“If the resources of the States do not increase commensurately, how is the Finance Minister going to protect the social sector from suffering on account of lack of resources?”: E Ahmad, IUML

Member of Parliament E Ahamed from the Indian Union Muslim League (IUML) tore open the budget speech presented by Finance Minister Arun Jaitley. Following is Ahamed’s speech in the Lok Sabha disapproving various provisions, rather lack of it, on Monday, March 16, 2015.

The Finance Minister in the very beginning of his speech has said that his budget proposals lay out the roadmap for accelerating growth, enhancing investment and passing on the benefit of the growth process to the common man, woman, youth and child those whose quality of life need to be improved. But as he proceeds further and comes to and end, it becomes very much clear that his Budget proposals are for elite and Corporate sector and nothing to do with the downtrodden. The philosophy is when the upper strata and the Corporate sector flourish, the downtrodden will get something. So focus on them and wait for trickle down. It is just opposite to what we believe.


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E Ahamed (file photo) (Courtesy: HT)

I felt very sad to read the couplet in para 3 of his speech. They do not want to recognise our contribution. But we have done a lot for the downtrodden during last Twelve Five Year Plans. The Finance Minister did not utter a word about crash in crude oil prices and world commodity prices which have a statutory impact on our economy. To implement a large number of Budget proposals, the government requires not only a healthy finance but also strong political will, especially in the context of Black money.

BUDGET AND TAX RESOURCES

The Budget has been prepared in the backdrop of a revenue shortfall in 2014-15 to the tune of Rs. 1,13,133 crores which is close to 0.9 per cent of GDP. The fall was largely in Central excise duties and Service tax which together fell short by Rs. 70,000 crores.

The Budget for 2015-16 proposes numerous changes in both direct and indirect taxes. On the direct tax front, the government has reduced corporate tax rate from 30 per cent to 25 per cent while phasing out selective incentives. This has been done to boost corporate sectors performance. Government has deferred the General Anti-Avoidance Rule (GAAR).

Instead of direct taxes being raised more to make taxation progressive, the budget has abolished the wealth tax and initiated moves for significant reduction in corporate tax. Now the moot question is when resources are scarce, the objective should be to mobilise more resources from Direct taxes. The abolition of wealth tax would make the fight against black money more difficult. It is difficult to hide property so a lot of tax could be collected as wealth tax.

My question is whey adequate efforts were not made to raise the tax – GDP ratio which is very low?

To garner more revenues, the Service Tax base has been expanded to include all services provided by the government except water supply, public health and slum improvement. Service tax has been raised from 12.36 per cent to 14 per cent and by a further 2 per cent to fund the Swachh Bharat. This will add to the production and distribution cost and thus increase prices besides putting burden on the common man.

The sheer magnitude of changes in the indirect tax and service tax indicate the imperfection and anomalies of our current indirect tax regime. There is a need to reduce service tax. I hope the Finance Minister will give a second thought to this.

The Finance Minister reaffirms the introduction of GST in 2014, but the roadmap is still missing. Without it, the business community will not be able to plan for transition to the new regime.

The Budget proposals will reduce direct taxes by Rs. 8315 crores benefitting the rich and increase the burden on the common man by raising Rs. 23,383 crores through indirect taxes.

BUDGET AND REVENUE EXPENDITURE

Subsidies, Interest payments, Defence expenditure, Police, Pension, salaries of government employees etc. constitute 93 per cent of total revenue expenditure.

There is no scope to curtail these expenses. So from where the money will come to finance schemes, programmes and projects?

There is surplus in the capital account which is being utilised to cover deficit in the revenue account. In a financially sound economy, there is surplus on Revenue Account and deficit on the Capital Account.

My question to the Finance Minister is: How he has proposed to change the situation in the long run, so that schemes/programmes/projects for asset creation are not starved of funds?

BUDGET AND THE 14TH FINANCE COMMISSION:

The implementation of 14th Finance Commission coincides with this Budget. There is 10 per cent increase – from 32 per cent to 42 per cent share of States in the divisible pool of taxes, though States were asking for 50 per cent.

The Central government has given full freedom to State to utilise this enhanced share in whatever manner they feel, can utilise as per their priorities.

But the real question is – do the States get this enhanced packet? If we look at the finances of schemes, the Centre has made reductions in many of these schemes expecting the States to finance them from the enhanced devolution.

My question to the Finance Minister is: what is the net gain to the States, especially for Kerala?

BUDGET AND MAJOR PROGRAMMES UNDER CENTRAL ASSISTANCE FOR STATE PLANS:

Central assistance to State Plan has been restructured. These are Schemes to be fully supported by Union government. The Budget has increased allocation under these schemes marginally. For example , Pradhan Mantri Gram Sadak Yojana will get Rs. 140 cores more in 2015-16 (Budget Estimate) as compared to 2014-15 (Revised Estimate). If you consider inflation, there is no real increase in the outlay for this scheme.

Under the 2nd category, there are schemes to be run with the changed sharing pattern. Under these schemes, barring a few, there is decline in the outlays for majority of schemes. For example, Integrated Child Development Scheme got Rs. 16316 crores in 2014-15 (RE) which has been reduced to Rs. 8000 crores in 2015-16.

The third category is those schemes which has been declined from Union Support. States were getting funds for tourist infrastructure (495 crores), Normal Central Assistance (Rs. 26814 crores), Special Central Assistance (Rs. 10150 crores), Backward Regions Grant Fund (Rs. 2837 cores) etc. These have been discontinued now. As a result, States have deprived of these funds.

