The Finance Minister, Ms Nirmala Sitharaman, created combative speeches on the Budget in the Rajya Sabha on February 12 and in the Lok Sabha on February 13. In the Lok Sabha, without having getting offensive, she referred a dozen instances to my intervention on the prior day, I take these references as component of the thrust and parry of parliamentary debate.
However, I take exception to taking liberties with numbers. The Budget is all about numbers: each quantity will have to be justified. If just 3 numbers are incorrect, the Budget — that is the Annual Statement of Revenue and Expenditure — is a worthless pile of papers. The 3 numbers are the estimates of Total Receipts, Total Expenditure and the Borrowing (= Fiscal Deficit).
Three Key Numbers
When the Budget for 2020-21 was presented on February 1, 2020, I had questioned the credibility of the 3 essential numbers. I had stated the 3 numbers have been ‘suspect’, which means that their credibility was questionable. I had based my criticism on the reality that the GDP development had slowed down for seven successive quarters (4 quarters of 2018-19 and 3 quarters of 2019-20) and was poised to slide additional in Q4 of 2019-20. Hence, I had argued, the projections for 2020-21 have been optimistic and ambitious. The FM had angrily refuted my criticism.
A month later, the pandemic started to sweep India and 2020-21 started on an ominous note. The slowdown turned into a recession. All the numbers projected by the FM went for a toss. Even without having the pandemic, she would have been proved incorrect with the pandemic, she was proved hopelessly incorrect. Just see exactly where we began (Budget Estimates) and exactly where we will finish (Revised Estimates) on March 31, 2021:
The very same sordid story continues in the Budget Estimates for 2021-22, providing rise to inquiries. I asked some inquiries in Parliament, there have been no answers some I have added right here.
Questions, No Answers
1. What is the basis of the optimism that tax revenues (net to Centre) in 2021-22 will improve at 14.9 per cent when they decreased by 1 per cent in 2020-21 more than the prior year? Even assuming that the recession will finish in Q1 of 2021-22, will the GDP develop sufficiently to yield a development of tax revenues by 14.9 per cent?
2. When receipts from disinvestment fell brief by Rs 1,78,000 crore in the prior year, what is the basis for the estimate of Rs 1,75,000 crore in 2021-22?
3. Is it appropriate that the RE of total expenditure in 2020-21 consists of the re-payment of Rs 2,65,095 crore to the FCI for loans that the FCI had taken on behalf of the government? If yes, how can that be counted as ‘government expenditure’ that will stimulate the economy?
4. Likewise, does the BE of total expenditure in 2021-22 involve the re-payment of a substantial quantity to the FCI?
5. Having supplied a paltry improve of Rs 3,266 crore below ‘Defence’, and a reduction of Rs 7,843 crore below Health (web page 10 of Budget at a Glance), has not the FM grossly below-estimated the Total Expenditure in 2021-22? Will not ‘Defence’ and ‘Health’ call for substantially more funds?
6. Has not the Budget below-supplied for different departments such as Education and Energy and schemes such as the MGNREGA and Nutrition?
7. If Total Revenue has been more than-estimated and Total Expenditure has been grossly below-estimated, is not the estimate of Borrowing (Rs 15,06,812 crore) in 2021-22 a misleading and perilous below-estimate?
8. Is the FM implying, contrary to the estimates of the RBI and other specialists, that the typical inflation in 2021-22 will be only 3. per cent? If yes, what is the basis of that assumption?
9. Why has the FM charted a glide path that will cease when the fiscal deficit (FD) will attain 4.5 per cent in 2025-26? Has the government abandoned the target of minimizing the FD to 3 per cent or beneath? Does it not imply that the FRBM Act has not been merely suspended but buried six fathoms deep?
10. In view of the estimated GDP (in continuous costs) in 2021-22, has the government offered up on attaining the target of a USD 5 trillion economy by 2024-25?
Incompetent Governance
When the UPA demitted workplace soon after 2013-14, it left behind a GDP (in continuous costs) of Rs 105 lakh crore, 3 instances more than what it was in 2003-04. Since then, the GDP has crawled to Rs 131 lakh crore in 2017-18 Rs 139 lakh crore in 2018-19 Rs 145 lakh crore in 2019-20 and is anticipated to fall to Rs 130 lakh crore in 2020-21, the very same as in 2017-18. Thus, due to incompetent management, the economy is at the very same level as it was 3 years ago!
Budget numbers are certainly estimates estimates can go incorrect regardless of properly-founded assumptions. I will have to nonetheless point out that an ill-advised try to fudge the numbers and present a so-referred to as ‘budget for growth’ is unpardonable. It is the men and women that will spend a heavy price tag.
Website: pchidambaram.in
Twitter @Pchidambaram_IN