SHRI PIYUSH GOYAL (MAHARASHTRA): Mr. Deputy Chairman, Sir, underneath the gloss and glitter of the 2nd fastest growing economy lies another India of about 330 million BPL families and the largest number of mal-nourished children in the world. It is in this background that the nation expected a visionary Budget to alleviate the misery of poor Bharat. On the contrary, the Budget has let down the aam admi and become an exercise in financial engineering as I will attempt to decipher in the next few minutes. The Union Budget is not just a statement of accounts. It should not just contain statistics. It was intended to reflect the vision and foresight and statesmanship and should hold a promise of a better tomorrow for the millions who reposed their faith in the UPA Government. The hon. Finance Minister is a veteran and he gave great hope to all of us. Unfortunately, this Budget belies all such expectations. It is devoid of any vision, foresight, focus, statesmanship initiative or drive.

SHRI PIYUSH GOYAL (CONTD.): Sir, this has been a missed opportunity. As India enters the last year of the Eleventh Five Year Plan, we see that almost on all parameters, this Government has failed. In the power sector, where the target was 78,577 MW, they only managed to achieve 32,000 MW. In Highways, 35,000 kms. roads were to be built but only 7,736 kms. have been built. With regard to crude oil production, which was slated to be 187 million tonnes, only 130 million tonnes could be achieved. Coal production against a target of 680 million tonnes, reached only up to 319 million tonnes. In case of major ports, against the targeted handling capacity of 511 million tonnes, they handled only 297 million tonnes. What has been the performance of this Government? Sir, for everything that we ask a question about, they only go back to the NDA performance and juggle with figures and statistics to try and juxtapose part of the performance vis-a-vis the NDA performance. One would ask them, what they did for fifty years of governance. Sir, out of sixty years, they ran the Government in this country for fifty years and what have they given us to show to the world in terms of performance.

Sir, I think, it is time that this Government announces performance audits of all the schemes that it is undertaking, by private initiative, by private participation to understand where we are going wrong. They really have no concrete blue print to achieve literacy, education and health care for all. It is not just mere statistical Budget provision that is going to solve the problem. One senior colleague mentioned about Mahatma Gandhi National Rural Employment Guarantee Act, and, he mentioned that this scheme is providing employment to the people of this country. Is that the sort of employment that this Government wants to give to the people? Another senior colleague from the Treasury Benches himself raised a question two weeks ago, and, said that the Government should focus on creating assets and not just give a dole to the people working in MGNREGA. Where are the assets being created? Look at the performance of NDA. They created infrastructure; they gave jobs to people in creating assets. It was not like distribution of MGNREGA funds. Sir, they are boasting of the performance of MGNREGA. Look at the performance. So far, as on 9th March, 2011, the total sanctions under MGNREGA come to Rs. 35,850crores. Out of this, only in the last 68 days, from 1st January to 9th March, Rs. 20,864 crore have been sanctioned, and, possibly disbursed in the last few days.
How is this money ever going to reach the common man? It is a complete farce. They are talking of schemes but they are not being able to implement those schemes on the ground, and, if giving 40-50 days of employment to the poor people is their idea of giving employment and uplifting the poor people, I think, it is a very sorry state of affairs of the UPA Government’s performance.

Sir, they talked about eradicating black money and coming out with schemes to take care of black money. Recently, in a press conference, the Ho’ble Finance Minister said that they collected 34,500 crore through the Director General of Income Tax, International Taxation. Sir, I went into the books a little bit and found that it was routine tax collection comprising international companies, transfer pricing, foreign bank branches, TDS or withholding tax on foreign remittances, and, FIIs short-term capital gains tax. It had nothing to do with the black money. This was not a part of the collection out of any significant effort to go after black money or foreign accounts. In fact, the money that they have collected from foreign accounts is less than Rs. 20 crore. Sir, I would also recommend that this Government comes out with a blue print of how all procurement processes in this Government are going to take place, and, how the Government is going to allocate natural resources. It is time that we make a policy on this. We should announce a transparent price discovery mechanism through e-auction for all purchases by the Government and for allocation of natural resources, be it spectrum, be it oil and gas reserves, be it coal, be it iron-ore, or, be it Government land etc. All Government resources should only be allocated by a transparent e-procurement process, where everybody has a right to participate, rather than fudging and doing the kind of things that we have seen this Government doing in the last few days. I am very worried about a provision in this Budget, which, I think, is an amnesty scheme in disguise. The hon. Finance Minister is on record, and, I believe, hon. Prime Minister is on record saying that they do not want to bring an amnesty scheme as it is a disincentive to honest taxpayers.

