March 11, 2011

Speech in Rajya Sabha on ‘The Budget (General) 2011-12’

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.


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