Bharatiya Janata Party's key economic strategist Jagdish Shettigar had a lot to say about this year's Budget. In an hour long chat with rediff.com readers, he answered their queries with clear, incisive logic.
Here is the transcript:
Jagdish Shettigar says, The finance minister has two positive factors in his favour. Namely bulging revenue collections and high economic growth over 9 per cent but at the sametime he had challenges to contain inflation and also to maintain the image of the ruling combine as pro-commonman. But unfortunately he has failed to utilize the positive factors in his favour in addressing the challenges before him effectively.
ak asked, Sir, Do you think that this budget is common man friendly inspite that education surcharge increase to 3% (increase in service tax and corporate tax)
Jagdish Shettigar answers, at 2007-03-01 16:34:15Mere increase in surcharge from 2-3% need not be seen as anti-commonman since the objective behind the proposed increase in cess is laudable. But he has to ensure that the revenue collected through addition cess should be properly and efficiently utilized for the purpose it is meant for. But when you look at the budget as a whole I do not think that it can be described as the one meant for caring Aam Aadmi.
SR SATISH asked, No Government, whether it is NDA or UPA, has dared to enhance the IT limit inspite of inflation. May I know the reason Sir?
Jagdish Shettigar answers, Any government would like to give as much concession as possible and minimise the tax burden. In fact the BJP had promised to raise the exemption limit to Rs one lakh at five years prior to coming to power. But it could not fulfill the promise mainly due to the prevailing fiscal situation of pressure to meet the need for enhanced expenditure for developmental purposes and also the limited revenue collection base.
bakul asked, Sir, what is ur rating on a score of 10 to this budget ?
Jagdish Shettigar answers, Frankly I would not like to get into this exercise of grading the budget especially in view of the fact I belong to the opposition party and hence I may not be able to make a fair assessment.
Alok asked, Sir! Do you think we can sustain 9+ growth for next year
Jagdish Shettigar answers, Yes, we can. In fact there is a potentiality of India reaching double digit growth rate but this needs further movement on reform track. Unfortunately the present government is not in a position to carry forward the required reform process mainly due to the presence of left front.
sam asked, Sir, Previous ur NDA governament was so sympathetic towards salaried class who real contributers for exchaquers, y this govt is against salaried class?
Jagdish Shettigar answers, The present government has removed special treatment given to the salaried class visa viz non salaried class- by removing standard deduction benefit. Besides they also imposed fringe benefit tax which now got extended to IT sector.
sam asked, Sir, I feel one importants issue FM has missed out that is GLOBAL WARMING. i expected this could be taken up on priority as in couple of years there will disatsarous effect on agriculture and general living ...
Jagdish Shettigar answers, No, he has initiated a move in this direction by announcing to set up a committee to study impact of climate changes. In future corrective steps may be taken in the light of recommendation by the experts committee.
sd asked, Is this a farmer friendly Budget? If so, why?
Jagdish Shettigar answers, It has only shown lip sympathy towards the farm sector without taking concerete steps to address the crisis the farmers have been facing during the last couple of years. The minimum he could have done is to bring down interest rate on farm loans keeping in view suicides by the farmers in different parts of the country. With regard to fertilizer subsidy he showed good intention by announcing the subsidy should be distributed to the farmers directly as against the present system of distributing the same through fertilizer companies. In fact this has been resulting in lot of leakage- more than 50 per cent going to the kitty of fertilizer companies and hence reform in this respect is long pending. But he has just announced to set up a committee the modus operandi of distributing fertilizer subsidy instead of taking concerete steps. In fact a report suggesting reforms in this respect was ready by the time the NDA government left. He could have gone through the report instead of wasting another couple of years in studying the whole issue once again.
Jacob asked, If you were to pick one best and one worst feature of this Budget what would they be?
Jagdish Shettigar answers, His intention to upgrade ITI's by allocating Rs 750 crores would go a long way in making youths especially amongst the lower middle class and the poor section of the society employability. He has totally failed to diagnose the exact nature of inflation the country has been facing during the last one year or so and that is why the so called steps taken in order to contain inflation is in the wrong direction.
wah asked, Lalu will be better FM that PC.Comments please.
Jagdish Shettigar answers, Probably you are also misguided by the fact that railways has started showing profits during his stewardship of the railway ministry. Without going into the economics of the issue, by applying a commonsense one should ask himself why the same man brought down Bihar to such a miserable condition. When the state was under his control for 15 years. If railways financial position has improved of late it is mainly because of the measures initiated since 2001 onwards during the NDA government. This was on the basis of recommendations by the Railways Reforms Committee set up by the NDA government. Perhaps Lalu as FM would not make two hours long speech- a borning exercise. He would have entertained the listeners. I may be having certain differences with the policy approaches of PC but certainly I would not like to put country's economy in the hands of persons like Lalu Yadav.
NoName asked, Since BJP did not do much on the economy front, it got booted out. Now what is the point in being smart and criticising CHidambaram's budget?
Jagdish Shettigar answers, NDA has not lost power on account of its performance on the economic front. In every respect it was moving in the right direction. If we lost it was mainly because of strategic mistake in terms of campaign especially by using India Shining Campaign which irritated merely one fourth of the population below the poverty line. Besides we also made certain electoral mistakes with regard to identifying or not identifying right partners especially in states like Tamil Nadu, Maharashtra and Assam.
Chidambaram asked, Shettigar-ji, if you were the finance minister what would you have done differently or better?
Jagdish Shettigar answers, Keeping in view the present nature of inflation that is rising prices of essential commodities which is mainly due to green signal given to hoarders as a result of inadequate stock of foodgrains which in turn was due to procurement failure in the face of competition from organized retail companies, I would have reviewed the policy approach towards the minimum support price and accordingly taken corrective steps. With regard to farmers I would taken steps to initiate reforms with regard to fertilizer subsidy and saved more than Rs 10,000 crores which could have been utilized for improving farm infrastructure facilities.
natesa asked, This Budget has aimed to reduce inflation, what do you thug the inflation will reach in %. If inflation doesn't drop significantly what option do you think FM has and will exercise
Jagdish Shettigar answers, As I have already pointed out the government has not been able to diagnose the exact nature of inflation. That is why it has not been able to address the issue effectively except that they have decided to ban forward trading in foodgrains that too after losing two major states Punjab and Uttarakhand. I had demanded ban on future tradings on foodgrains one year back. Now they have to address the issue of the inability of government agencies in procuring foodgrains from the market under the changed circumstances of many big business houses entering into retail sector which in fact is beneficial to both farmers and consumers. However, there is a need to review the policy towards minimum support price and see how the government godwns are full with foodgrains which is quiet curcial for maintaining price stability.
Jagdish Shettigar says, Thanks for your questions. I enjoyed interacting with you. Hope to meet you again.
