Mumbai:
Former finance
minister P Chidambaram says the Union Budget fails to generate
excitement among investors, both foreign and Indian, to set up
greenfield projects in the country.
Addressing a public meeting here on 2 March, Chidambaram said the
proposal to levy tax on dividends would act as a deterrent against
private investments in industries. The proposal of tax deduction at
source (TDS) on dividend will burden the income tax department,
creating an administrative monster out of it, even as acting as a
disincentive for the retail investors. TDS will become tedious.
Chidambaram said the budget failed to address the overall recession in
the Indian economy. There should have been more money left in the
hands of people during recession, so that greater demand is generated
leading to greater production and higher growth, he said.
Instead, by seeking to levy 5 per cent surcharge, Finance Minister
Yashwant Sinha would add to the general gloom prevailing among the
people, particularly those in the middle class.
We pay tax to buy
civilizations. But here it is the case of paying tax to get a corrupt
government, he added.
Chidambaram said Sinha seemed to have missed the larger picture. Sinha
should have addressed the recession head on and initiated steps to
inculcate a sense of confidence among investors, he said.
If only Sinha would have announced the plan to start 10 new
greenfield projects, each involving investment of over Rs 5,000 crore,
there would have been an electrifying effect on the nation. But he
missed the opportunity. If the Tatas, the Ambanis, the Birlas, the
Ruias as also multinational companies would have been enthused by the
government to invest in new projects, the country could have got out
of the trough, Chidambaram said.
He described Sinhas proposal to raise the planned outlay on
infrastructure as a mere promises that are never fulfilled.
Because, he
said, there has always been a wide gap between planned outlay and
actual expenditure.
Chidambaram also questioned Sinhas claim of achieving a growth rate
of 7 per cent and reducing the rate of fiscal deficit. The
government needs a lot of luck to achieve this, he added.
The former finance minister wondered why the Union Budget did not
address the two most crucial issues of absorbing technology and
attracting investments that are essential to put the country on a high
growth path.
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