We need to stop talking about corruption and divisive votebank politics. We must start focusing on good governance and growth

I read the article, ‘Modi versus his party’ by Shekhar Gupta (National Interest, IE, June 15) with great interest and consider it necessary to bring out the right perspective on various issues with regard to the BJP, its relation with the RSS and Narendra Modi.

I find it amusing that it has become fashionable to talk about the BJP’s evolution and growth as an unwelcome development. The BJP, while rooted in history for its ideological inspiration, has willingly embraced contemporary ideals on economic issues. We have consistently marched forward and evolved as a modern and mature political party.

Manmohan Singh introduced economic reforms in 1991, but his actions were short-lived. Impactful reforms happened under Atal Bihari Vajpayee’s stewardship, when he smoothly navigated the rough waters of building consensus in a fractious polity. In 1998, he inherited a flailing economy with high fiscal and current account deficits, high inflation and poor investor confidence. It is his sustained policy action that corrected the situation and when he demitted office in 2004, he left behind a robust economy growing at over 8 per cent with low fiscal deficit, three years of consistent current account surplus and euphoric investor sentiment. Arvind Panagariya, professor of economics at Columbia University, described this to me as the “golden period of the Indian economy”.

The UPA thus inherited a fiscally strong economy with rapid expansion in government revenue, the fruit of which they reaped for the first few years. They indulged in massive corruption, yet got some electoral successes on the back of pernicious policies that wrecked the economy in the long run. While they offer lame excuses such as “global factors” and “coalition compulsions” for our current economic woes, it is their policy inaction and philosophy of jobless, consumption-led growth, coupled with a disconnect between the government and its extraneous masters in the National Advisory Council (NAC), which has led us to this state of despair.

Even though the NDA is not in power at the Centre, Vajpayee’s ideals of decisive leadership and good governance were imbibed by our state governments, ably led by Narendra Modi in Gujarat, Shivraj Singh Chouhan in Madhya Pradesh and Raman Singh in Chhattisgarh, to name a few. A young engineer from IIT, Manohar Parrikar in Goa, won with the wholehearted support of minorities and in a short period, has become a role model for development and honesty. Much against popular perception, Modi inherited a state that was only growing at 4 per cent (FY’96-’01) with negative growth in agriculture when he took over. Under his dynamic leadership, the BJP delivered over 10 per cent GDP growth for a decade, trumping the national average both for agriculture and manufacturing. The CAG report in March 2013 recognised Gujarat as the most improved state in reducing malnutrition by a massive 32 per cent, based on their study of the Integrated Child Development Scheme. The real story of Gujarat is best seen, heard and experienced when one visits Gujarat. While we miss the sage advice and leadership of Vajpayee due to his ill-health, we have no dearth of good leaders who model themselves after him.

It is the BJP-led NDA that brought about transformative reforms across sectors such as oil and gas, power, banking, insurance, pensions etc, and connected India through the telecom revolution and a massive infrastructure rollout programme. The BJP is now being unfairly criticised for not supporting the insurance and pensions reform bills. All parties, including the Congress, opposed the insurance FDI increase, since only Rs 5,950.30 crore has come in over 8 years, and insurance penetration has been miserable. Even if we were to support it, our concerns on fixing valuation norms as per international standards and mandating infusion of fresh capital have not been addressed. As far as the pensions bill is concerned, even the regulator has stated that increasing the FDI cap in pensions fund managers is irrelevant.

Bharatiya Janata Party Treasurer Piyush Goyal tells Aditi Phadnis what the government should do to get the economy in order.

So we know what Rahul Gandhi wants for India. What does the Bharatiya Janata Party (BJP) want for India – beyond being a naysayer to every initiative the current government takes?

We still do not know what Gandhi wants for India. What we do know is that he says he cannot do anything about our problems.

We, the BJP, are not naysayers. On the contrary, we have supported the government on many measures of national interest. We have a plan to pluck the low-hanging fruits, a mid-term plan and a long-term plan, to quickly take India to double-digit growth and prosperity.

For example, we all agree India needs to be connected. There are only three ways to connect India – through railways, air and roads. Railways are ideal for connectivity. But rail lines cannot be set up overnight. That will be the long-term plan. A robust road network, with land acquisition, right of way, environment issues, will be the mid-term plan. But if I could make air travel more accessible for ordinary people quickly, it can be the immediate low-hanging fruit.

How can air travel be made more accessible for the common man?

India already has 350 airports, and fifty per cent of them are non-functional. What if these airports could be modernised and made functional the year round?

A basic airport requires a jet landing strip, terminal building, customs, immigration and air traffic control. Food courts and shops could cross-subsidise the costs. I have done the math – you can make a good functional airport for Rs 300 crore only. 

