September 18, 2020
Saugata Roy speaks on Supplementary Demands for Grants – First Batch (2020-21) and Demands for Excess Grants (2016-17)
FULL TRANSCRIPT
Sir, I speak on the Supplementary Demands for Grants and I speak in support of four cut motions proposed by me. The government has sought the Parliament’s approval to incur an additional expenditure of Rs 1.67 trillion for 2021 in order to recapitalise banks to fight COVID-19 and fund various welfare schemes announced by it.
This includes Rs 40,000 crore for additional allocation to the MGNREGS, Rs 33,771.48 crore for direct benefit transfer to the holders of Pradhan Mantri Jan Dhan Yojana accounts, who are all women, Rs 10,000 crore for food subsidy under National Food Security Act, Rs 6,000 crore for setting up a price stabilisation fund, 4,860 crore for Pradhan Mantri Garib Kalyan Yojana and Rs 4,000 crore for the guarantee emergency credit line (GECL) facility to eligible MSME borrowers.
Around 14,000 crore has been asked for the health sector, which is at the forefront of fighting COVID-19, including Rs 2,475 crore to the Indian Council of Medical Research. Around Rs 46,000 crore has been sought as additional allocation under Post Devolution Revenue Deficit Grant to cover States’ disaster response funds, in line with the recommendations of the Fifteenth Finance Commission.
Now, where does this leave the economy? The baseline expectation now is that the Government of India’s fiscal deficit will widen to Rs 14 trillion, or 7.4 per cent of the GDP in financial year 2020-21. This is what is happening to the economy. The deficit has already touched Rs 8.2 trillion in the first four months of the current fiscal, which is 3.1 per cent more than what was estimated in the Budget. The revenue shortfall would be around Rs 6 trillion in FY21.
Now, I do not envy the Finance Minister for presiding over the Finance Ministry during a time of such disaster. This disaster is definitely a by-product of COVID-19, which the Minister has called ‘an act of god’. But the economy was on a downwards spiral even before COVID-19 started. We reacted to it late, since it was already known in January that COVID was coming. We were still welcoming Mr Trump to India. And then, when we suddenly announced a lockdown, the spreading of COVID had already started.
So what did this lead to? It led to India’s GDP shrinking by the steepest ever percentage, to 23.9 per cent in the April-June period, during the period when the coronavirus-induced lockdown was slowing down the economy. About 24 per cent of the economy was lost. The economy had grown by 5.2 per cent in the same quarter of the last fiscal.
Now, you compare this with China. China’s economy grew by 3.2 per cent in April-June, while ours shrunk by 24 per cent. China had a decline too, of 6.8 per cent in the January-March quarter of 2020. So how are we going to compete with China?
Agriculture, or the poor kisans, was the only outlier as all other sectors, including manufacturing, construction and services suffered. And the other thing that this budgetary allocation is doing is that it may infuse Rs 20,000 crore into public sector banks to shore up their equities.
The Reserve Bank had given a report, wherein it asked the government to urgently infuse capital into banks. As a reaction to that, Rs 20,000 crore was given but actually, Rs 80,000 crore and Rs 1.06 lakh crore were given in the two previous fiscals. Therefore, we also see that we are getting only Rs 20,000 crore for the banks as the latest infusion of funds.
Sir, what is the total damage to the economy due to COVID? The coronavirus outbreak has caused losses to the tune of Rs 30.3 lakh crore to the national economy, which amount is 50 per cent more than the COVID-19 relief package, worth Rs 20 lakh crore, announced by the Finance Minister during her five-day press conference. So for a total loss of Rs 30.3 lakh crore, the Finance Minister has announced relief to the extent of only Rs 20 lakh crore. This is the government’s response to COVID-19!
This is an economic mess, but it has been coming for sometime. The economy shrunk by almost a quarter due to the COVID lockdown. However, the seeds of economic disaster were sown much earlier. The first was the overnight demonetisation of Rs 500 and Rs 1000 currency notes in the name of war on corruption and terror, none of which actually happened. Rather, demonetisation devastated small businesses and MSMEs and the largely informal economy of the country.
On top of that, when green shoots of recovery were appearing, came the botched implementation of the GST, designed by people who probably never ran a business in their lives. The implementation of the GST almost doubled the cost of compliance for small businesses. With four non-zero GST tax slabs, India keeps company with other chaotic political systems like Italy and Pakistan. Most nations have a maximum of one or two slabs. Sir, this is what we have done to the economy over which the Finance Minister is presiding.
Now, the government and its supporters are behaving like ostriches. I do not know when they will get their collective heads out of the sand and recognise that there is a genuine big problem.
Having stated the problems of the economy and given the statistics about the state of the economy, I must also mention that the hardest hit are the employed people. Unemployment levels have reduced as the economy unlocks, but 18.9 million salaried jobs were lost during the lockdown. Now how are we going to give them jobs? Logo ki naukri yeh sarkar ne chhen liya. <Point of Order by Member not allowed by the Chair>
Sir, may I say about the economy, that the four key engines of growth, that is, domestic consumption, private investment, government expenditure and exports, are all faltering. Unemployment is at an all-time high. Kaushik Basu, a former chief economist of the World Bank, has said that investment has to go up for economic revival.
Sir, the question is, you may say that you have spoken about the failure of the economy and the present state of the economy, so what is your formula? I have no ready-made formula but it seems that there may be a demand-side intervention. Demand-side intervention means direct cash transfers and tax cuts, in order to leave more money in the hands of consumers so that domestic consumption increases. At the beginning of the lockdown, economists like Abhijeet Banerjee, the Nobel Laureate, had said that at least Rs 10,000 should be given in the hands of the migrant labourers.
What is needed, as the demand-side economy says, is that the government should allocate more funds for income transfer to schemes like MGNREGA, speed up the transfer of revenues owed by the Centre to the State governments and increase spending on public infrastructure. Other proposals include the extension of the free foodgrain distribution project. So there are formulae available but the government is not realising their importance. The Finance Minister thought it fit, at this time of the COVID-19 pandemic, to sell off six airports. What have airports to do with fighting the coronavirus or the economic mess?
The government is selling off public sector companies. As correctly said it is selling off the family silver and on the other hand, not giving States their GST dues, to the tune of Rs 3 lakh crore. The Finance Minister says that the Centre has no money and therefore, the States must borrow. Is this a responsible statement?
Lastly, the Centre is talking about taking away the MPLAD fund, when it is worth only Rs 4,000 crore approximately per year. And as far as the Ministers are concerned, what sacrifices are they making? The government is saying that it is cutting the sumptuary allowance of Cabinet Ministers, from Rs 2,000 to Rs 1,400, which is a deduction of only Rs 600, whereas for the Members, it is cutting Rs 30,000. The Ministers get the sumptuary allowance for treating and entertaining guests and that is being cut by only Rs 600. This government does not believe in stringency, in any sort of austerity. The Ministers will have their money, their salary and constituency allowances will not be cut, but the poor MPs will be told that your money is being deducted. That’s why you have to work and you have to entertain people. I understand that you are an entertainer.
Sir, I end my speech by saying that the Finance Minister should show a way out of the tunnel that we are in. She has to tell us whether there is light at the end of the tunnel. With these few words, Sir, I thank you for allowing me the time, and again I press for my cut motions on the failure of the government to tackle the problems of migrant labourers and fighting COVID-19.
