Promise of Rs 5 lakh for healthcare a ‘big jumla’: P Chidambaram

Former Union Finance Minister P Chidambaram has hit out at the Centre over promising Rs 5 lakh for 10 crore families for secondary and tertiary healthcare, saying that the total cost for such a scheme to take off would be around Rs 5 lakh crore.

“If the insurance companies will foot the bill, the premium at Rs 5,000-15,000 per family will require an outgo of Rs 50,000-1,50,000 crore an year. Is the FM serious?” asked Chidambaram.

Berating the government’s ability to create enough jobs, the Congress leader said that the government falling back on the Mudra scheme to create jobs was “mere tokenism.”

“More Mudra loans will mean more tokenism, but no additional jobs,” he said.

The leader also criticised the Modi government for not providing any tax relief to the salaried class,

Taking a holistic view of Modi government’s last regular budget, Chidambaram remarked, “Unfortunately, the budget proposals are a big let-down.”

Below is the complete statement of P Chidambaram:

The Budget for 2018-19 was presented today. It is the last full budget of this government, and I should add ‘thank god for that’.

Let me recall the economic context in which this Budget has been presented. I draw my facts from the official document of the government, namely, the Economic Survey that was presented on 29 January 2018.

*There are two macro-economic situation vulnerabilities — fiscal account and current account.

*The real effective exchange rate (REER) has appreciated about 21 per cent since 2014 affecting India’s export competitiveness, but the domestic political economy (meaning BJP) favours a stronger, less competitive exchange rate.

* In the last four years, the level of real agricultural GDP and real agricultural revenues have remained constant.

* Jobs is the number one issue. Jobs are not being created. Industry — especially MSMEs — create jobs. Industrial GVA growth has declined from 9.8 per cent in 2015-16 to 6.8 per cent in 2016-17 to 2.7 per cent in 2017-18. In the same period, Manufacturing’ GVA has declined from 12.7 per cent to 7.9 per cent to 3.1 per cent.

* The last number on investment (GFCF) was 28.91 per cent of GDP in the second quarter of 2017-18. The last number on CPI inflation was 5.21 per cent in December 2017. The last numbers on credit growth are: Non-food credit 10 per cent and credit to ‘Industry’ 2.1 per cent.

The Big Disappointments of the Budget

In the light of the above, the Budget proposals should have been bold and radical, and backed by adequate provision of funds. Unfortunately, the Budget proposals are a big let down.

Let me list the big disappointments:

1. FISCAL DEFICIT: The FM failed the fiscal consolidation test. All deficits have crossed the budget estimates. Against a BE fiscal deficit target for 2017-18 of 3.2, the final number will be 3.5. Even that is questionable. Similarly, for 2018-19, against a target of 3.0, FM has pegged it at 3.2. Both these slippages will have serious consequences and raise grave doubts about India’s commitment to fiscal consolidation.

2. EXPORTS: I did not hear any measures to boost exports. Because the government has run out of ideas to boost exports, the FM has imposed additional customs duties to restrict imports. The PM’s speech at — and the spirit of — Davos has been forgotten within a few days!

3. AGRICULTURE: There is a promise to increase MSP 1.5 times, but there are no details. (The Swaminathan Committee has been remembered in the last year of the government’s tenure!). Besides, Rs 2000 crore for e-markets and Rs 500 crore for Operation Green (whenever the Cabinet will approve the schemes) amount to a pittance. There is nothing to indicate that farmers’ real income will rise. Farm sector distress will continue and deepen, putting in peril the lives of a majority of the people primarily dependent on agriculture.

4. HEALTHCARE: The promise of Rs 5 lakh per family for secondary and tertiary healthcare is a big jumla. The target group is 10 crore families. There is, as yet, no scheme. Assuming that each family will avail of Rs 50,000 (one-tenth of Rs 5 lakh), the amount required per year will be Rs 5 lakh crore! If the insurance companies will foot the bill, the premium at Rs 5000-15,000 per family will require an outgo of Rs 50,000 -1,50,000 crore per year. Is the FM serious?

5. JOBS: The FM has no new ideas and has fallen back on the tried and failed Mudra scheme. The average size of the Mudra loan is Rs 43,000. This is tokenism and will not create even one job. More Mudra loans will mean more tokenism, but no additional jobs.

6. INVESTMENT and CREDIT: There was nothing in the Budget to boost private investment. There was nothing in the Budget to encourage banks to lend, and investors to borrow, for new investment. The FM seems to have given up on private investment altogether.

7. TAX RELIEF: There is no tax relief to the average tax-payer. Only corporates with income up to Rs 250 crore get a tax relief of 5 per cent. For individuals, Standard deduction is back, but Long Term Capital Gains Tax is also back. For the middle class earner and saver, one cancels the other. Actually, by way of LTCG and 4 per cent cess, the taxpayers will pay the government Rs 31,000 crore more whereas the gain through Standard deduction will be only Rs 8000 crore.

8. SLASHING ALLOCATIONS: The most disappointing part of the budget is the cut in the outlays on major schemes for 2018-19. Some important schemes that will get constant or reduced outlays are: MGNREGA, PMAY, National Drinking Water Mission, Swachh Bharat Mission, National Health Mission, Midday Meals Scheme, Interest Subsidy for Short Term Farm Credit, Northeastern Investment Promotion, Price Stabilisation Fund and Gram Jyoti Yojana. The FM will have much to explain when Parliament debates the Budget next week.