 2011-12.

From 19 percent in 2004-05, the percentage share of agriculture & allied sectors in GDP dropped to 18.3 percent in 2005-06 and then to 17.4 percent in 2006-07. Reuters

  • Why mum on Swaminathan Commission’s recommendations?  The key recommendation that MSP should be cost of production + 50% has not been implemented so far.

Mismatch between MSP & cost of production

  • The latest calculation of Commission for Agricultural Costs & Prices (CACP) is testimony to this reducing margin for the farmers. Input costs like cost of seeds, pesticides, fertilizer, diesel, power, water have all gone up.  According to Haryana government, the cost of producing one quintal of paddy in the State is Rs.1,566.  The government buys paddy at 1,280 per quintal.  So, the government does not even pay the cost of production, let alone profits, to the farmers.

  • It is true that MSPs have been hiked.  What you forgot is the fact that cost of production has also gone up by 300% thereby even surpassing hiked MSPs.
  • There has been abnormal and manifold rise in the prices of agriculture inputs like fertilizers, pesticides, diesel and labour wages.
  • Between January 2008 and January 2012, prices of cruicial farm inputs went up sharply, impacting cost of cultivation across States.  Yet, the government announced MSPs are lower than the cost of Production of the most kharif crops.
  1.  
    1. Fertiliers                                       300%
    2. Farm power                                  20%
    3. Lubricants                                    62%
    4. Fodder                                          60%
    5. Diesel (pumpsets)                       44%
    6. Diesel (tractors)                          34%
  • What happened to Hooda Committee’s recommendation of Rs.10,000/- compensation to farmer for loss of crops? 

  • A massive loan waiver scam has been unearthed by C&AG. More than 34 lakh farmers who were eligible for loan waiver were not benefited on account of the faulty implementation of the scheme.  More than 24 lakh ineligible farmers became beneficiaries. 

  • Farm suicides have continued unabated during your regime.  19000 farmers committed suicides in 2011 and 14000 in 2012.  This budget fails to address any of these farmers’ problems.  Now we are getting reports from AP that the distress farmers are selling their organs to come out of agriculture debt trap.

  • Look at the BJP-ruled states.  Karnataka came with a separate ‘agri budget’ which was extremely innovative.  Madhya Pradesh showed a double digit agri-growth rate at 18.2%, the highest in the country.  Gujarat is growing at 10.8%.

  • What are the steps taken to ensure lower interest rates on agriculture credit?  Swaminathan Committee recommended credit to be given at 4%. Some of the BJP ruled states are giving at the rate of 0% interest, and some at 1% or 2%. Then the States with their limited resources can provide loans at lower interest rates, why not the Centre?  This speaks of your attitude towards agriculture and welfare of farmers.

  • Contrary to PM claims, only 1/4th of the farmers are getting agriculture credit from the banks forcing the remaining to borrow from private lenders, according to the Rangarajan Committee.

Industry & Investment Climate

  • Government should know why the investments have fallen.  Land acquisition, rehabilitation and clearances are a few of the other main reasons.  The coal linkage problem is also affecting Rs. 5 lakh crore investment proposals.

  • Stable tax policy is essential to encourage investments in the businesses.  However, investors have lost confidence due to repetitive retrospective amendments.
  • As per the World Bank and International Finance Corportion’s Doing Business 2013 data, India is ranked a lowly 132 out of the 185 countries analyzed.  In the category of “Paying Taxes”, India’s ranking is further low, at 152 which has worsened from 149 in the year 2012.  This clearly indicates that India is loosing out on its competitiveness vis-à-vis other countries.

Infrastructure

  • Infrastructure has received mere lip service.  The problem in infrastructure is of clearances, administrative bottlenecks and interest rates.

  • 37 projects sanctioned under BoT in the last three years are yet to take off.  Nobody is coming forward due to lack of resources, banks and financial institutions are not providing adequate loans.  Last year, there were no takers for NHAI’s 11 projects for expansion of 4-lanes to 6-lanes.