SHRI PIYUSH GOYAL (CONTD.): But, they have brought in a provision by which dividends repatriated from overseas subsidiary will be taxed at a reduced rate of 15 per cent against 30 per cent. What is this method of giving this amnesty? Any company can be incorporated overseas in less than 48 hours and move their funds from wherever they are in tax havens into that company by way of commission or any entries and repatriate that into the country as a dividend at 15 per cent. So, this is an indirect amnesty scheme that this Government has introduced. I believe, it is important that this Government bring out safeguards to make sure these dividends are out of genuine income, they are out of sustained income over the last few years and check the source of this dividend to make sure this is not surreptitious money which is being brought in the garb of dividends. Sir, the SEZ policy of this Government has been completely flawed from day one. The NDA brought in the SEZ concept as a means to bring export competitiveness in India, as a means to develop the backward regions. What is this Government doing? They have made it a real estate play. You now have SEZs in Gurgaon; you have an SEZ in the municipal limits of Mumbai. You have a 20-acre IT SEZ within Mumbai at Powai. Is that the type of development for which we are giving tax concessions to SEZs? Then, this Government changes its policy every few days. You might have read in the papers today, the Commerce Ministry and the Finance Ministry as parrying. The Finance Ministry first gave all the concessions to SEZ and now they are withdrawing all the concessions. They are bringing in MAT. They are bringing in Dividend Distribution Tax for units and developers of SEZ. I think, it is time this Government focus on stable long term policy and attack the misuse. If at all they want to tax SEZ developers, tax the real estate developers, not the genuine infrastructure developers in backward regions. You have to differentiate between the two. Sir, there is an amount of rupees 2.48 lakh crores held up in tax litigation. This Government is on record saying that tax litigation is one of the biggest problems and the largest litigant is the Government. Why does the Government not come out with schemes, fast track or special courts, at least, for the large cases? There is a tendency, Sir, in the Government revenue department – just slap a case, slap a tax or a penalty.

That has also become a tool to extort and harass people. So, I think, there should be some accountability on litigation also of the Government. There is a lot of talk of computerization of the tax department which started in 1991. We have been hearing of it for twenty years and till today I have not received any assessment through the computer. Refunds are a big problem. Tax credit on TDS is a big problem. I think, this Government should focus to sort out this computerization problem. Sir, I have an important observation to make on the misuse of DTA Treaties, especially through Mauritius. I can understand if Mauritius is the originator of capital and bringing it into India, giving tax benefit for that is understandable. But when Mauritius or other such Treaties are being misused only as a pass through vehicle, when actual funds are coming from some other domain into Mauritius and then are brought into India, this is just round tripping of funds or using Mauritius just as a pass through. I think, Government should differentiate in this respect. Give the tax benefit to Mauritius. I have no problem. But it should be only for genuine funds coming from those countries. Wherever it is used, as a pass through, there should be a tax levied. I am often told that there is a foreign relations issue. If at all Mauritius earns some money out of being used as a pass through, it will be 100 or 200 or 300 million dollars. Our country will be better off giving a grant of 300 million dollars to Mauritius, one time or every year. But they will probably earn billions of dollars of tax revenue which are going in the garb of tax treaties for so many years. Especially in the case of FIIs money coming into India, I think, some sort of control should be done so that this misuse can be stopped.

   Sir, they have imposed one per cent excise on 130 items. I don’t know what revenue they will get, but certainly it will create a lot of problems for assesses, registration, returns, audit, etc. Transaction cost will go up. So, they must reconsider that one per cent excise. In the power sector, there is no long-term philosophy, no reform. In fact, the money that was allocated last year has not been used. I don’t know what this Government plans to do for the power sector. (Time-bell) Tourism is completely denied anything. There is no focus on tourism. There is no future for tourism. 

SHRI PIYUSH GOYAL (CONTD.): Sir, they have talked of reforms in the GST and tried to attack the NDA Government. The fiscal autonomy of States has to be protected, especially from the effects of natural calamity. There should be some method to protect their fiscal autonomy. I don’t think any State is against it as long as their genuine concerns are taken care of. Sir, one important thing that I want to talk about is inflation. My senior learned colleague tried to attack and paint the NDA regime with the same brush as the UPA regime. I went into complete statistics. The WPI in the previous Congress-led regime from 1991-96 grew at an average of 9.3 per cent. It was the NDA which through sheer fiscal prudence brought it down to 4.9 per cent. We reduced the WPI inflation to half. Then this Government came in again, and again the inflation started inching up. Its average for the last seven years that they have been in power is 6.2 per cent.

MR. DEPUTY CHAIRMAN: Please conclude.

SHRI PIYUSH GOYAL: Sir, just look at food inflation. In the NDA Government, the food inflation on an average was 3.5 per cent. But during the seven years of this Government, food inflation has been in the average of ten per cent and if you take the last five years, it is twelve per cent. It is a very disturbing feature. This Government is answerable to the people of India for the kind of inflation that it has caused.

