New Delhi: Days after the budget was announced by the finance minister Arun Jaitley, former Union Minister P Chidambaram said the latest Budget's measures do not meet the 3.6 per cent fiscal deficit target for FY 2015-16.
He blamed the budget by the Modi govt of failing the fiscal and financial stability test, the test of equity, and the test of rising inequality. “Some aspects of the budget are good, and I appreciate the Finance Minister Arun Jaitley for it”, he said.
While speaking at the Loyola Institute of Business Administration's session on ‘Budget 2015-16', Chidambaram contended that Jaitley has rather increased the deficit by 0.3 per cent.
He also said that a fourth slab was in need, in the personal income tax rates since the liberalisation is giving huge rise in income for certain people.
"The government's acceptance of the 14th Finance Commission report which increased the states' share of divisible central taxes to 42 per cent from 32 per cent, does not mean states were going to get more money," he added.
"This Budget increased the fiscal deficit from 3.6 per cent to 3.9 per cent, a rise of 0.3 per cent requiring an additional borrowing of Rs 42,500 crore, which has not been included in the planned expenditure and instead has been included in unplanned expenditure."
Chidambaram also defended the Minimum Alternate Tax (MAT). It was introduced to force companies which do not pay tax due to availability of concessions, exemptions and deductions to pay tax.
“The companies make profit as per profit and loss account but do not pay tax due to concessions. So, they are made to pay a nominal amount as tax. Companies making profit pay tax, and MAT could be offset in case of a future loss. It is only a form of advance tax. MAT is a correct tax. But how much percentage to be charged can be debatable,” he said.
Given that ‘planned expenditure' in the coming year was less than the current year's ‘planned expenditure', Chidambaram sounded a warning that the 6,000 model schools planned in every panchayat union could be axed. “There will be no money for this scheme,” the former finance minister said. Chidambaram added that the Budget, by reducing funds available for SC, ST, and for children by Rs 24,000 crore failed in being equitable.