The total taxes levied by the Centre and the states on aviation turbine fuel amount to only Rs 5,000 crore annually. Also, there are all sorts of taxes like passenger taxes, airport development charges, landing and parking fees, and so on. This increases the cost of air travel by nearly 100 per cent and makes it out of the reach of the common man. A one-way Delhi-Mumbai ticket by air should cost only Rs 2,500 if there were no taxes.

Delhi airport is the most expensive in the world. It reportedly costs $29,000 for a flight with 400 people to land and take off, whereas comparable cost in Dubai is $2,500. I’m proud we have a great airport. But it is not an enabler for the common man to travel by air. We should innovatively use the cross-subsidy opportunity, with the land around airports, to finance their upgradation and eliminate all taxes on the sector.

Making civil aviation more accessible is a win-win for everyone. Using the existing infrastructure, no land acquisition or environmental clearances are needed: all you are doing is leveraging capacities you’ve already created. And, in turn, connecting remote parts of India rapidly and generating millions of jobs in the process.

So you’re saying air travel can be a route to the revival for India’s economy?

This is just one example of innovative thinking and seeing things differently. I believe if one forgoes taxes or revenue to expand the market and create economic activity, it is in fact prudent use of fiscal policy to create jobs and rapid growth. For example, Indian ships were being registered abroad owing to high rates of taxes in India, and we were losing revenue. The National Democratic Alliance government introduced “tonnage tax” on ships, as is prevalent in other sea-faring jurisdictions, and attracted all ship-owners to register their vessels and conduct the business from India. Thus, economic activity grew rapidly in the sector.

What about India’s current economic problems. First, inflation…

Read the speech of India’s first Finance Minister R K Shanmugam Chetty. In 1947, he said, and I quote, “Inflation is not due to further increase of currency but to a steady fall in the supply of goods”. He further said, ” The only real answer to inflation is to increase our internal production and thereby close the gap between the available supplies and the purchasing power in the hands of the community which in present circumstances imports cannot bridge.”

I believe, the only way to sort out the inflation problem is by supply-side management. On the contrary, we have made interest rates so high in India, especially for small and medium businesses. Can the Indian economy ever become a manufacturing hub at interest rates of 14-18 per cent? Inflation can only be corrected by keeping an eagle eye on the supply side. You will recall, we lost an election because onion prices skyrocketed. What should have been done is that when the prices went up, we should have immediately imported 50 planeloads of onions. Many times, you do’t even have to bring in the product, a mere announcement will bring prices down.

You remember, in the 1990s, there was such a shortage of LPG cylinders that you had to beg and bribe the gas company person to send you your refill? Why was that? Because we simply did’t have enough companies making these cylinders. Ram Naik just opened up gas cylinder manufacturing to the private sector and created a surplus of cylinders and bottling facilities. Costs came down owing to sufficient availability.

The other issue is land and real estate. Acquiring land and selling it should not be the route to make bumper profits. It happens when cities do not grow and demand increases. We sorted out this problem in Gujarat. Take the case of the Ahmedabad Urban Development Authority. It created a ring road around Ahmedabad and expanded it sixfold. There is sufficient land available for development, and prices are stable.

How do you suggest the current account deficit (CAD) be brought under control?

Now, let us discuss the deteriorating CAD. Gold imports have shot up in recent years since they provide a hedge against inflation and security to the housewife. There is also social pressure, especially during marriages. I think it is time we introduced a gold bond, measured in weight, assuring quantity-to-quantity supply whenever the investor requires. The banks could even give a two to three per cent interest as a sweetener, and they could deploy the funds in much needed infrastructure creation at six to seven per cent for long tenures. The banks could hedge a part of the quantities, and if required, the government could even provide a reserve quantity of gold as security. This will cool the market and reduce gold prices and thereby imports.

We should also focus on expanding the tourism potential. Foreign tourist arrivals (FTAs) are under seven million in India, whereas city states like Dubai and Singapore have much more. Turkey and Egypt have been able to expand their tourism rapidly. India should implement bold measures to rapidly increase FTAs, may be draw plans for an ambitious target of 60 million at the end of 10 years, which could provide opportunities for large-scale investment in infrastructure, job-creation and increased foreign exchange earnings – from $16 billion at present to $100 billion.

I have concrete plans on the subject, and I am confident we can provide sustainable solutions to address the CAD problem.

What are the dark clouds you see on the horizon? What is the next shock we should brace ourselves for?

Capex as a percentage of government expenditure has fallen drastically. In the revised estimates for the last year, there is an increase of Rs 60,000 crore in subsidies and a reduction of Rs 77,000 crore in planned capital expenditure. This will further kill the investment cycle. The costs of this are now evident. The government is spending on revenue account more than it earns, thus leaving behind debt for future generations without creating assets. I fear we are headed for a debt-trap, unless we reverse this trend quickly.

