New Delhi : In his last opportunity to present a full-fledged Budget, Union Finance Minister P Chidambaram found himself cramped for room and desisted from taking any big initiative. So, he opted for a modest revival path, hoping that the economy would enter the 6 percent growth phase in the next fiscal, and the revenues would gain buoyancy.
But even with elections due next year, he shunned the populist route of giving any tax sops; on the contrary, he increased surcharges on direct tax to mop up an additional Rs.13,000 crores. He also imposed an additional surcharge of ten percent on those earning more than Rs.1 crore. However, he refrained from calling it a tax on the super-rich, and assured that this would be for just a year, and there would be no need to continue it in future.
His firm indications are that fiscal prudence is the route to economic recovery. So, even if growth does not return to 6 percent phase, Chidambaram remains committed to reducing the fiscal deficit from 5.2 percent this year to 4.8 percent next year.” ”This is a redline,” he asserted.
Similarly, his commitment to reforms is unshakable. He has promised that he shall bring in the Direct Tax Code bill within this Budget session, and also that he is firm on getting the GTS regime in place at the earliest.” I have demonstrated my commitment by providing Rs.9000 crores for compensation to the states when GST is implemented. Now, the ball is in their court,” he said. Incidentally, former finance minister Yashwant Sinha welcomed this move, indicating that there is some political convergence on this aspect.
Even as he emphasized that ‘higher growth leading to inclusive and sustainable development” is his mool mantra, he conceded that growth by itself cannot be an objective as “growth has to translate into a better life for the people,” he asserted.
Chidambaram has compressed the expenditure last year to achieve the fiscal deficit target of 5.2 percent, but in the budget for 2013-14, he has provided Rs.5.55 lakh crores for plan expenditure — an increase of 29 percent and hopes that this is adequate for the purposes of stimulating a revival.
He accepted that his big worry is the current account deficit that cannot be controlled by mere governmental controls. ”It can come down only if our exports grow or our imports shrink, or both these things happen,” he said.
He also assured that when the commerce minister Anand Sharma announces the foreign trade policy before March 31st, 2013, he would also announce measures that would boost exports.” This economic revival is not a one-time story. It is not that you present a budget, and then come back after a year. I shall keep making announcements at different times,” he observed.
Reflecting the new found gender sensitivity of the UPA-2 government, Chidambaram also announced a new public sector women’s bank with an investment of Rs.1000 crores and hoped to launch it by November 2013.” This decision reflects my own sentiment about the condition of women in society. I strongly feel that the women deserve this special treatment as banks are usually reluctant to lend to them,” he added.
In the Lok Sabha, the finance minister was heard with attention, and there were a few interruptions, only when some specific state was mentioned.
GDP rate tumbles
The extent of the slowdown gripping Asia’s third-largest economy was underlined by data released just hours after the FM delivered his Budget for the coming fiscal year, showing GDP growth tumbled to 4.5 percent in the October-December quarter, its lowest in nearly four years.