'This is a budget with no vision, no strategy and no road map. I do not think that growth rate will go beyond 4 to 5 per cent that we have seen in the past few years,' says Prithviraj Chavan, Congress leader and Member of Parliament.
On his assessment of the Budget
I am extremely unhappy that a great opportunity to kickstart the economy has been lost. This is a budget with no vision, no strategy and no road map. The 10th five year plan envisages a real GDP growth rate of 8 per cent average. The first year growth rate was 4.4 per cent. Therefore economy will have to grow an average rate of 9 per cent per year for the next four years. I dont see that happening.
On how the Budget 2003 will help the common man
Finance minister has reduced income tax upto a limit of Rs 8.5 lakh annual income. Also he has increased the standard deduction, therefore there will be some savings in the direct taxes. But on the other hand, he has reduced the rate of interest on small savings in public provident funds. Also, service tax goes up from five per cent to 8 per cent. Therefore there may be very slight gain for average tax payer. Diesel price increase will tend to push up all the prices upwards. For agriculturist increase in fertilizer prices have come at a very wrong time because Indian agriculture is facing a grave crisis.
On whether the budget does not take into account the drought in many states and the impact of that on the rate of growth of the economy
I think you are right. The growth rate envisaged in the 10th Plan could be impossible to achieve. The first year growth rate was only 4.4 per cent. Agriculture had a negative growth because public investments in agriculture is shrinking. We need to make the Indian agriculture drought proof. Unless there is a large public expenditure it will not happen. Therefore I do not think that the growth rate could go beyond 4 to 5 per cent that we have seen in the past few years.
On whether his remarks against the Budget are politically motivated
The second reason why I feel that an opportunity is lost is because finance minister ignored the Kelkar reports. He said that there was an overwhelming response from the public for the Kelkar reports but the BJP politics in form of Rajnath Singh's report over-ruled Jaswant Singh. FM given accepted the basic philosophy of the Kelkar document but had no political backing from the highest level. And therefore it seems like a populist election budget.
On if the Congress is to be blamed for its past performance, due to which GDP has remained at around 5 percent even after 50 years of its rule
Congress launched the economic reforms in 91-92. If you compare the growth rates of the 91 to 96 period of the Congress rule with the last five years of NDA alliance you will see that we had reached GDP growth rates of near 8 per cent starting from the crisis years of 91-92. But this momentum could not be sustained in the last three years when growth rate has been 4.4 to 5 per cent. Growth has definitely deccelerated compared to the five years of Congress rule.
On what can be done to make Indian agriculture drought-proof
The public investment in agriculture has gone down over the last five years. Public investment leads private investment. Without adequate capital formation in agriculture it will be difficult to help dryland farming and save the Indian farmer from the vagaries of monsoons. Secondly, with globalization of trade surplus produced by Indian farmers, particularly wheat, rice and sugar, are not finding international markets. Local stocks are rising and prices are plummeting. Farmers are committing suicide. There is no strategy to liquidate the stocks and therefore Indian agriculture would continue to suffer.
On the drought conditions in Rajasthan
Rajasthan has continued to experience drought for last four years. It is a really difficult situation. And centre has not come forward with the help that was required considering the severness of the problem. The state government is trying to do its best.
On why Congress is opposing disinvestment despite initiating the economic reforms process
Congress is not opposing disinvestment but we are against privatization of strategically important profit making units. Also, disinvestment process must have a clearly explained logic and rational which is not the case. We have grave objection to underpricing the assets and opaque valuvation process followed so far.
On whether the Budget has been presented with an eye on the next year's general elections
Yes. That is why I think a great opportunity to kickstart the economy is lost. And the national elections may be held sooner than they are due because BJP has run out of innovative development ideas, they have not won a single election on their developmental record, that is why they are going back to the communal agenda again.
On some key reforms that Jaswant Singh failed to implement
Most important candidate is the simplification of the tax regime suggested by the Kelkar task force, which the finance minister ignored.
On whether the Congress is winning elections only because of the anti-incumbency factor
Anti-incumbency is another name of bad governance. You have Mr Digvijay Singh winning in Madhya Pradesh second time because he provided a development oriented administration. But for Godhra and the events that followed, BJP government in Gujarat was trounced in local body elections and byelections, only because of bad governance by Keshubhai Patel. BJP had to replace him. There is no substitute for good governance. Congress definitely a better track record than BJP.
On the three hits of this Budget
First is beginning of the implementation of VAT, but I dont think the Central government has done enough preparatory work particularly with the state governments. Second, the river linking project, but again there is no allocation for this huge project. Also, it will require concurrence of all the state governments before they part with their water. Third, continuation of lowering the custom duty regime to make Indian industry more competitive.
On the low growth rate of the economy under the Congress rule
Since independence the GDP growth has never fallen behind the population growth rate. But, it is true that first 30 years the average growth rate was low- about 3.5 per cent. But remember the starting conditions at the time of independence. In the decade of 80s, the average growth rate rose to 5.8 per cent and as I said earlier from 91 to 96 Congress rule, it went to as high as eight per cent. During the last five years of BJP rule, we have come down to five- five and a half per cent.
On the viability of the rivers linking project
It is an expensive project expected to some Rs 500,000 crores. Also, it is difficult to implement because not all the states would agree. But we could certainly study in great detail and may be a few river basins could be connected if there is a overall benefit of relief from the flood and taking water to the drought prone areas. Personally I do not think the entire project of linking all the rivers can ever be achieved. Further, there should be lot more emphsis on water conservation, recharging the ground water, aforestation and water management.
On his personal take on taxing rich farmers
In states where land reforms have been implemented, the holdings are so low that there cannot be rich farmer at all. In states where land reforms are not implemented and farmers have thousands of acres of holding, and have huge personal incomes could be considered for taxation. Also, rich film stars and industrialists who show part of their income as agricultural income showing some paltry farms or orchards should not get the concession. To begin with all those who do not earn their livelihood out of agriculture but have some other profession should get their additional agricultural income taxed. But since agriculture is a state subject will have to explain this properly to all concerned and gradually introduce changes.