SHRI PIYUSH GOYAL (MAHARASHTRA): Thank you very much, Sir. Sir, the need the Government has to address today is not about theshort-term policies; it is not only about what is happening on a day-to-day basis. What is urgently required is that the Government come out with a fifty-year roadmap; they come out with a vision that this country is going to have to take care of the energy needs and the energy security of this country. I think, the biggest failure of this Government, apart from what my esteemed colleague mentioned earlier, is that this Government is devoid of the big picture. This Government is completely unable to make a plan which will address the energy security of this country.It is time the Coal Ministry, in consultation with the Planning Commission and the Environment Ministry, comes out with a solid plan which will take care of the energy needs of the country. After all, cheap coal power is the cornerstone of the economic growth of any nation. If you look at Europe: UK and Germany, from 1900 to 1950; if you look at the US from 1940 to 1970; or even if you look at China, in our neighbourhood, from 1980 to 2010, the growth was fuelled and driven by cheap coal power, and that, I think, will have to be the cornerstone of India’s growth. India, with the fourth largest reserves of coal, is today in a situation where one lakh megawatt of power is in various stages of development. Projects are stalled, banks are in dire crisis, rising NPAs in the banking system will kill the whole banking sector, but this Government has no vision, this Government has no plan as to how they are going to address the need of coal. The nation is faced with huge power cuts. We in Delhi or Mumbai are probably privileged to get power, but rural India, large parts of India, are suffering from huge power cuts because of the failure of this Government even to hold an FSA Committee meeting in the last twelve months. Sir, what we need to look at is the myopic policies of this Government which have lead us to this situation. We are headed towards an unmitigated disaster. There is likelihood of significant part of the power generation projects under construction or development becoming stranded or stalled for lack of fuel supply agreements. Based on the Government linkages, people have invested money in power plants. But the Coal India Ltd. – 85 per cent of coal comes from there – have failed to even meet their

targeted production. In fact, they are falling in production year on year; and how can we expect coal to be available for these power plants. The Prime Minister called a big meeting. The officials of the PMO were given the task of sorting out these problems. But,  three months have passed and nothing has come out of all those meetings. Today, we have a situation where even in an optimistic scenario, the domestic coal production from CIL will not go up beyond 450 million metric tons by 2016-17 and captive mines are estimated to produce 82 million metric tons by 2016-17. So, overall, we will have about 532 million metric tons as against the demand which, not on an optimistic basis but on a very conservative basis, will be nearly 817 million tons by 2016-17. So, we are clearly looking at a shortfall of 285 million tons in the next four years. And if the demand for these 285 million tons has to be met by imports, you can imagine the colossal demand-supply mismatch in the overall world supply of coal. Even if we have to import this coal, at a conservative price of 100 dollars a ton, we are looking at a 30 billion dollar outgo which will completely ruin the Balance of Payments(BOP) position. Trade deficit will rise; the rupee will devalue further and the cascading effect of that, the inflation that will be caused with rising power cost, it is going to be absolutely impossible to sustain the kind of growth that this Government is projecting.

