Raw deal for rural India: BJP

Left parties oppose raising of FDI limit in insurance sector

The CPI(M) supported the Budget cautiously, and the BJP attacked it, but both were clear that the long term effect of the Budget could be inflationary.

The Left parties announced that they would not support the amendment to the IRDA Act which would open up the insurance sector to foreign direct investment but added that they would do nothing to "make the Opposition happy". They conceded that without their help the amendment would not go through.

Former Finance Minister Yashwant Sinha and BJP President Venkaiah Naidu said the Budget was touted as a "New Deal" but would turn out to be a raw deal for the people of India.

Naidu and Sinha, at a joint press conference said the figures and numbers in the Economic Survey and the Budget vindicated the "India Shining" theme that the BJP had used during the elections.

The economy was at peak performance because of the policies of the NDA government, they claimed and said the several proposals, like the tonnage tax for shipping, had been ideas taken from the NDA Budget. "Jaswant Singh had also referred to exemption from income tax with a taxable income of Rs100,000," Sinha said.

Referring to it as a Budget of deception and deceit, Naidu said the proposals would hit the common man hard. Sinha referred to the 2 per cent education cess as "mindless" because of the cascading effect it would have. He said the hike in service tax, excise duty on steel and palm oil would be "inflationary".

He also said the UPA government had not put its money where its mouth was. Although the common minimum programme (CMP) had talked a great deal about food and public distribution system, the outlay had been cut from Rs 149 crore in the interim budget to Rs 84 crore.

For social justice, allocations had been hiked by just Rs 82 crore. Allocations for roads and highways had been hiked by just Rs 13 crore, despite the promise in the CMP that infrastructure would be strengthened. The net increase in outlay for agriculture between the interim and the final Budget was just Rs 900 crore.

The CPI (M) was agitated about raising the FDI caps on the insurance, civil aviation and the telecommunications sector. The Left parties, which announced that they welcomed the Budget, said they would be asking the government to reconsider the FDI decision.

"We cannot support the increase in cap on FDI especially in the insurance sector," said CPI(M) leader Nilotpal Basu. Basu argued that the funds generated by private investors in the insurance sector had never been spent on the country's development imperatives.

The Left also highlighted that the import duty on crude oil has been left untouched and said the finance and petroleum ministers had consulted on the issue and promised to bring it down.

In the matter of dereserving the small scale industries sector, the Left had its reservations. "Last year 40 per cent of small scale units closed down, we want a careful calibration of the dereservation," added Basu.

However, the Left appeared delighted by the welfare tilt of the Budget. "We welcome measures like the 2 per cent cess for an educational fund, health sector proposals especially the redesigning of the family insurance schemes, and the industrial restructuring board and reforms in the Centre-state financial relations," said Basu.