Sir, the last point that I want to make is this. This Government has given us a Budget which is not honest in its figures. Last year’s Budget Estimates and Revised estimates have gone up by ten per cent. If you see the Budget Estimates, it was ten per cent over the actual of the previous year 2009-10. The overall increase is twenty per cent and now they say that they will contain the expenditure increase at 3.5 per cent. It is just humanly impossible. What are they going to cut back on? They have not provided for oil subsidies adequately; they have not provided for food subsidy; and they have not even provided for Food Security Bill. I believe the fiscal deficit is a threat. It will go up by at least Rs. 2 lakh crore.

MR. DEPUTY CHAIRMAN: Please conclude.

SHRI PIYUSH GOYAL: The spending of the Government will go up in the coming year. The interest rates will rise and money supply will be tightened with Government being a big borrower. There is a severe threat to the people of this country.

MR. DEPUTY CHAIRMAN: Please conclude.

SHRI PIYUSH GOYAL: Sir, I think the numbers just don’t add up.

MR. DEPUTY CHAIRMAN: Please conclude. There are other three Members from your party to participate in this discussion.

SHRI PIYUSH GOYAL: The plans are not known. The policies are not credible.

MR. DEPUTY CHAIRMAN: Please conclude.

SHRI PIYUSH GOYAL: Sir, I only hope that the hon. Finance Minister has a solid
plan to achieve his target.

(Ends)

SHRI PIYUSH GOYAL: Thank you, Sir. I just want to make two or three very brief interventions. The Bill, in its Section 3(A), states that it will apply only to nuclear installations controlled either directly or through an authority by the Central Government. But there is proviso to Section 7(i) in which they have said: “The Central Government may, by notification, assume full liability for a nuclear installation, not operated by it.” I would seek the Government’s clarification on that.

Secondly, Sir, in Section 4, they have explained that if there is any damage caused during temporary storage of the material or during transportation of the material, it will be deemed to be the operator’s liability. I am concerned about the safety aspects, especially in transit or in storage; people think that there will be a premium not to be safe. So, we should have some liability also imposed on the people who are storing and transporting, or some incidental or criminal liability should have been imposed on them.

The third point Sir, is, there is a very big concern that is being expressed by many speakers and authors, that there will be a premium to be unsafe. If there is a cost involved in making the plants more safe or if it comes to light that there could be some improvements to the plants, which will make it safer, then the operator will think that the cost is too much and the liability at Rs.1500 crores is being capped; it is much cheaper. And lastly, Sir, one small point. By limiting the liability to 300 SDRs, are we limiting the funds available under CSC to our beneficiaries? In the unfortunate event of an accident, I think, CSC could also participate beyond 300 SDRs; I do not know what the Government’s stand is.

Just one last point. In the Lok Sabha debate, the hon. Minister has mentioned that though the liability in civil jurisdiction is limited, there will be unlimited liability. Yes, it is on record; in the Lok Sabha — I heard it on T.V. — the Minister mentioned that the real liability would be unlimited and the courts of law can give any larger claim also. I would seek the Minister’s clarification on this point. Thank you, Sir.

Bharat needs Bhagirath again –

An action oriented fast track proposal

With Pokhran, Golden Quadrangle and such bold initiatives, Shri Atal Bihari Vajpayee has created tremendous self-confidence in the country and has become a symbol of vision, inspiration and implementation of mega projects. The nation looks to him to take the next bold initiative to permanently eradicate the menace of floods and drought. The time has come for him to give a call to the countrymen from the Red Fort on Independence to stand behind him for this noble cause.

“ना ही बाढ़ ना ही सूखा

पूरा करेंगे, देश का सपना”

Background

• India faces a perennial problem of both floods and droughts. A solution suggested about 50 years ago was ignored and not implemented due to the scarcity of resources then. The Nation has been paying a heavy price all through these years.
• Water will be the most critical resource of the 21^st century – India receives annual precipitation of 4000 billion cubic meters (bcm) but presently only 28% is used.
• Recession continues, new investments sluggish, employment growth less than 2%, core sector worst affected.
• Tremendous success under the Roads program has boosted demand and generated jobs.

Purpose

• A National water grid be created to control and balance the collection and distribution of water across various states through a network of canals and dams.
• To provide employment for one crore people, mainly the excess rural labour and lakhs of educated professions, in the creation of infrastructure all over the country.
• Increased savings coupled with guaranteed water supply will lead to investments in mechanization, better seeds and fertilizer, ultimately adding to purchasing power in the villages.

Implementation

• Project to be executed directly by the Central Government by setting up a national water grid authority on the lines of the National Highway Authority of India.
• The entire water resources of the nation can be available for transfer from flood prone areas to drought prone areas such that there is always adequate water all-around.
• Massive data on the subject is available with our institutions and research bodies for the development of the National Water Grid with a network of canals, reservoirs and small and medium dams.
• With this data and using GIS technology this project must be kick-started in a short period of time at thousands of different locations eventually converging into an integrated water grid.
• Considering enormous calamities caused by floods, it is suggested to take chronic flood prone areas in the first phase.