SHRI PIYUSH GOYAL (CONTD.): And when we go out in the international market to import 285 million metric tonnes, Sir, the price will rise exponentially, and I don’t see the price sustaining at hundred dollars. And if that goes up to, say, the level of 150 dollars, just imagine the kind of crisis that India is going to face. Look at the cost of power. We will have a situation where power from coal which is today hovering around Rs.2.50 a unit will go up to Rs.6 a unit with rising interest cost and rising CAPEX on projects because of delays due to the inefficiency of this Government. With the need for imported coal which has been acknowledged by the Prime Minister’s Office in the last meeting, we are in a situation where the cost of power generated by coal will go up to Rs.6 a unit. And, all this happens when we have the world’s fourth largest reserve of coal! It is a very sad day. There is a complete lack of decision-making in the Government. The policy paralysis that the whole world is talking about is evidenced clearly in the Ministry of Power and the Ministry of Coal. And I think the failure of the Ministry of Coal is going to cost the country dear. It has taken India back by ten years, between the Ministry of Coal and the Ministry of Environment – it’s acknowledged by the Ministry of Coal in its Annual Report — there are about 200 environmental clearances which are pending. They cannot sort them out. Now, we have a situation where coal mining is stuck; new exploration is stuck; and power projects are stuck. The only thing this Government is good at, Sir, is in allocation of coal mines post-haste, without even following the due process or without any guidelines based on which coal mines should be allocated. Many earlier speakers have highlighted that. I will not go into the detail. But there are two details which have not come out in the earlier discussions. One, when they allot captive mines, the allocation of mine, the size of mine is disproportionately high compared to the requirement. And that is one way where scam gets hidden. They may have given a mine for cheap power for the State, but the disproportionately high reserve is where the scam lies. And the second is the allocation of mines to State Governments and State companies. The method in that is that the mine is allocated to a State or to a State Corporation. They enter into a JV with a private party and, in effect, pass on the mine to a private party without following the due process and that is where even the Government allocated mines need to be scrutinised in great detail. The entire allocation of mines from 2004-2009 needs to be scrutinised all over again. The Coal Controller himself has acknowledged that only 28 or 29 mines to date have been taken up for production out of almost 195 blocks. And the Government says that it has cancelled 25 allocations. I went through that list. It is on page 94 of the Standing Committee Report. I fail to understand how some mines are cancelled after ten years while some are cancelled in two years. There is no process. What about the 160 odd mines which have not yet been started? What are they doing about that? What about the 50 recommendations for cancellation since January which has not been acted on? What about the showcause notice? No action on any of them has been taken. I think the Supreme Court is going to come down heavily on it. It has already stated that auction of natural resources is the right method and this Government will have to review all these allocations before the CAG Report comes out. Like the Prime Minister mentioned, there could be some foreign hand in the nuclear protests, I wonder whether starving this nation and its power plants of coal also is the handiwork of some hidden hand which this Government is protecting. I think it is high time the Coal Ministry in consultation with the Ministries of Power and Environment and Forests made a visionary road map to get the country out of the mess that they brought us in. Thank you, Sir.

(Ends)

SHRI PIYUSH GOYAL (MAHARASHTRA): Thank you very much, Mr.Vice-Chairman, Sir, for giving me this opportunity to present the views on the Budget presented by the Hon. Finance Minister. At the outset, I am disappointed man, Sir. We have an illustrious Finance Minister, very experienced. The first Budget he presented was in 1981 when he became the Finance Minister for the first time, and, since then, we have always looked up to him as a beacon of light to take this economy out of the morass that it finds itself in. Unfortunately, that is not to be. Despair is spreading, Sir, all over India. Corporate India does not believe that this Government understands what are the evils afflicting the economy. The middle class is completely shocked and shamed by all the scams that we see with continuous frequency emerging one after the other. Sir, the poor aam aadmi, about whom other Members talked about so passionately from the Treasury Benches, doesn’t trust the administration of the welfare schemes, tom-tomed by this Government, which, though may be launched in the name of one particular family over the years, but which are hijacked by administrative failures and corruption of very large magnitude, as evidenced by statements of their own senior leader as far back as 20 years ago or may be 25 years ago when he said, ‘85 per cent of Government’s expenditure is frittered away in corruption and maladministration.’

Sir, this Government needs to address bigger issues of good governance. They need to address the big issue of de-bureaucratization rather than just focus on tinkering with FDI retail because, unfortunately, for this Government, reform is equal to FDI and they go no further. I think it is time the Government realizes that there is far more things to reform in our country. People want Government to get out of their lives.

SHRI PIYUSH GOYAL (contd.): People want Government not to interfere, not to tax every aspect of their lives, not to have a license quota raj for everything that they engage in. They are looking for freedom from high taxes. They are looking for freedom from bureaucratic controls over their lives.

Sir, I just wish to touch upon one or two points, since I am on the point of reforms, before I go further. This Government has often alleged that it is the Opposition that is responsible for the paralysis in policy reforms that this country is urgently asking for. I would like to contest that, Sir.  We talk of the GST. The Government talks of reforms in the indirect tax structure by the introduction of GST. But what have they done? They have an Empowered Committee of Finance Ministers working for the last four years. In the last four years, the Government has not been able to bring even the Chief Ministers of their own States on the same page as the Central Government in terms of implementing the GST.

On this account, Sir, let me raise a few points about the GST. We do not dispute the advantages of having a Central tax which eliminates a lot of duplication in the system. It eliminates the cascading effect of taxes. It eliminates the export of taxes. Probably, getting a GST in place would also give the States a share in the service tax collected, which by the way, Sir, was a promise made by this Government when service tax was first introduced in India, that the revenue would be shared with the States. But, till date, we have not seen that revenue being shared. However, despite all of these advantages, why are we frittering away the benefits of GST? We are frittering it away because the Government has still not been able to come to modalities of how to implement that tax. They still do not have a common form, which can be filed by an assessee, finalized by the GST committee. The Central Government wants to usurp all the powers. The States are not willing to let go their powers. As of now, about two lakh assessees report to the Central Government in excise whereas 50-60 lakh assesses are under the jurisdiction of the States. So, now a new formula has come, which I don’t think the people outside, who claim that they want GST, are aware. This formula is that the General Sales Tax would comprise two sections – one, a Central GST and the other, a State GST. I don’t understand what would be the benefit of such a GST that they are proposing. And then, there is no clarity at all on how the assessments would take place, where the returns have to be filed, how the money has to be paid, who the dealer would report to, and so on. And, I am given to understand that every dealer will have two assessments, one, from a Central authority and another from a State authority. And then, they don’t have a dispute resolution mechanism in place. As yet, we don’t know how a dispute under the Empowered Committee will be resolved, because the Centre wants a veto power, while implementing GST or dispute resolution, which, obviously, the States are not willing to give.

