New Delhi: In a move to woo the voters ahead of the upcoming Lok Sabha elections, Finance Minister P Chidambaram on Monday unveiled the UPA government's interim budget, its last before the party goes to face the electorate.
In his interim budget, the Finance Minister has reached out to specific classes of voters. Excise duties have been cut to reduce the cost of household appliances and automobiles. The long-standing demand of the armed forces of 'one rank, one pension' has been accepted and will be implemented from the next fiscal year. The scheme is expected to benefit over 25 lakh retired defence personnel.
He also lured the young generation by announcing a moratorium on interest on educational loans taken before March 31, 2009 which will benefit over 9 lakh borrowers.
The government which has been facing a massive economic slowdown and is unlikely to be re-elected to power when the country goes to vote in May, has in its pre- election budget tried to induce a hope amidst the people that the worst of the slowdown is over.
The Finance Minister did not propose changes in the tax laws except to continue the 10 per cent income tax surcharge on 'super- rich' individuals and up to 5 per cent on corporate entities. "In keeping with the conventions, I do not propose to make any announcements regarding changes to tax laws," he said in the budget that sought to provide sops in indirect taxes including reliefs in service tax to storage and warehousing of rice and blood banks.
Later in his post-Budget press briefing, he also said the revenue sacrifice on account of indirect tax concessions would be Rs 300 to Rs 400 crore in the 40 days remaining in the current fiscal and Rs 700 to Rs 800 crore by May. However, he added that a 5 per cent pick up in the sales of products in these sectors would make up for the loss of revenue.
He justified the excise duty relief saying, "However, the current economic situation demands some interventions that cannot wait for the regular Budget. In particular, the manufacturing sector needs an immediate boost."
On continuance of the tax on 'super-rich' and corporate entities, he said he has left it to the new government to review the impost that was slapped in the last budget. The indirect tax concessions will be valid up to June 30 and can be reviewed by the new government.
The opposition parties, left no stone unturned to criticise the budget and termed it as an "unconvincing election speech." "If by cutting down expenditure you are bringing down fiscal deficit, you are not leaving a great legacy for future generation. It was absolutely and election speech an unconvincing election speech," Leader of Opposition in the Rajya Sabha Arun Jaitley said.
BJP leader Prakash Javadekar, too, termed it as the FM's a farewell budget. This is a farewell budget of a minister who has lost on all counts. Chidambaram gave the speech of his farewell. He was making us count his failures. There is no comparison between there 3 per cent of foreign country and ours. There is no direction in this budget," he said.
Not just the BJP but other parties too targeted the UPA government for giving a populist budget. "This budget is placed before elections which will blow up some thing. This government has brought the economy to a very bad shape. It is going to be challenging for any government which will be formed. He has left the economy in deep crisis. People are wise enough to understand the economy of the country. He is leaving very bad legacy and an economy which is in deep crisis," CPI MP D Raja said.
While BSP supremo Mayawati said that she saw nothing new and revolutionary in the budget, CPM leader Sitaram Yechury said that necessary correctives will have to come in next budget as in the long run this will hurt the economy, employment will go down and prices will rise.
Despite getting a cold shoulder by the Opposition and industry, the Finance Minister denied the allegations and said that he was not a failure as Finance Minister and read out a long list of achievements of the UPA-1 and UPA-2. "My intention is not to please anyone. My intention was to speak plainly to the people of India and tell them that these are turbulent years. We are navigating through a turbulent period. The government has done a lot in last 21 months to stabilise India's economy and it believes that a fair measure of success has been achieved," he said.
Referring to the GDP growth rate, Chidambaram said the slowdown began in 2011-12 and in nine quarters it had declined from 7.5 per cent in Q1 of 2011-12 to 4.4 per cent in Q1 of 2013-14. He thanked the numerous measures taken, and expressed confidence that the decline will be arrested and the growth cycle will turn in the second quarter.
"I think I have been vindicated. Growth in Q2 of 2013-14 has been placed at 4.8 per cent and growth for the whole year has been estimated at 4.9 per cent. This means that growth in Q3 and Q4 of 2013-14 will be at least 5.2 per cent," he said.
Chidambaram delivered the speech amidst sloganeering by Congress MPs from Seemandhra and also provided service tax exemption for storage and warehousing of rice like it was done in case of paddy in 2013-14. He also exempted blood banks from the service tax purview.
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