Financial Resources

• Initial capital to be provided by the Central Government.
• Issue of tax-free long term Infrastructure Bonds.
• Borrowings from cash rich Indian banks and financial institutions.
• Global funding agencies like Asian Development Bank, World Bank, international trusts and pension funds; also from NRI’s through second series of Resurgent India Bonds.
• Revenue from sale of water, hydel power and use of inland waterways.

Other Benefits

• The project would pump-prime the economy envisaging investment of nearly Rs. 3 to 5 lakh crore (US $ 60 -100 Billion) – to be executed on fast tract basis in three stages of 30 to 40 months each.
• Such massive and speedy spending will generate huge demand for steel, cement, transport, capital goods, etc. and in turn will also increase government revenue collections.
• Hydel Power generation can be increased at various locations through small power plants to feed local requirements at low cost without much transmission and distribution losses.
• Inland waterways can be created providing environment – friendly and cheaper means of transport for men and materials.
• Revival of industry will reduce Bank NPA’s.

Piyush Goyal

Mumbai

6^th August, 2002

Case Study
A Government hospital in North India recently issued a purchase order for supply of 1000 nos. of O.T. stainless steel trays for Rs. 2000 each as an emergency requirement based on lowest out of 3 quotes (all from related companies). The usual market price is Rs.50 per tray; higher price was justified by minor modifications to the technical specifications (in this case only the shape) from the ones readily available in the market.

Background

• There is a feeling of helplessness all over the country that nothing can be done to remove corruption; people have lost faith largely because of lower level corruption in all walks of life affecting day-to-day work.
• The leadership is committed to eliminate/substantially reduce corruption.
• The government has started a major initiative to provide Internet access to the remotest parts of the country.
• Transparency in government purchases is also a requirement of the WTO.

Methodology

• Every government and semi government department or undertaking and joint sector company will be required to create web-sites on the internet and announce tenders/inquiries/intent-to-purchase on their site.
• Technical specifications of each contract will be exclusively described on the Net. Inquiries and clarifications about the specifications will also be answered on the website to ensure free flow of maximum information and most competitive offers.
• All such purchase requirements will have the HSN code (used by customs and excise in India and based on international nomenclature) so that linkages can be provided to all requirements of a product all over the country. This will enable easy access to suppliers of a specific product.
• Sealed tenders will be opened in public and each offer will be described on the Website giving price, technical specifications, taxes, delivery and other terms and conditions.
• Negotiations, if permitted under the tender conditions, should be optional to all bidders with a defined time-limit to re-quote; preferably following sealed cover process again, on commonised specifications.
• Final offers with any changes in earlier specifications and terms will be shown on the net. The purchase decision should also be recorded on the net giving price, technical specifications, terms and conditions, name of the beneficiary and name of the person finalizing the order.

Expected Benefits

• Details of government purchasing will be widely publicized and get more suppliers; both domestic and foreign, and will generate healthy competition providing better quality products.
• Supplier cartels will be eliminated.
• Purchaser will hesitate to inflate prices or favour suppliers since his actions will be open to public eye.
• Prices will continuously fall in every subsequent purchase of same product; as past data is available to competitors; till it reaches lowest reasonable price. Scope of bribes will reduce to bare minimum.
• Several products which are wasted and never used in government departments will come to light.
• Transparency requirement of WTO will be met.

Background

• Low investment; large employment; high and quick returns

Purpose

• Plan $25 billion investment over ten years to develop tourism
• As an example, a $1 billion (Rs. 4,400 crores) investment in the Kulu-Manali-Kangra region can

1. Eliminate unemployment in H.P.
2. Generate earning of over $1 billion a year within five years
3. Save the region from environmental degradation

Methodology

• Investments can be in stages as follows:

1. All weather, four lane and lighted cement roads
2. Water shortage and purification plants
3. Garbage collection and disposal; effluent treatment plants
4. Strengthen electricity distribution network
5. Environment friendly hotels and motels with golf courses, theme parks, casinos, vacation homes, etc.
6. Develop international airport nearby
7. Privatised worldwide marketing to attract international tourists

Resources

• Encourage strategic investments in tourism from

1. Idle, unaccounted money both in India and abroad
2. Foreign Direct Investment (FDI)

• Liberal incentives may be offered to private enterprise:

1. Subsidy based on number of jobs generated
2. Tax holiday from civic, state and central levies
3. Low interest and long moratorium foreign currency loans without collateral security

• Start with government supports and central assistance (may be borrowed initially); private investment will follow

Piyush Goyal

Mumbai

12^th June, 1999