Sir, they have not yet even determined the rate at which GST would be taxed. Still, there is a talk of two rates but we don’t know what those two rates are going to be. We don’t know what the floor rate will be. We don’t know what the band would be in which the GST would be implemented in various States. We don’t know how the money is going to be forwarded to the States in terms of compensation. The Central Government is still not compensating States for the loss of the CST, which was reduced from four per cent to two per cent, with the promise and sovereign assurance that they would be compensated for the loss. To date, except for the first two years, from the third year onwards, a very small compensation has been made. This year, there is no plan for compensation, and the logic being given is that ‘when we announced VAT or CST reduction, we had said that we would compensate for two or three years’. But Sir, they had also said that GST would be implemented in three years. They have not completed one part of the bargain. They have not implemented GST, but they have stopped compensating the States. How do they expect States to trust such a Government? And, obviously, there is resistance because the fiscal autonomy of the States is under threat under such a GST regime that is proposed by this Government.

Therefore, Sir, the GST is not a burden on my head. It is a burden on the Centre’s head, to resolve these issues, sit down with the people concerned and the concerned States and find solutions.

SHRI PIYUSH GOYAL (CONTD.): Sir, we have a great law called the ‘Direct Tax Code’ which has been proposed by this Government. I am a part of the Standing Committee and we have recently put forth our recommendations and Report. Sir, the recommendations have come out after detailed examination of the DTC. But the Government chose to take (ive parts of the DTC, for example, the General Anti-Avoidance Rules, and implement them in the Budget itself in the original form rather than considering the recommendations of the Standing Committee. Sir, these are draconian provisions. In the normal course, we would welcome them since they are a tool to fight black money. But, Sir, we all know, and I think, many people in this House must have experienced their constituents complaining about the misuse of the tax laws in our country. People come with a gun on their head and say, ‘Look, you deposit additional tax before 31st March, otherwise I will penalize you; I will trouble you because we have to meet our fiscal targets set by the Finance Ministry.’ Sir, assessees are also told, ‘You deposit money before 31st March and we will refund it to you in April. But if you do’t deposit it and if I do’t meet my targets, then I may not get a good posting, then I may not get a good CR and I may be penalized.’ Is that how tax administration in our country works? In that situation, with a provision like GAAR, what will happen to the assessee? They will be under continuous pressure with no safeguards brought into the law. I would urge the Hon. Finance Minister to please consider the recommendations of the Standing Committee before finalizing the Budget provisions and bring those recommendations into the GAAR provisions, as they have been proposed.

THE VICE-CHAIRMAN (PROF. P.J. KURIEN) in the Chair.

Sir, the disinvestment process has been a big casualty of this Government. The NDA Government had initiated a process of strategic sales through auction in a most transparent manner. I do’t know how some Members of the Treasury Benches had called it ‘sweet-heart deal’. I do’t understand how can an auction, where the whole world was invited to participate, be a ‘sweet-heart deal’. But ever since this Government has come, no loss-making PSU has been disinvested; no loss-making PSU has been turned around and there is no improvement in efficiency of these PSUs. All that we have seen is the sporadic sale of some shares of PSUs which have not even met the disinvestment targets of the last three years. What is the solution? I would urge the hon. Finance Minister to look at that big pool of assets in the Government’s hands. Today, just the listed PSUs have a market cap of Rs.14 lakh crore. The rest of the PSUs, with all the assets put together would not be less than another Rs.20 lakh crore. So, he has an asset base of approximately Rs.30 lakh crore. It is already on record that Government can disinvest up to 51 per cent. Why do’t you take that forward faster? Why do’t you take the process forward to raise revenue from alternate mechanism, as the hon. Leader of the Opposition said, through auction or transparent method? The assets of the country can be better utilized or exploited in the hands of the private sector, can be utilized through Public-Private Partnerships. I would urge the Government to look at disinvestment in a more holistic fashion and take this process forward.