  • During the NDA regime, construction of highways achieved a level of 11 kms. per day.  Today it stands at an abysmal low of just 3 kms. per day despite their tall promise of building 22 kms. every day.

  • Power generation which was targeted at 78,000 MW in 11th plan actually achieved only 54,000 MW.  The performance of other sectors of infrastructure like rail, ports, oil and gas is also lack luster.

  • With all round failure to address the power sector’s pervasive and crippling problems, the UPA government is succeeding in pushing the country to kerosene lantern days again. In Andhra Pradesh, from 6.00 am to 6.00 pm there will be no power!  Andhra Pradesh has now become Andhera Pradesh.

Black money

  • When UPA-2 came to power in 2009 PM promised to bring back black money in 100 days.  Many such 100 days have gone by.  Nothing happened.

  • You are silent even on your government’s ‘White Paper on Black money’.  Your predecessor promised a more effective policy response.  Where is that more effective policy response?

Employment

  • Economic Survey says India will face a shortage of about 17 million non-agricultural jobs by 2020 if labour reforms and high-growth policies are not taken up immediately.
  • The BJP led NDA could create 12 million jobs in its tenure, the UPA could create only 2 million.  What the UPA so far offered the country is “jobless growth”.

  • 17 lakh applications for 1500 posts in SBI!.  2 lakh applications for 100 posts in DRDO!.  Today the headlines in Economic Times is disturbing - 13 IIMs unlucky for placements.  Even in IIMs that is the situation.

  • Economic Survey warns that by 2020 India could be faced with upto 16.7 million ‘missing jobs’.

Flagship programmes

  • Flagship programmes are flagging.
  • MNREGA, originally provided for Rs.40,000 cores,  In the past two years, this amount has been reduced to Rs.33,000 crores.
  • Pradhan Mantri Gram Sadak Yojana (PMGSY) got 24,000 core in the last budget but could spend only Rs.10,000 crore.
  • The 26 schemes covered under the Under Direct Benefit Transfer (DBT) scheme, have a budgetary allocation of Rs.5595 crores.  Till today the actual expenditure is only Rs.5.38 crore.  This scheme according to UPA is a game-changer of Indian politics,  finally it will end as regime changer.
  • Over 28,78,41,507 Aadhaar numbers have been generated as on February 28, 2013. That means less than 25% of the population have been issued Aadhaar cards. Aadhar is not going to enhance your Janadhar.  It will make you Niradhar.
  • The estimated requirement of food subsidy in the government’s National Food Security Bill was Rs.1,17,000 crore for distribution of 7 kg. of foodgrains per person per month.  The Parliamentary Standing Committee projected a subsidy demand of Rs.1,12,000 crore for the distribution of 5 kg food grains per person per month.  They suggested a coverage of 67 per cent of the population.

  • Rajiv Gandhi Drinking Water Mission : Allocation in 2012 was Rs.10,500 crores.  11,000 crores in 2013.  Token increase.

  • Rajeev Gandhi Grameen Vidyudeekaran Yojana : Allocation for 2012 was 4,900.  For 2013 it is 4,500 crore.  Reduced.
  • Grameen Telephony : Allocation for 2012 was 3,000 crore and it is the same in FY 13.  No change.
  • Rural Irrigation Project : Allocation for 2012 was 1,081 crore.  2013 it is 1,207 crore.  A meager hike only.
  • Either the allocations were reduced or remained stagnant.  Even if hiked, they are nominal.
  • UPA-II has done worse than UPA-I in social sector spending

Average Annual Growth in Budget Allocations

 

Education

Health

Women & Child Development

UPA 1

(2004-10)

25.7%

19.0%

29.8%

UPA 2

(2010-13)

21.7%

16.2%

25.4%

Source : Budget at a glance, Ministry of Finance 2004-2013

Sir, this budget is totally disappointing, lacks direction, does not inspire confidence and does not add to growth.  I conclude by saying that Mr. Chidambaram seems to have followed BJP’s policy, of course, in reverse – we say ‘appeasement of none and justice for all’ and his motto seems to be ‘injustice for all and appeasement of none’.

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