My question to Finance Minister is: whether he has developed any mechanism to ensure States do not falter on these schemes especially in the 2nd and 3rd category as I mentioned earlier?

BUDGET AND CENTRAL PLAN OUTLAY:

If you look at the provisions made in the present budget with those made in the last year’s budget and the Actual expenditure for 2013-14 interesting facts are revealed.

Ministry of Women and Child Development spent Rs. 17912 crores in 2013-14, got Rs. 989 crores in 2014-15 and the present Budget has retained the same for 2015-16 – that means considering inflation, there is a decline in real term. Similarly, Ministry of Textiles, Ministry of Tourism, Ministry of Urban Development, Ministry of Rural Development, Ministry of Micro, Small and Medium Enterprises, Ministry of Food Processing, Ministry of HRD to mention a few, all very important in terms of employment generating and welfare of masses, get a reduced allocation under Central Plan outlay.

Ministry of Drinking Water and Sanitation had spent Rs. 11935 cores in 2013-14. With the emphasis on sanitation, it was provided only Rs. 231 crores in 2014-15 and the same amount has been retained in 2015-16 also.

Similarly, Ministry of Water Resources, River Development and Ganga Rejuvenation got Rs. 1607 crores in this year’s Budget as compared to Rs. 3245 crores provided in last year’s Budget.

My question to the Finance Minister is : How can he achieve the targets with reduced financial allocations?

BUDGET AND SOCIAL SECTORS:

While the Sates share in Central taxes and Non-Plan Grants as share of GDP does show an increase, the total Union resources reveals a decline from last year’s budget expenditure.

The reduced expenditure also throw light on the lack of priority accorded to the social sector commitments of the Union government.

Share of social sector expenditure as per cent of GDP was 3.40 per cent in 2010-11. It came down to 2.84 per cent in 2014-15 and further to 2.57 in 2015-16.

My question to Finance Minister in this context is: If the resources of the States do not increase commensurately, how he is going to protect the social sector from suffering on account of lack of resources?

BUDGET AND BLACK MONEY:

Greater focus is required on curbing generation of black money in India. A great number of measures to curb generation of black money can’t be put into operation without the assistance of CBDT, ED, FIU, CBEC etc. These agencies are running staff shortages to the tune of 30,000. The Budget fails to address this issue. There is need to strengthen the administrative machinery significantly.

Efforts to curb black money will not be effective unless all loopholes related to illicit money flows, aided by tax treaties, are identified and addressed. There is a need to probe the flow of funds through FIIs (Foreign Institutional Investments) with the help of Participatory Note – the culprit behind money laundering.

My question to Finance Minister is: why he has not banned Participatory Note instrument?

BUDGET AND THE PROBLEM OF MALNUTRITION:

The extent of malnutrition is high in India especially among children below 5 years of age. Almost 43 per cent of children below 5 years of age are under-weight. Almost half of the children are short or stunted for their age.

What the present Budget has done for them? The outlay for ICDS has been reduced to Rs. 8000 crores in 2015-16 from Rs. 16,316 in 2014-15 (RE). The revenue expenditure for the scheme will henceforth be borne by the States. The allocation under Mid Day Meals has come down to Rs. 9,326 crores in 2015-16 from Rs. 11,051 cores in 2014-15.

My question to the Finance Minister is: what is the reason for reduction in allocation for ICDS and MDM Schemes from 1.8 per cent to total expenditure in 2014-15 to 1 per cent now?

BUDGET AND MINORITIES:

· Although the Religious Minorities constitute 21 percent of total population, only 0.23 percent of the total Union Budget 2015-16 has been earmarked for development of Minorities.

· * The Current budget has allocated Rs. 3738 crores in 2015-16 as compared to 3734 crores in 2014-15 for Ministry of Minority Affairs. There is an increase of 4 crores only. If inflation is taken into account, there is no real increase in the allocation for Ministry of Minority Affairs for 2015-16.

* To address the overall development of deficits of minorities especially muslims, there is a need to implement Sachar Commission Recommedations. Now the Kundu Committee has also given its report on the implementation of Sachar Commission Recommendations. Government should take action on these.

BUDGET AND KERALA:

There is nothing substantial in the Budget for Kerala. In his Budget speech, the Finance Minister has indicated his intention to provide one major Central Institute in each State. For Kerala, he has proposed to upgrade the existing National Institute of Speech and Hearing to a University of Disability Studies and Rehabilitation.

Keeping in view Kerala’s position in the human development index, Kerala deserves to have much more. Its educated youth is badly in need of new avenues to engage them and this was an opportune time, the Finance Minister could have made announcement in this regard. Moreover, the State’s Plantation, Fisheries and Tourism sectors have a lot to contribute in the countries growth. Unfortunately, the present government has given step-motherly treatment to Kerala. It is really very sad.

On the whole, the Finance Minister has decorated his Budget Speech with attractive schemes and programmes. But these are starved of the required funds. Moreover, States are expected to look after themselves in a large number of welfare oriented schemes and programmes. It is just a wait and watch situation.

In response to what the Finance Minister said in para 3 of his Budget speech, I would say that “The Garden we left was full of roses, the new Gardner ignored them and let them die. Then what else – only “Kaante”will be there”.

With these words I disapprove the Budget for 2015-16. Thank you.

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