Sir, one other suggestion that I want to make is that the Government should move to the accrual system of accounting. It will take care of the earlier problem that I mentioned of tax officials troubling the assessees during the end of the year just to meet fiscal targets. It is high time the Government also started accounting for its assets, expenses and incomes on an accrual basis, which is an internationally accepted, correct method to account for Government revenues.

Sir, my dear friend, hon. Shri Mani Shankar Aiyar, very (ively chose one statistic and, unfortunately for him, he chose a statistic on which this Government, or unfortunately India as a whole, has been a complete disaster.

SHRI PIYUSH GOYAL (CONTD): He chose a statistic of debtto-GDP ratio in order to highlight how India is a great story with 63 per cent debt-to-GDP ratio, and a completely amusing and amazing statistic of China having 155 per cent debt-to-GDP ratio. I wonder from where he got those statistics. I would urge the hon. Finance Minister to please apprise his esteemed colleague on what the real facts are. But, in any case, I will highlight the real facts. The fact of life is that whereas India had a debt-to-GDP ratio of
66.2 per cent in 2011, China had a debt-to-GDP ratio of only 16.5 per cent in 2011. Sir, since you are busy, I will repeat. India is at 66.2 per cent. China is at 16.5 per cent. I wish the Treasury Benches had some more economically-savvy people to give, at least, the correct facts on the Table. Then, unfortunately, he chose a country like China which, on almost every parameter, has beaten India, whether you look at per capita income, whether you look at GDP growth, whether you look at Forex reserves, whether you look at FDI, and I can continue to name so many more fields. China has beaten India hollow and we have to put our act in order, we have to start acting fast. If the dream to make India a super power has to be achieved, I would urge the Finance Minister to please take these large deficits, that he is proposing in his Budget, more seriously and not fritter away the resources of this country on large subsidies, which have been wasted and not implemented properly.

In the same light, Sir, regarding the foreign exchange reserves, what is the current account situation in this country today? Last year, the current account deficit was over 3.4 or 3.5 per cent. Sir, even in 1947-48, when the country gained independence, the current account deficit was not such an alarming figure. It was, probably, less than 2.5 per cent. And, look at the foreign exchange reserves. Mr. Mani Shankar Aiyar went about harping on NDA Government’s performance. So, I did a little calculation. When the NDA Government came to power in 1998, they had Forex reserves of $29 billion. When they demitted office in March, 2004, the Forex reserves were $113 billion. It shows a growth of 289 per cent over a period of six years, an increase of about 48 per cent every year. This Government came to power in 2004 with a reserve of $113 billion. Today, as on 16th March, 2012, the Forex reserves are $294.821 billion, that is, a growth of about 161 per cent in the last eight years of mismanagement of the economy. That shows growth of only 20 per cent a year in our Forex reserves. I have gone through the Economic Survey. On every page, I can do a statistical analysis to show how the economy was far better handled by the NDA Government, vis-a-vis, the UPA Government. Take the case of inflation. I beg to correct myself. The first Budget, that Pranabda presented, was for the year 1982-83. I stand corrected. Sir, in the fifth para, page 1 of that Budget Speech of 1982-83, hon. Finance Minister had said, “The fight against inflation has been a high priority of the Government. Any slackening of effort on this front would have undermined the very basis of our development. Inflation hurts all sections of the community. But, it hurts the weaker and poorer sections the most. Inflation also hurts the development process, as investment costs get distorted and financing becomes an increasingly severe problem.” So, we were assured that this would be the mantra of the hon. Finance Minister when he presented the last two Budgets that I have seen.

SHRI PIYUSH GOYAL (CONTD.): Unfortunately, Sir, on the front of inflation, this Government has failed miserably. If you see the statistics, when the NDA Government came to power in 1998, they were handed over a headline inflation, which during 1991-96, again, the Congress’ previous regime, had reached 9.3 per cent per annum. It was the NDA, which, through sheer fiscal prudence, brought it down to 4.9 per cent per annum. From 9.3 per cent per annum in six, seven years that we were in power, it was brought down to 4.9 per cent per annum.

We almost reduced the WPI inflation to half. Unfortunately for this country, the UPA came back to power. In the last seven years, upto 2011, the headline inflation was at an average of 6.2 percent, again, inched up year on year. Of course, the last year has been even worse. We have seen double-digit inflation all through the year, except in the last two months, but that also was more because of the base level effect. If the base is higher in the previous year, it shows that the inflation has come down. Similarly, coming to food inflation, Sir, during the NDA regime, food inflation was at an average of 3.5 per cent but in the seven years of this Government, it has been in double-digits at an average of 10 per cent, and, if you take only the last five years, it is 12 per cent per annum. So, in terms of statistics, we can keep going on till the cows come home, and, there will be enough statistics to show as to how this Government has mismanaged the economy.

