New Delhi: Finance Minister Nirmala Sitharaman on Thursday hit out at Delhi Chief Minister Arvind Kejriwal saying he had given a “perverse twist” to the debate on freebies as health and education were never considered giveaways and no Indian government has ever denied them to the people.
Sitharaman said that by classifying education and health as freebies, Kejriwal was trying to instil fear in minds of the poor. There should be a genuine debate on this matter, she said. The Finance Minister was responding to questions raised by the Delhi Chief Minister on freebies.
Earlier, the BJP had also criticised Kejriwal saying that the culture of ‘revdis’ being promoted by AAP was more focussed on advertising but weak on governance.
“I am here to expose the free education model of Arvind Kejriwal. Kejriwal’s mantra is Vigyapan par zor, Vyavastha me kamjor (Focus on advertisements, weak on governance). Kejriwal’s revdi model means that of the 500 schools and 20 colleges promised, none have been delivered. This is the revdi culture we caution against,” said BJP spokesperson Shehzad Poonawalla addressing a press conference.
A government source said Kejriwal was deliberately framing the argument in a wrong manner.
“Nobody is saying that free benefits to the poor are wrong. But it is also wrong to classify the loan write-offs as being freebies, or to say that corporate tax rate cut was designed to benefit corporates,” the source said.
According to a source, the central government is perhaps the first one to be giving free food over and above the highly subsidised food provided under the National Food Security Act. The Pradhan Mantri Garib Kalyan Anna Yojana provides 5 kg of free foodgrain to 80 crore people every month, and at the end of September 2022 it would have been running for 2.5 years.
“We have seen many political parties promise free television sets, kitchenware, gold jewellery, free mobile phones for all ration card holders, free electricity up to certain units to every household, gold as marriage assistance, laptops, washing machines, sarees, free internet connection, bicycles, etc to lure the voters,” added the source.
Government sources questioned that opposition saying it does not seem to have any coherent strategy to take long-term corrective steps, create more employment, boost incomes or improve the ease of doing business. They are unable to resolve issues adversely affecting people. The entire focus is to simply promise freebies and allurements to either win elections or stay in power by offering them as ‘bait’ to woo the voters.
There is no justification for political parties offering freebies that the government’s exchequer cannot afford and will eventually lead to bankruptcy of the state. When they promise free electricity, water or other freebies, they are merely borrowing from future generations to reward present ones.
Responding to the MGNREGA allegation of Kejriwal, that Centre says it does not have the money to pay the 100 days wages of MGNREGA, the source said it was a lie. “He should look at the Budget documents in detail before commenting. The fact of the matter is that the Government has been flexible and has raised the allocation for MGNREGA as and when needed,” the source added.
The allocation for MGNREGA was Rs 61,500 crore in Budget 2020-21, before the pandemic arrived. However, seeing the impact of the pandemic, this was increased to an unprecedented Rs 1,11,500 crore in the Revised Estimates of which Rs 1,11,169 crore was actually spent, a historic amount.
The next year, while Rs 73,000 crore was budgeted for MGNREGA in 2021-22, this was increased to Rs 98,000 crore in the Revised estimate in response to the demand.
On Kejriwal allegation that in 75 years since independence, for the first time wheat and rice are being taxed, the source said that Kejriwal should instead ask his Finance Minister Manish Sisodia that why he did not raise any objections to this during the GST Council meeting, or provide any sort of objection when the Fitment Committee came with its report, or the Group of Ministers was sitting on the issue.
Responding to the allegation of Kejriwal that Centre has collected Rs 3.5 lakh crore a year from the tax on petrol and diesel, where has the money gone, source said that RBI data in its ‘Handbook of Indian Statistics’ shows total developmental expenditure incurred by the Modi Government in 2014-22 was Rs 90.9 lakh cr, far higher than is being alleged by some sections of the Opposition. In contrast, only Rs 49.2 lakh crore was spent on this during 2004-14. The expenditure incurred by the Modi Government includes Rs 24.85 lakh crore spent so far on food, fuel and fertiliser subsidies and Rs 26.3 lakh crore on capital creation. Over the 10 years of UPA, only Rs 13.9 lakh crore was spent on subsidies. The developmental expenditure incurred by the Modi Govt of Rs 90.9 lakh cr so far is over and above the Rs 93,685.68 crore already spent between 2014 and 2022 on repaying the UPA-era oil bonds. Further, an additional Rs 1.48 lakh crore will be paid by 2026.
Add to this the fact that the Government is spending Rs 3.4 lakh crore on providing free foodgrain under PMGKAY, and is also providing COVID-19 vaccines for free.
Responding to the Kejriwal comment that Rs 10 lakh crore of loans of their super-rich friends have been waived off, Govt source said that he would know the basic concepts that Write-offs are not waivers. Write-offs are technical requirements as per the RBI, and the recovery process continues. RBI data shows that not only has the amount written off by PSBs fallen since 2018-19, the amount recovered from written off accounts has increased over that period. Out of the 12,265 designated wilful defaulters as on March 31, 2022, a suit has been filed against 12,076 (98.5%), FIRs have been lodged against 40.2% and SARFAESI action has been initiated against 75.5%. Banks have recovered over Rs 8.6-lakh crore bad loans in the last eight years on account of strong measures initiated by the government and the Reserve Bank.
On Kejriwal’s comment that vast benefits have been given to corporates through tax benefit, source said that following the 2019 corporate tax cuts, this Government was accused of favouring corporates at the expense of Government revenue. However, the truth is as follows: Total corporation tax collections in 2019-20 did decline by about 16% to Rs 5.57 trillion, compared to Rs 6.63 trillion in 2018-19.
But the decline was just about Rs 1 trillion and not Rs 1.45 trillion, as was feared at the time. The tax collection figures for 2020-21 are not relevant because of the Covid impact.
The latest provisional unaudited numbers with the Controller General of Accounts show that in 2021-22, corporation tax collections rose to Rs 7.12 trillion, surpassing by a good margin the collections made in 2018-19.
On Kejriwal comment that devolution to the States has come down from 42% to 29-30%, source said that one of the key tenets espoused by the Modi Government is Sabka Saath, Sabka Vikas, which also includes embracing the ideal of cooperative federalism. It is in keeping with this ideal that the Centre whole-heartedly accepted the recommendations of the 14th Finance Commission to increase the States’ share in central taxes to 42% from the earlier 32%. This has been retained under the 15th Finance Commission as well.
Firstly, Central transfers to States have not come down. From about Rs6 lakh crore in 2013-14 (39% of the gross revenue receipts of the Centre, including State’s share in Central Taxes), resources transferred to States have increased to almost Rs17 lakh crore in the current budget (60% of the gross revenue receipts of the Centre), a nearly three-fold increase. In fact, the Centre has been transferring the devolution amount to States in advance. This has been done thrice so far, the latest of which was yesterday when the Centre released two instalments of tax devolution to State Governments amounting to Rs. 1,16,665.75 crore, as against normal monthly devolution of Rs 58,332.86 crore.
Earlier, on Wednesday, Kejriwal hit out at Prime Minister Narendra Modi and said that taxpayers are betrayed when their tax money is used to waive off loans of “rich friends”.
Kejriwal’s reaction came on PM Modi’s statement on freebies. The Aam Aadmi Aadmi party leader further stated, “The common man is betrayed over the fact that GST has been imposed on essential food items like milk and curd while tax rebates have been given to the rich people.”