Economy was in terrible hands under UPA, says Jaitley

New Delhi, Feb 9  Finance Minister Arun Jaitley today slamed his predecessor P Chidambaram for being a “know- all” living under false “illusion”, and said the economy was in the hands of a “terrible doctor” under 10-year rule of UPA which pushed it to being in the fragile five economies in the world.

Indian economy under the BJP rule since 2014 has covered the journey from policy paralysis to structural reforms which have taken out the economy from being in fragile five to being a bright spot, he said.

“I do believe that some people can make very good comment at us because they write and speak with right logic but I am not so sure whether they make the best administrators,” he said.

Replying to the debate on the Union Budget 2018-19 in the Rajya Sabha, Jaitley reeled out statistics on GDP growth, inflation, fiscal deficit and current account deficit (CAD) to draw a contrast between the previous UPA rule and the present regime.

He picked on Chidambaram for questioning the rationale of plan to lower corporate tax to 25 per cent from current 30 per cent, saying the Direct Tax Code drafted and finalised by the former finance minister had first proposed lowering of the tax paid by Indian companies to leave them with surplus to invest.

“In some cases, where you stand depends on where you sit,” he said alluding that his predecessor had changed stand after moving from treasury to opposition benches.

While there was division within the ruling UPA over the issue of national biometric ID Aadhaar, stand on the Goods and Services Tax (GST) and corporate tax change was also changed, he said. “What is the consistency of your stand on economic policy,” he asked.

Answering posers put by Chidambaram during his speech on the Budget yesterday, Jaitley said when pre-Budget Economic Survey spoke of work remaining to be done on agriculture, employment and eduction sectors it did not mean the problem was created in last four years but implied unfinished task of 55 years of Congress rule.

“The work is still pending a lot and this is the real reality. We are not living in the air castle,” he said.

Referring to Chidambaram’s quip that chief economic adviser – the author of Economic Survey, was a very good doctor but the government is a terrible patient, he said even a bad patient ends up being curred if there is a good doctor.

“For those ten years 2004-2014 you had a terrible doctor.

And when you have a terrible doctor, even the healthiest of the patients are likely to disappear,” he said.

The BJP government’s journey has been from policy paralysis to structural reforms and a journey from fragile five to being a bright spot in the economy in world, he said.

“That’s the journey of transformation,” he said. “And therefore we can throw up questions in the air and live under the illusions of all sorts of know alls. But the fact is, our analysis can be incorrect (but) data cannot speak any alternate language.”

Jaitley said GDP growth in under UPA rule in 2012-13 was 5.3 per cent – the lowest in recent years and it was 6.3 per cent in the following year.

“We lost one quarter GDP because of GST, because people were destocking (and) manufacturing came down and it became 5.7 per cent. So for one quarter it was 5.7 per cent. So there was so much of hoopla for one quarter” as compared to 5.3 to 6.3 per cent for full years under UPA, he said.

CAD in during the UPA rule broke “world record” by coming at 6.8 per cent and was at 4.2 per cent and 4.8 per cent in last two years of the Congress rule, he said, adding that under BJP it was “half a per cent, one per cent one and a half percent” range.

“And we are hearing the music about what you are doing about CAD,” he said.

On breaching fiscal deficit, Jaitley said the excess of expenditure over revenue (fiscal deficit) in last three years of UPA rule was 5.9 per cent, 4.9 per cent and 4.5 per cent.

In contrast, the fiscal deficit under BJP rule came down to 4.1 per cent in first year, 3.9 per cent in second and 3.5 per cent in third.

“This year we were to reach 3.2 per cent but we remained at 3.5 per cent because of apparent reason” that GST revenue in current fiscal will be short by one month, he said. This is a “statistical slippage of the fiscal deficit”.

“Maintaining fiscal deficit as high as 5.9 per cent, you are today lecturing us as to why you didn’t bring it down to 3.2 per cent,” he said.

Inflation rate has been brought down from double digit under the UPA rule to 3.6 per cent average this year, he said.

“We are being told that the doctor who diagnosed was a very good one but you are a bad patient. Then let us not be under the impression that these are data anybody is likely to forget. And just appreciate this journey. That was a journey from policy paralysis to structural reforms that we have covered,” he said.

Jaitley said only 7,000 companies remain uncovered by the 25 per cent corporate tax after the lower tax regime was extended to entities with turnover of up to Rs 250 crore.

Providing these firms a lower 25 per cent tax would result in loss of revenue of Rs 45,000-50,000 crore which the Budget cannot absorb, he said, adding that the taxes can be lowered when exemptions given to them are waived.

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