Sir, I come to one figure which Mr. Mani Shankar Aiyar spoke about, and, I was again very amused to see how (ively statistics can be used for distorting the correct picture. From the Finance Minister’s Budget, he spoke about the interest outgo versus revenue receipts. So, I sat down, took out a calculator and gathered the old information. Look at what I have found, Sir. This Government was in office till 1996. They left behind an interest to revenue receipts ratio of 47 per cent, and, when the NDA came to power in 1998, we were handed over an interest to revenue receipts ratio of 49 per cent. So, it was 47 per cent during the original Congress rule, and, 49 per cent when the NDA came to power. Again, by the time, we left office in 2004, with sheer fiscal prudence; we had brought it down to 41 per cent in the Budget Estimates of 2004-05, which were actually achieved. And, as my Hon. Leader also mentioned, it was not like the present Government which gives figures which are never to be achieved. Our figures used to be achieved. We brought it down to 41 percent, which is a reduction of 16 per cent. But, there again, in the last six, seven years of UPA rule, as per the 2011-12 revised estimates, they have been able to bring it down to 36 per cent, and, a fall from 41 per cent to 36 per cent amounts to only 12 percent reduction. So, despite having a much better fiscal position than what we had, they have not been able to reduce it as much as we had reduced the ratio. I wish Mr. Mani Shankar Aiyar would check his statistics better, maybe, he can consult somebody like me, I will help him to run through statistics and give more factual statistics rather than giving distorted figures, which do not mean anything. The most amusing thing, I repeat, is the China’s 155 per cent Debtto-GDP ratio. That is the best of them all, Sir.

One very interesting figure came to my notice when I was going through the Budget in detail. Sir, since they like to blame the NDA Government for everything, I thought I will highlight some of the achievements of the NDA, which are far more important than the so-called blames. Sir, when the NDA Government left office in 2004, as per the actual figures for 2003-04 in the last year when we were in power, our non-Plan expenditure on the revenue side was Rs. 2,83,000 crore, and, on capital account, it was Rs. 65,000 crore, whereas in the current Budget of 2012-13, they have increased the revenue account to Rs. 8,65,000 crore, and, capital account to Rs. 1,04,000 crore.

SHRI PIYUSH GOYAL (CONTD.): So, Sir, in the seven years that they have been here, or eight years now, they are increasing the Revenue Account by 200 per cent whereas the Capital Account expenditure is increasing only by 50 per cent. And the same goes with the Plan expenditure. The Revenue Account expenditure from 2004 to 2012 has increased from Rs. 78,000 crores to Rs. 4,20,000 crores, which is an increase of 450 per cent on the Revenue Account, and on the Capital Account, the increase has been from Rs. 43,000 crore to Rs. 100,000 crore, which is only 150 per cent. What does that show you? It shows you clearly a Government which is focused on vote bank politics. They are throwing away the money of this nation, creating large fiscal deficits only on the Revenue Account, costing the nation and the future generations of this country huge problems as we go into the future, and that, by no stretch of imagination, is prudent fiscal management. I think, a good Government would have spent more money on creating assets of this country, spending on the Capital Account rather than wasting money on the Revenue Account. And, further, I just want to highlight one small thing. The hon. Finance Minister had projected GDP to grow by 14 per cent in the last year’s Budget and again 14 per cent in this year’s Budget. Now, he did achieve 14 percent in the last year’s Budget, but not by genuine growth. The nominal growth is 14 per cent and the real growth, as he himself has acknowledged, is 6.9 per cent, which I personally contest because that figure is based on the first three quarters and the last quarter is worse than the previous one. I think, 6.9 per cent will be left at about 6.5 per cent by the time we get the actual figures.

Having said that, we still achieved GDP growth of 14 per cent. So, how did you do that? The rest was inflation. Now, in the current year, we are told that it will again be 14 per cent. I am just calculating that if the real growth in GDP is going to be 7.6 per cent this year, at 14 per cent nominal growth, that means, it is already budgeting for 7 per cent inflation. Whatever may be the final figures, today we are already budgeting 7 per cent inflation in this. Final figures, I suspect, would again be double digit inflation with the pressure of large indirect taxes and the lower growth would be compensated by inflation. Yes, you will again have 14 per cent nominal growth in GDP but through means of inflation.

THE VICE-CHAIRMAN (PROF. P.J. KURIEN): Mr. Goyal, your party has ten speakers. So, please try to conclude it now.

