Big Bang theory missing in 2006-07 budget: Yaswant
Kolkata, Mar 04: Former Union Finance minister Yaswant Sinha today (Mar 04, 2006) described 2006-07 budget proposals as "directionless and bereft of suitable measures ensuring double digit GDP growth before the end of the present decade".
Participating in a panel discussion on Union Budget proposals for the next fiscal, Mr Sinha expressing serious concern at the continued fiscal and revenue deficits of over four per cent and 2.5 per cent respectively felt that it was bound to push up the rate of inflation as well as bank's interest regime.
Claiming that through strict and calculated fiscal discipline the rate of inflation during the NDA rule was brought down to less than two per cent on an average which had in turn introduced a soft interest regime in almost every sector to push up the economic growth from below five per cent to about 6.5 per cent till 2003-04.
Stating that the Indian economy had turned around in the midst of tremendous growth in consumerism among the burgeoning middle and upper middle classes, the former Finance minister felt that with the possiblity of soft interest regime almost gone, the rate of growth would be stalled to a great extent.
He was also very critical about Finance minister P Chidambaram's alleged lack of direction in controlling the government expenditure which, according to Mr Sinha, was likely to rise from around 21 per cent in 2002-03 to nearly 30 per cent in the coming fiscal.
This was bound to have a chain impact on the rate of household saving, which Mr Sinha apprehended would be declined by at least two per cent by next year.
Regarding government plan for growth of infrastructure Mr Sinha wondered that despite making tall claims, not many major projects were coming particularly in energy and road and port sectors. Most of the projects that were being proposed in the coming budget were in fact intitiated during the previous NDA rule, Mr Sinha, also the former External Affairs minister, claimed.
He also lambasted Mr Chidambaram for unjustifiably cutting down the annual cost of infrastructure projects from from around Rs 19,000 crores earlier to only about Rs 13,800 crores for the next year. This was going to have a boomerang effect on the country's overall economic growth, Mr Sinha said.
Touching upon the government's tax reform proposals, Mr Sinha wondered why no tangible efforts were made to further simplify the tax structures at the corporate as well as at individual levels.
Referring to the unified tax rate proposals, mooted by the previous NDA government under his finance ministership, Mr Sinha found no justification in Mr Chidambaram's either enhancing or reducing the rate of excise duty and taxes from the previous 16 per cent 'as per his personal whims".
"We must bear in mind that as representatives of the people at large we must take a holistic view on the entire reform process and do justice to all and not to any particular a section of the society", Mr Sinha pointed out.
He also felt that the abolition of 1023-G in direct taxes would hit the growth of infrastructure as it put extra burden on its interest rates and demanded its immediate reversal.
However, on the whole, Mr Sinha felt that much talked about Big Bang theory in terms of growth prospect was missing in the 2006-07 budget proposals and it just merely added on various factors.
Earlier, BCC President Santosh Rungta highlighted some of the major tax proposals in the budget and sought the intervention of the opposition in Parliament on making the corporate tax structure a little more industry friendly.