Finance Minister says the previous UPA govt. mismanaged the economy after the 2008 financial crisis.
Union Finance Minister Nirmala Sitharaman invoked the mismanagement of the economy by the UPA following the global financial crisis of 2008 to draw a contrast with the government’s deft management of the ‘once in a century’ situation created by the COVID-19 pandemic, in her response to the debate on the Union Budget for 2022-23 in the Lok Sabha.
Responding to Opposition jibes about the next 25 years of Amrit Kaal leading up to India’s 100 years of Independence, as mentioned in the Budget, Ms. Sitharaman said that the ‘Andh Kaal’ (era of darkness) referred to by a member actually occurred due to the Congress.
“In 1991, the country had just two weeks of foreign exchange reserves left… Double digit inflation during the 10 years of the UPA-1, and particularly UPA-2, was Andh Kaal indeed. Third, the coal scam, the everyday headlines of corruption, 2G scam, middlemen all over, that was Andh Kaal,” the minister said.
“…And not knowing how to deal with the country after the global financial crisis, and India becoming a fragile five economy with policy paralysis, so the Opposition member is referring to the situation they created as Andh Kaal,” she asserted.
While real GDP growth slowed down to 3.1% in 2008-09 due to the global financial crisis, the pandemic effect led to a 6.6% contraction in 2020-21, she pointed out, noting that the loss to GDP in both cases was ₹2.12 lakh crore and ₹9.57 lakh crore, respectively.
“Despite supply side disruptions, India’s CPI (Consumer Price Index) inflation was 6.2% in 2020-21 compared to 9.1% in 2008-09. Look at the scope and the intensity by which the Indian economy had to contract. What does it mean? Today, despite the intense crisis, the CPI is well-contained and is only 6.2% showing that we managed the economy much better now,” she argued.
Stressing that many MPs had raised wild allegations about the economy and thrown several questions about inflation worries, Ms. Sitharaman noted that some of those members were not in the House to hear her response.
While India had a current account deficit of 2.3% in 2008-09, despite the pandemic, it recorded a 0.9% surplus in 2020-21, while forex reserves had risen from about $250 billion in 2008-09 to nearly $650 billion. “FDI inflows were 8.3 billion, now it is 80.3 billion dollars under our watch,” she said.
Taking on members who questioned the Budget’s reference to just 60 lakh jobs being created over the next five years, Ms. Sitharaman said that number was only under the Production Linked Incentives schemes which is not the only program to generate jobs.
“The first principle is — employment generation would be a natural outcome of… in general, when we are talking of high growth, and investment in infrastructure, these are not going to happen without jobs. The urban unemployment rate of January to March 2021-2022 had declined to pre-pandemic levels after peaking in 2020. In November 2021, we saw a net addition in the EPFO subscription peak at 13.9 lakh new members, 109% over the previous year and the highest since 2017,” she said.
While recounting the measures taken to help micro, small and medium enterprises (MSMEs), Ms. Sitharaman also quelled concerns, especially in Kerala, about the higher import duties on umbrellas.
“25 million umbrellas come to this country every year and from only one country and you know which country that is. Prior to the Budget, they attracted 10% basic customs duty and parts attracted only 5%. We got a lot of representations including from the MSME associations who said shouldn’t we be protected under AtmaNirbhar Bharat?” she said.
“What is the pain in doing this? It is not against any one State as everybody uses umbrellas. Even this attracted so much noise,” the minister noted.
The Finance Minister tore into concerns about BSNL’s health and said the public sector entity was put into the Intensive Care Unit (ICU) due to neglect under the UPA and the present government is correcting course.
“BSNL was formed in 2000 but there was an agreement at the time that the annual licence fee will be reimbursed till 2010, but in 2006, the UPA stopped paying the reimbursement. The BSNL was in the ICU queue, because of Congress,” she said, emphasising that ‘crocodile’s tears’ are now being shed for the company.
“In 2010, MTNL was suddenly told that the prices set by the spectrum auction should be paid by it for broadband wireless access, so a cash-rich company suddenly had to pay ₹11,000 crore and became a loss-making company overnight. BSNL was killed slowly, MTNL was killed,” Ms. Sitharaman stated, adding that now all government departments, States and public sector entities have been asked to use BSNL and MTNL services.