Chidambaram asks FM Jaitley to cut indirect taxes immediately

Former finance minister P Chidambaram, who feels the Union Budget for 2017-18 is "aimless and directionless", has said that the government should immediately cut indirect taxes across the board to revive the sagging economy.

Demonetisation, he said, damaged India's GDP growth in 2016-17. Further, he fears that its shadow will fall on 2017-18 and some parts of 2018-19.

He also said that lack of creation of jobs for the youth is a powder keg and a small spark can lead to a large explosion. Resentment might not be visible but it can be a "silent killer", Chidambaram said.

"What is the overarching goal of this Budget? It is aimless and directionless," said Chidambaram, who has presented nine Union Budgets in a span of nearly two decades.

"Sometimes, you chase growth. Sometimes, you chase financial and monetary stability. Sometimes, the goal is boosting growth in a slowing economy," he told PTI in an interview.

Chidambaram said Finance Minister Arun Jaitley missed an opportunity at reviving the economy hit by demonetisation.

"That (cutting indirect taxes) is a tried, tested and proven method of boosting economy. He could have easily cut between four-eight per cent (tax) across the board," Chidambaram said. 

"It is only up till GST's time and when GST comes, GST will take over. He had a window of about eight months to cut indirect taxes. It would come into force from February 1 and I don't think GST is going to come before October 1. So, he had eight full months to give a boost to the economy by cutting indirect taxes," he said.

Asked if the finance minister should still cut indirect taxes now that the Budget has been presented, he said, "Yes, he should. Even now it is not too late."

Chidambaram said that slashing indirect taxes would push consumption and in turn perk up production.

"If you cut indirect taxes by four-eight per cent, there is going to be a revenue loss, I am not denying that. But just imagine the signal that would have gone to both producers and consumers. And if consumption rises much above the level of the cut, some of the cut will be made up. The idea is to boost consumption which in turn will boost production," he said.