SHRI PIYUSH GOYAL: Yes, Sir. In terms of subsidies, the Hon. Finance Minister has under-provided so grossly that I am amazed that even a common reader – Sir, I gave a speech in March last year on last year’s Budget and I raised exactly the same point – of the Budget could glance at it and tell you subsidies were underprovided, revenues were over-provided. It does not need rocket science to understand that, Sir. But again, this year it is the same ploy – show low subsidy, show higher revenue growth, fool the public because after all, public does not bother about the Revised Estimates of the last year. So, you tell them The future is rosy, forget the past. In 2013, when we come back to debate again, and I hope my party gives me a chance to speak then, we will again see a picture, an actual picture, when you will have all these figures going wrong and nothing to write home about.

THE VICE-CHAIRMAN (PROF. P.J. KURIEN): I think, you can conclude now. You are searching for points.

SHRI PIYUSH GOYAL: No, no, I have got so many of them all over the place.

THE VICE-CHAIRMAN: A number of speakers are there from your Party.

SHRI PIYUSH GOYAL: Sir, Service Tax is one area I want to highlight to the hon. Finance Minister when I talk about this Budget being less than honest in its figures, and I hope I will get some answers. I have sought protection from the Chair on many an occasion. This is my seventh or eighth intervention in the House in the last one and a half year, but to date I have got no response to any of the points I have raised. But then that is another story. I hope the Parliamentary procedures bring in some mechanism that we get a response to our comments. Sir, they have shown Service Tax to grow from Rs. 95,000 crore to about Rs. 1, 24,000 crore, an increase of only Rs. 29,000 crore.

SHRI PIYUSH GOYAL (CONTD.): The projection being made is not a very big burden on the aam aadmi. Sir, I contest that figure. And I will tell you why.

Sir, the Hon. Finance Minister is on record saying that there will be a GDP growth of 14 per cent, and we all know that services are growing faster. It compensates for the lower agricultural and manufacturing growth. Last year, service tax grew from Rs.71,000 to Rs.95,000 crore. This is 34 per cent growth without any increase in rates. This year and last year also, the GDP was slated to grow at 14 per cent. So, by that same logic, this year also, in the normal course, without increasing the tax rate and without increasing the scope of services to be taxed, there should be a 35 per cent growth in service tax. However, to be more conservative, I have taken 30 percent as the normal growth. Hence it will be Rs.95,000 crore + Rs.28,000 crore, which is 30 percent, as the normal growth in  service tax.

Now, they have also expanded the scope of service tax, everything on earth except 17 items. I have assumed that this will add another 25 percent. So, another Rs.32,000 crore can be added by the expanded scope. The total becomes Rs.1,55,000 crore. Then there is a 20 per cent rate increase, from 10-12 percent, which is another Rs.31,000 crore. So, the effective tax, service tax alone, I suspect, Sir, could be Rs.1,86,000 crore and by the time the year ends, you will see an additional burden on the common man. As my hon. Leader said, the Prime Minister is on record in 1991 to state that indirect taxes are an inefficient way of taxing the people; it is a burden on the common man; and it should not be resorted to. But what we are seeing is a burden of Rs.91,000 crore on the common man which in addition to a customs increase of Rs.33,000 crore and an excise increase of Rs.44,000 crore is a phenomenal burden on the common man.

THE VICE-CHAIRMAN (PROF. P.J. KURIEN): Please conclude. 

SHRI PIYUSH GOYAL: Just one more thing. They are talking of excise increase of 30 per cent in the current year. Out of that, 20 percent is due to the rate increase. They are saying that only 10 percent will be the real growth of excise collected. They are already acknowledging that production and manufacturing in India are dead. There is no hope for domestic Indian manufacturers. But on the customs side, without any increase in rate, there is an increase of 22 per cent. Are we going to see an increasing, an overarching dependence on imports in the years to come causing the Indian economy to be shattered and the foreign economies to gain at our expense from the large domestic market in India? 

THE VICE-CHAIRMAN (PROF. P.J. KURIEN): Goyal ji, please conclude.

SHRI PIYUSH GOYAL: However, Sir, as we can see, today, we are in a situation where the Indian Government has to take proactive steps to ameliorate the problems of the poor, effectively give them relief from the high dose of taxation, do something for good healthcare, and provide them quality education. I was amazed to see Shri Mani Shankar Aiyar quoting statistics that a ninth standard boy cannot read a second standard textbook. I don’t know whether he was speaking from our benches or from their benches. I think it is an insult to the Government of the day if that is the status of their highly tom tomed Sarva Shiksha Abhiyan. If the NRHM loot is going to continue in this country, when is healthcare really going to reach the common man? What is there in this Budget for tourism? What is there in this Budget for infrastructure? And all that they can do is retrospective amendments in laws due to which SEZ story has been killed, foreign investment will be killed, and we will have a situation where India will, once again, go back to the old days of backwardness and lose the momentum that we have achieved in the last few years. Thank you very much, Sir.

(Ends)