Exclusive - Corporate tax cut not justified, says Chidambaram
New Delhi: While asserting that he was not against corporates, former Finance Minister P Chidambaram on Monday said the Budget for 2015-16 is pro-corporate and the focus on social sector was diluted.
In an exclusive interview to BTVI, Chidambaram said, “I believe that Corporate Tax relief is not justified. I see a bias in the Budget in favour of corporates. The Finance Minister is to give away approximately Rs 2.5 lakh crore by way of Corporate Tax relief,” he said.
Chidambaram said, “The Finance Minister said he is fiscally constrained for programmes like MNREGA and PMGSY.”
“Is it right to offer 'bonanza' to companies at a time of fiscal constraint?” he asked.
Chidambaram said, “The Finance Minister is making an additional borrowing of Rs 42,500 crore by easing fiscal aim. The additional borrowing undertaken is going entirely to non-plan expenditure. The plan expenditure has been cut despite additional borrowing. The plan expenditure should go up commensurate to additional borrowing.”
“How does one justify additional borrowing going to non-plan expenditure?” the former Finance Minister asked.
Chidambaram said 8 per cent GDP target is over-ambitious. “Growth at around 7.8-7.9 per cent is attainable. This would be a satisfactory result,” he said.
On disinvestment, Chidambaram said it is only a revenue raising and resource mobilisation measure.
“If desired revenue is not being derived, divestment process can be postponed. The Government must think through an idea before announcing it,” he said.
Chidambaram said Finance Minister Arun Jaitley was wrong in relaxing fiscal deficit target from 3.6 per cent to 3.9 per cent.
Chidambaram, however, had words of praise for the Budget 2015-16. “Even this Budget has some good ideas. Mudra Bank is a good idea provided FM 'finds' the Rs 20,000 crore needed,” he said.
The former FM said he fully supported the increased devolution to States. “Nobody in Congress opposes giving a higher share of revenue to States,” he said.
He said, “There is an 'optical illusion' that States are getting 10 per cent more revenue. But States not to get more money even after higher devolution.”
Chidambaram claims that the average share of States from Centre's revenue remains the same as earlier. “Of the overall devolution only 62 per cent to go to States vs 63 per cent earlier,” he said.
He said the promise to enact Bankruptcy Law is a good idea and should be implemented soon.
Chidambaram said the Government has to raise revenue to fund unfunded programmes.
The former Finance Minister said, “The Government has undertaken 'cruel cuts' under ICDS, Women and Child Development.”
Chidambaram said, “Funding for social welfare programmes hasn't been reserved. Allocations for Schedule Caste and Schedule Tribal sub-plans lower than last year,” he said.
On insurance, the Former Finance Minister said insurance schemes are good but they aren't universal in their scope.
Chidambaram suggested that India should have monetary policy committees in lines with UK and the US.
The Former Finance Minister sees no justification to postpone the General Anti Avoidance Rule (GAAR).