Who Believes India's GDP? - 3G Speech of Jairam Ramesh - GDP, GST and Gas
CONGRESS MP, Jairam Ramesh, in perhaps his last speech in the Rajya Sabha yesterday said,
Sir, my today's speech is going to be on three Gs. It is a 3-G speech. The first 'G' will be on GDP. The second will be on GST. And, I will come to the third 'G' after finishing two Gs. I come to the first G, that is, the GDP.
Today, nobody believes in India's GDP figures. Dr. Swamy is shaking his head. I am sure, he agrees with me. And, I will come to Dr. Swamy a little later. The Chief Economic Advisor does not believe GDP numbers. The Governor of the Reserve Bank does not believe GDP numbers. The London Economist does not believe our GDP numbers. The Wall Street Journal does not believe our GDP numbers. Investment Bankers, Research Scholars -- they all know that our economy is on a growth path. Nobody is denying the fact that we are on a higher growth path than most other countries including, perhaps, China. But the numbers that are being put out by the Government on GDP are highly suspect. In fact, there is today a wide consensus that the GDP growth is not 7.5 per cent plus, but somewhere between 5.9 to 6.5 per cent. Sir, I am not going to quibble about whether it is 5.9 or 7.5. We are growing; we are growing well; we should grow faster; there is no dispute on that. But, I think, for the first time, the credibility of our GDP's numbers has become an international issue. Now, I am not attributing any mala fides to anybody. It has happened. The way the GDP numbers are being calculated, it has served the Government's political purpose very well. And, I would honestly urge the Finance Minister to pause, to take note of the criticisms that are being made of our GDP numbers and come up with a credible set of estimates, which everybody, including the Governor of the Reserve Bank, including the Chief Economic Adviser, including all top economists of the world and India and all research scholars, agrees to.
Sir, I have a suggestion for him. He does not have to look anywhere else outside. His own family. In his own party, he has an outstanding economist who has written seminal articles on statistical methods in Econometrica in 1962, in the Quarterly Journal of Economics in 1964 and in the American Economic Review of 1965. Yes, Sir, I referring to Dr. Swamy! He can get Dr. Swamy to head a commission to review his GDP estimates, and in this process, he may end up saving his job as well.
Sir, as far as the GST is concerned, let me reiterate our position which has been consistent and has been principled. We want GST; we want a GST, a good and simple tax. We brought the legislation in 2010. It was torpedoed by the Standing Committee. It took two-and-a-half years for the Standing Committee Report to be published, to be submitted. It was, then, subverted by the Chief Minister of Gujarat, who has now emerged as the biggest champion of GST in India and abroad.
We have made three specific suggestions for improving the GST. I have read hon. Finance Minister's blogs and his facebook, his response to our suggestions. If these suggestions are met, I am sure a consensus can emerge on the way forward. So, on GST, Sir, let me reiterate our position. Our position is, an independent dispute settlement mechanism; number two, the elimination of extra one per cent tax; and, number three, through the creative use of language, in which the Leader of the House is an expert, introduction in the Constitution of an upper cap on the GST rate. I know the Leader of the Opposition is going to say that the Constitution does not mention any...(Interruptions)... I am sorry, Leader of the House. I am used to seeing him as the Leader of the Opposition. I would soon get to see him as the Leader of the Opposition again, I am sure. Article 276, if the hon. Leader of the House knows Article 276(2), a very specific number of Rs.2,500/- as the ceiling on profession tax is mentioned in the Constitution. So, it is not true to say that the Constitution does not mention specific numbers, but, as I said, through the creative use of language, it is possible to accommodate the Congress Party's position that there be an upper cap on the GST rate in the Constitution (Amendment) Bill, so that Indian industry is competitive and the Indian consumer pays a lower tax incidence.
This is as far as GST is concerned. Sir, let me now turn to the third 'G'. The first "G" 'GDP' has three letters, the second "G" 'GST' has three letters and the third "G" also has three letters. It is a coincidence. It is 'Gas'; and I am not talking of 'political gas' but of 'natural gas'. But before I talk about gas, let me draw the hon. Finance Minister's attention to an article that appeared on Sunday in one of India's leading newspapers which I will authenticate and lay on the Table of the House which says the following. "A school of thought in the Government believes that the proposed GST is undesirable, a top Government Economist told The Hindu. There is a list of products for which States can go for higher than standard rates. A desirable GST is one that will have uniform rates. The current GST has too many rates. It is not a real GST". Sir, what I want to say is that the real opposition to the GST is not coming from the Congress. The real opposition to the GST is coming from within the BJP, from within sections of the Government, and the Congress Party is being used as a smokescreen, as an alibi, as an excuse for the failures and the limitations of the current structure of GST.
Sir, let me now turn to 'Gas', and why do I bring it up in the context of the Appropriation Bill is because this 'Gas' is a case of misappropriation and it is only appropriate that I talk about misappropriation in the context of appropriation. What is the story, Sir? Today the country is rightly concerned, the Finance Minister is concerned, the Minister of State is concerned about huge mounting NPAs of banks -- one lakh crores, five lakh crores. Different numbers are given. The country is exercised over the fact, and rightly so, that Mr. Mallya is sitting in London when he owes the banks Rs.9,000 crores. There are industrial groups in India which owe banks Rs.20,000 crores, Rs.30,000 crores, Rs.70,000 crores and, I think, the Congress Party will support any move that the Government comes forward with for reducing the burden of NPAs and for solving this problem of wilful defaulters once and for all. There is no politics in this. We will support any move that the Finance Minister comes forward with to reduce the incidence of NPAs and to bring wilful defaulters to book. However, Sir, as the Prime Minister said, there is no selectivity in the fight against terrorism. You cannot have good terrorists and bad terrorists; you cannot have good NPAs and bad NPAs. You cannot be selective in your fight against NPAs. Public sector NPA is as bad as a private sector NPA. If there is a private sector industrialist who has taken Rs.9,000 crores from banks and has not paid it back and is not in a position to pay it back, go after that industrialist and we will support you. But what about a company that takes Rs.20,000 crores from banks, has to pay Rs.1800 crores per year back to the banks in terms of interest but its annual income is only Rs.80 crores? Is this a solvent company? Isn't this company a fit case for being declared a non-performing asset?
In 2005, the Chief Minister of Gujarat announces India's largest gas discovery of 20 trillion cubic feet. Sir, 20 trillion cubic feet of gas in offshore Krishna-Godavari basin! Offshore basin means Government of India, not Government of any individual State. It is a national resource. The contract for exploration was given by the Government of India. From 2005 to 2009, what happens? The reserves in the KG Basin, rightly called the Deen Dayal Upadhyay Block, are reduced by GSPC, from 20 trillion cubic feet to one trillion cubic feet! These are not my inventions. These are not my numbers. This is from the CAG Report presented to the Gujarat Assembly, hardly fifteen days ago, on the last day of the Session, leaving no opportunity for a discussion. These are numbers. This is a forty page-discussion on this company in the CAG Report. Reserves come down from 20 trillion cubic feet to one trillion cubic feet. Bank loans go from zero crore to Rs. 19,700 crores. There is a failure of due diligence. Yes, UPA Government was in power. Yes, Finance Minister was a UPA Minister. Yes, the Petroleum Minister was a UPA Minister. But the company was the GSPC. And, when the reserves have declined from 20 trillion to one trillion, as the CAG brings out, bank loans merrily increase from zero to Rs. 19,700 crores. Please find out why this happened. You are investigating everybody. You are investigating Mr. Mallya; go ahead. You are investigating, hopefully, the Panama Papers names; we will support you.