Jaitley trashes Chidambaram's interim budget, calls it 'repackaged'

While coming out all guns blazing against Finance Minister P Chidambaram’s Interim Budget, BJP leader Arun Jaitley today gave an indication that the country’s next finance minister may not have an easy time. And in a scenario, if the BJP forms the next government at the Centre, the indications to the fiscal jeopardy ahead are telling. Although the BJP leader blamed Chidambaram for all the wrongs in the country’s economy and the burden that the nation might have to bear in future for it, the actual worry is India may still need a lot of time to emerge from this economic agony .

“Will the finance minister seriously introspect on the legacy he would leave behind for the next finance minister? The finance minister will be a relieved man today. His successor will be in trouble,” Leader of Opposition in Rajya Sabha and BJP leader Arun Jaitley wrote in a blog.

Keeping the Lok Sabha elections in mind, Jaitley called the Vote on Account populist and a last ditch attempt by the finance minister to redeem some of the UPA’s lost credibility through some smart repackaging of the ruling coalition’s fiscal experience in the last 10 years.

“The finance minister presented Vote on Account estimates before the Parliament today. It was an electoral imperative for him to attempt to repackage the 10 years of the UPA. He is faced with a harsh reality. He inherited an 8.5 percent GDP growth rate. He exits on a 4.5 percent GDP growth. The last three years of the UPA witnessed a sharp fall in the growth rate from a near 9 percent to less than 5 percent,” Jaitley said in the blog.

Not willing to buy Chidambaram’s announcement that the alarming fiscal deficit was contained at 4.6 percent below the so-called red mark of 4.8 percent, the senior BJP leader poked holes into the claim.

“The finance minister had set a laxman-rekha for himself last year. The fiscal deficit had to be brought down to 4.8 percent. He now claims to have brought it down to 4.6 percent. He achieves this spectacular feat not by bringing in revenue buoyancy or by reviving the investment cycle but by cutting down expenditure, particularly the capital expenditure,” the Leader of Opposition in Rajya Sabha said in the blog.

“The grants for creation of capital assets and capital expenditure has been cut down by as high as Rs 91,000 crores. This alone would have impacted the GDP to the extent of 0.8 percent. Similarly, allocations to various ministries in the current year shows wide difference between the Budget estimates 2013-14 and the revised estimates of 2013-14,” the BJP leader said.

Critising the Centre for cutting down budgetary allocations to ministries relating to infrastructure and social issues, Jaitley wrote, “The grant to the Ministry of Drinking Water and Sanitation are cut down by 21. 3 percent. The grant to the Ministry of Health and Family Welfare is cut down by 20.6 percent. The grant to the Housing and Urban Poverty Alleviation is cut down by 41.97 percent, MHA by 31.3 percent, Ministry of HRD by 6 percent, Ministry of Road Transport and Highways by 18.72 percent and Ministry of Rural Development by 22.92 percent. These are all departments and ministries which relate to social sector and infrastructure.”

For the BJP, which is using every bit of opportunity to take on the Congress, the Vote on Account came on a platter. The trimming of budgetary allocations to the states also faced immense criticism from the BJP.

“… the grants to the states have been cut down from the Budget Estimates of Rs 1,36,254 crore to Rs 1,19,039 crore - a reduction of 12.6 percent,” he said.

Jailey made it absolutely clear that without the help of the BJP-ruled states the country’s agriculture won’t have done well.

“The finance minister has taken credit for the stellar performance of the agriculture sector but the real credit goes to the states like Gujarat , Madhya Pradesh and Chhattisgarh which have consistently given double digit growth rates in agriculture,” the BJP leader said. The politics of the statement is split wide open. The states of Gujarat, Madhya Pradesh and Chhattisgarh are all BJP-ruled states.

Jaitley felt that the One Rank, One Pension for the defence forces is only a poll gimmick and warned the UPA to abstain from using the armed forces for political gains.

“The finance minister has again harped on the OROP viz. the One Rank One Pension scheme and transferred Rs 500 crore to the Defence Pension Account. The UPA government has been paying lip service to the cause of defence personnel. In the earlier Budget in 2009-10, a committee was set up and its recommendations were promised to be implemented. But the grievances remained as the approach was half-baked. Again the finance minister has promised that this cause has been completely addressed in this Budget. There should be no attempt to play with the aspirations of our Armed Forces,” he said.

Going into the details of India’s burgeoning subsidy bills, Jaitley criticised the finance minister for not doing enough to protect the economy.

“The subsidy outgo on food, fertilizer and fuel has been projected at Rs 2,46,397 crore for 2014-15. Out of this, fuel subsidy is at Rs 65,000 crore, fertilizer at 36,970 crore and food subsidy is at 1,15,000 crore. The combined expenditures on all food schemes has been reduced from Rs 1,24,844 crore in 2013-14 to Rs 1,15,000 crore in 2014-15 representing a fall. This is much below the expectations under the food security scheme which requires a much larger outlay. The subsidies in fuel has been underestimated year after year,” Jaitley said.

“The finance minister has once again rolled over fuel subsidies worth Rs 35,000 crore to the next fiscal. This move is a mere statistical illusion to keep the fiscal deficit look optically correct while its inflationary impact on the economy remains real,” he said.

The lull in the manufacturing sector has worried the BJP as well. Expressing unhappiness with the way, the finance minister handled the issue, Jaitley said, “This slowdown in the manufacturing sector is a huge concern. This directly reflects on job creation. The excise duties in the current year, which were estimated to be Rs 1,97,554 crore has now been revised to Rs 1,79,538 - a reduction of 9.1 percent.”

In the blog, the BJP leader sent out one message loud and clear clear that the party is extremely concerned about the bad state of economy.

“Even though the Vote-on-Account is only for a period of four months, there are serious concerns on the growth rate, real fiscal deficit, inflation, investment and the slow down in manufacturing sector. The stability of the rupee is a matter of concern particularly because the rupee itself has reached unacceptable levels,” Jaitley wrote.

But the question is if the BJP gets a chance to rule next, does it have answers to these problems?