Senior Congress leader P. Chidambaram said on Thursday that the current crisis in Karnataka and Goa might appear to be “political upmanship” but it had a “damaging impact on the economy.”
Mr. Chidambaram said foreign investors, rating agencies and international organisations did not read Indian newspapers and did not watch the tamed Indian TV news channels but “what they read and hear about political instability and political chicanery will have an impact on the economy.”
Participating in the discussion on the Union Budget in the Rajya Sabha, Mr. Chidambaram said the GDP projection was perplexing and the Budget did not chalk out a clear road map to take India on the path of high economic growth and lacked bold steps and structural reforms.
He termed Finance Minister Nirmala Sitharaman’s speech “insipid” and said the budget did not have any steps to propel investments and savings.
Simple arithmetic
Mr. Chidambaram said the government’s call of making India a $5 trillion economy by 2024-25 was simple arithmetic as it itself doubles due to the “magic of compounding” in six to seven years and did not require a Prime Minister or Finance Minister.
“There is this goal of a $ 5 trillion economy. Good, very good. I will give you better goals. In 1990-91 India’s economy was $320 billion, it doubled to $618 billion in 2003-04. Then UPA government came and from $618 billion, it doubled to $1.22 trillion in four years. It doubled again to $2.48 trillion in September 2017. It will double to $5 trillion in the next five years. It does not require a Prime Minister or a Finance minister. It will double. That is the magic of compounding, ask any money lender,” he said.
The size of the economy was currently estimated at $2.7 trillion and was growing at a nominal growth, he said.
Macro data
He said the Finance Minister did not present macro economic data, including receipts from revenue, in her Budget Speech in the Lok Sabha on July 5.
“I cannot recall a Budget Speech so bereft of macro data,” he said, and urged the Finance Ministry to ensure important data get mention in the Budget speech in future.
He said if the nominal growth of economy was 12% it would double in 6 years and if it grows at 11%, it would double in 7 years.
‘Need bold decisions’
“So please don’t put this pie in the sky before people of the country saying $5 trillion is equal to Chandrayaan landing on the moon. $5 trillion is simple arithmetic. So don’t put this pie in the sky. Come down to reality. The economy is weak. The budget speech is insipid. The weak economy needed a bold approach. I think the Prime Minister has enough will and determination to take bold decisions,” he said.
Mr. Chidambaram said he expected the government to come back and tell what structural reforms and what bold steps they would take on how they would improve investment, which was the only engine available to spur India’s growth to 8% this year and to 10% the next year.
Mr. Chidambaram said that at one place the GDP growth had been projected at 7% and at other place it was 8%.
“1% makes a huge difference,” he said, adding the government, CGA, and the Chief Economic Adviser could not present a unified picture for the current fiscal.
“Show me on one structural reform. There is not one,” he said.
Mr. Chidambaram said huge investments were required for firing engines of growth. And for investments domestic savings were pertinent.
Jibe at Jaitley
In an apparent jibe at former Finance Minister Arun Jaitley, Mr. Chidambaram said Ms. Sitharaman inherited a “wobbly economy” and accused the government of waiving corporate loans worth ₹5.55 lakh crore during the NDA-1 government.