Finance minister Nirmala Sitharaman on Friday defended her maiden Union budget saying the goal of making India a $5-trillion economy was backed by a concrete plan. She also dismissed former finance minister and senior Congress leader P. Chidambaram’s criticism that the budget lacked the bold steps expected of a government that had returned with a strong mandate.
During the discussion on the budget in Rajya Sabha, Sitharaman said the tax revenue targets for FY20 were achievable and every estimate was “realistic". She added that the focus on agriculture and investments would lay the foundation for doubling the size of the economy to $5 trillion.
On Thursday, Chidambaram questioned the revenue targets in the budget saying they were “completely unrealistic", given the shortfall seen in FY19 collections, and going by the latest data from the Controller General of Accounts (CGA).
While the budget documents went with the revised estimates of total tax revenue for FY19 mentioned in February’s interim budget, the CGA had come up with more recent numbers.
Chidambaram also downplayed the government’s goal of making India a $5-trillion economy, saying an economy growing at a nominal rate of 11% will anyway double in seven years due to the effect of compounding.
Sitharaman said the big picture presented in the budget was backed with a plan to increase investments without compromising on the fiscal consolidation road map.
“The plan is to increase investment coming into the country. The steps proposed in the budget will have direct impact on investments. That will promote the economy."
The finance minister explained that the plan included further easing of foreign direct investment norms, and bringing companies with sales up to ₹400 crore within the scope of a lower 25% corporate tax rate, which is now available only for businesses with sales up to ₹250 crore. The plan to stimulate the economy also included income tax breaks for purchasing electric vehicles and affordable homes.
“We are moving the GST Council for lowering the tax rate on electric vehicles from 12% to 5%...The government wishes to invest ₹100 trillion in infrastructure over the next five years," she said elaborating on the plan to boost economic growth.
Chidambaram argued that not all policy changes can be called structural reforms and that in the last 20-25 years there were only 11 structural reforms.
In her speech, Sitharaman, however, went on to list 16 reforms, including bank recapitalization and direct benefit transfer, during the first term of the Modi government.