Budget 2014: Congress says it's high on rhetoric, Jaitley must prove it's not

Already trapped by a big fiscal deficit, inconsistent monsoon, a negative IIP and inflation continuing northward, Union Finance Minister Arun Jaitley’s maiden Budget speech had to survive the sharp scrutiny of political opponents. Reacting on expected lines, the Opposition benches found the Budget lacking implementable measures to revive the struggling economy.

“This budget is extremely high on rhetoric and low on delivery. There is no direction set out for the manufacturing, agriculture and services sectors,” Congress leader Manish Tewari told CNN-IBN during a panel discussion.

“Unless there is cut in government expenditure, the GDP won’t go up. It is peculiarly disappointing to see a lack of grand vision. There are no steps to mitigate headline inflation. The difference between UPA and NDA is that UPA had robust growth plans to fund its key social projects. And here is a budget that is not backed by appropriate numbers. I am making an ominous prophecy that when the finance minister reads his next Budget speech next year many of these projects won’t even take off,” Tewari said.

Opposing the Congress view on the Budget, BJP MP and spokesperson Meenakshi Lekhi argued that the present government had inherited the economic mess left behind by the UPA.

“There was absolute policy paralysis. Investor confidence and economic growth were low. There was no elbow room in that context for the present finance minister. We are capitalisng the banking and the insurance sectors. We are also taking various measures to give impetus to domestic manufacturing. We are also focussing on SMEs and MSMEs,” Lekhi said.

CPM leader Sitaram Yechury, who was also part of the discussion, observed that the budgetary proposals to raise revenue are not practical.

“Just making investment avenues available and presuming that investment will happen is not the right way to go about it. The PPP mode is becoming costlier to people if we take international experience into consideration. This will shrink people’s buying power as utilities will become costly. India needs a recipe for a new deal,” he said.

“UPA created a mess of the economy. But there is no new direction in the BJP budget. If we separate the rhetoric from hard facts, it is all the same. The budget has missed the wood for the trees. The purchasing power of the people is decreasing because of inflation. Increasing investment is not the only area. You need a market as well,” Yechury said.

The Left leader did not accept FDI in the insurance sector, leave alone raising the ceiling from 26 percent to 49 percent.

“The new insurance ceiling is not the concern. FDI in insurance will put Indian savings at the disposal of foreign firms which they will invest elsewhere for their own profit. When the growth of capital formation is in the negative and manufacturing and IIP are not in the positive, figures on revenue generation are highly exaggerated. It is totally based on assumptions,” he said.

The BJP spokesperson said that there would be a gate-keeper to check the movement of Indian money when routed through foreign insurance firms.

“IRDA will decide where the money will be invested and it is not that Indian savings will be available internationally. We are seeking infrastructure development and job creation to boost money power of the people,” Lekhi said.

Another contentious issue related to FDI is with the defence sector.

“The 49 percent FDI in defence with FIPB permission is already permitted. And if it is beyond 49 percent permission from the Cabinet Committee on Security is needed. It is nothing new. The BJP was opposing insurance reforms for the last 10 years. It is quite an oxymoron that they have hiked FDI in insurance sector to 49 percent. I don’t think still anyone would be enthused to invest,” Tewari said.

The Congress even lashed out at the Centre for taking a U-turn on its decision to junk retrospective taxation.

Apparently unwilling to completely tear the Budget apart, Biju Janata Dal MP Bijay J Panda gave a studious assessment of the Union Budget.

“The kind of drastic targets that Jaitley announced by accepting the 4.1 percent fiscal deficit and to bring it down to 3 percent in 2016-17 is quite aggressive. Fiscal deficit is the linchpin as it decides inflation. In this scenario it is a bold gambit by the finance minister when he says in three-four years the GDP will return to 7-8 percent growth There are bold and decisive steps to fillip rural infrastructure,” the BJD MP said.

However, there was a caveat too.

“It is time to back the upturn in the sentiment of the markets that we have seen in the last 45-odd days with fine policies. There has to be certain continuation of UPA policies. The BJP needs to adopt Aadhaar to stop leakages in subsidy or else Jaitley won’t achieve his targets,” Panda said.