Just few days after the budget was presented in the parliament our correspondent Rajat Mishra talked to renowned economist Jayati Ghosh to discuss the facets of union budget 2020-2021.
1. Do you think that the budget has lived up to the expectations of the people?
No, in fact, the opposite.
2. The pre-budget economic survey has attracted fair share of criticism for relying on many unreliable data such as on Wikipedia etc.
I strongly recommend that the ministry of finance should do away with volume 1, because it is really embarrassing. So just stick to volume 2, as used to be the case.
Advertisement
3. The union budget 2020-2021 emphasised more on rural economy, talked at length about agriculture. So how do you see this budget from rural point of view.
Actually the longer she talked about a particular matter, the less money there is in the Budget. It is all fine to talk for 1 or 2 hours about how much you love the country and what needs to be done in particular sectors. But that’s not your job as finance minister, your job is actually to provide money.
So those 16 agricultural points are not the job of finance minister, but of the agriculture ministry. Allocations are the job of finance minister and in fact these have come down. Furthermore, we cannot trust any of the numbers that were presented. The revised estimates are inflated as they have assumed a lot of tax collection and other revenues in last three months, but they did not going to get those. So they are already cutting expenditure. Since the revised estimates are all false, the allocations for next year are also likely to be false.
Advertisement
4. How do you see the personal income tax cut?
In fact, the net benefit for most people will be maximum up to Rs 2000 per month as many CAs are calculating. But once you switch, you cannot never switch back and you will never get exemption even if that is better for you. So many people may not opt for it all. In any case, remember only 2 per cent of population pays income tax and therefore if you want consumption to increase, that is not the best way to go about it.
5. The government abolished Dividend Distribution Tax. From your perspective, what would be the impact?
It is good for companies but not good for individual retail investors. Now the burden is borne entirely by individual retail investors.
6.According to you what are the various +s of this budget?
There is nothing.
7. What is the biggest failure of this budget?
The main failure is the reason why everyone is so disappointed. We are now in a situation of economic crisis. Everyone had expected a major spending programme in order to revive the economy. That is not there. That is a big disappointment. Even governments own flagship schemes such as PM Kisan that could provide some money to farmers are not getting proper attention. So I am really not able to understand what this government is thinking.
Advertisement
8. How do you see this budget in comparison to last year’s budget?
I think a terrible precedent was established last year that the budget numbers turned out to be lies and that precedent has been continued. For Budget2018-19, both the revised estimates and the projections were completely off the mark and the finance ministry knew all that. And now they have done the same thing again this year.
9. The government has broached the idea of divestment in LIC. What is your take on this?
I think this is very absurd decision. As LIC is one of the safest avenues for middle class savers, and household savings is already falling. It is very important to retain it in public sector. You need a public insurance provider to provide baseline insurance. Also the government is going to regret its decision, as currently the government is using LIC for all kinds of things, such as IDBI bank has a problem, when industry has a problem, when the stock market needs to be shored up. But when you make it public, then it will be open to scrutiny and a focus on profitability, sothe government will not be able to do those things. The purpose of public insurance is not to keep the book clean. Private insurance providers are meant to make profit. Public insurance providers have a particular social role, that is to insure people with some reliability and provide long terms funds for social and developmental purposes. When you make it profit-oriented, then it will be like Bajaj Allianz and any body else.
Advertisement
10. After the LIC listing on the stock market, this is going to be one of the biggest IPOs so far. How do you see the impact?
That is what they want, they somehow want the stock market to stay up. It is a very short term vision. Actually, it increases the fragility in financial system. And also it reduces the safety and security of pension assets and other safety of Indian citizens.
11. How do you compare both regimes UPA and the BJP in terms of fiscal prudence?
Both regimes were neoliberal and both were crony capitalists. The UPA regime was neo liberal and competent, while BJP is neoliberal and incompetent.
Just one email a week