Referring to the fourth Budget of the NDA government, being tabled by his ‘good friend’ Finance Minister Arun Jaitley, Chidambaram began by saying, “It was rather obvious to everyone, except the Govt, that in this milieu, India could not achieve a 7, or 7.5 or 8 per cent growth.”
Then came demonetisation, for which Chidambaram, saved his sharpest critique. He says, “A 1% hit on the GDP implies a loss of Rs 1,50,000 crore. That’s the price we are paying for a bad decision. Anecdotal evidence points to the fact that no more than four persons were involved in the decision making, and among them perhaps the Finance Minister was not there. The people most affected were farmers, farm labour, self-employed, artisans, and MSMEs. There are 15 crore people in India who derive daily wage doing manual labour. About 30 to 45 crore people are in turn dependant on that daily wage. As many as 11 crore people stood in queues outside banks and ATMs every day for several days just to withdraw their own hard-earned money.”
Giving the attendees an overview on the opportunities lost in this year’s Budget, Chidambaram said while Prime Minister Narendra Modi had earlier promised to create two crore jobs annually if his party was voted to power in the 2014 Lok Sabha polls, “the best achievement of this government is in 2015-16 when they created 1.5 lakh jobs.” Citing Labour Bureau statistics, he said, in the three months of July, August and September last year, 77,000 jobs were created, with only 50,000 of them being in the government sector. As many as 12,000 jobs were lost in software, communication and IT sectors, he added. The budget did not address key issues of economic growth and job creation and did not have any ‘triggers’ for key components like govt and public investment besides consumption, he said.
Chidambaram said though he had urged the Centre to cut indirect taxes and not direct taxes in the budget, “the Finance Minister did the exact opposite.” When indirect taxes are cut, cost of production falls sharply, prices stabilise and that stimulates demand, he said. “Cutting direct taxes will not trigger demand. If you had cut indirect taxes across the board you would have found a very different situation, very different mood in the country. I think the government made a terrible mistake, a cardinal mistake in not cutting indirect taxes but cutting direct taxes,” he said.