Highlighting critical economic issues that remain unaddressed by the Budget 2024, Aam Aadmi Party Rajya Sabha MP Raghav Chadha urged the government to do a comprehensive review of the tax framework by making 8 suggestions for it to look into.
Speaking on the budget in the Parliament on Thursday, the AAP MP said this government has disappointed almost every section of the country with this budget. “They have managed to displease all sections of our society. In fact, even the supporters of the Bharatiya Janata Party, its voters are extremely disappointed with this budget,” he said.
“This Budget has sucked the blood through taxes. I want to request to look into direct and indirect taxes,” said Chadha in Rajya Sabha on Thursday.
The AAP MP said in the last 10 years, the government has sucked the blood of the common man of the country by imposing taxes. He said suppose a person earns ₹10, he gives back ₹7 to ₹8 to the government treasury after paying income tax, GST, capital gain tax and surcharge. And what does the government give us in return for the so much tax it takes from us, what international services, world class health care, education, transport facilities does the government give to the countrymen in return? “That is why today I have no hesitation in saying that we in India today pay taxes like England to get services like Somalia,” said Raghav Chadha, drawing applause from the Opposition benches.
Attributing the bad economic policies of the BJP-led Central government for its dismal performance in the Lok Sabha 2024 elections, the AAP MP said in 2019, the Bharatiya Janata Party had 303 seats, the people of the country brought them down to 240 seats by imposing 18% GST on those seats. Many reasons are given for this, some say that the religion card did not work, some say caste is the reason, while some say that there was a lack in ticket distribution. “These are all superficial reasons. I tell you three reasons due to which the Bharatiya Janata Party has faced this plight: the first reason is economy; the second reason is economy, and the third reason is also economy,” he said.
Giving reasons for the poor show by the BJP in rural areas, Raghav Chadha said the first reason for the defeat is rural income and inflation. “Due to rising rural inflation, rural unemployment, low crop yield, income inequality, farmer debt, high input cost, low income, no MSP and crop losses, rural income growth is at a decadal low in the financial year 2023-24. Along with this, there was a promise to double the income of farmers, there was a promise to give MSP as per Swaminathan Commission, when those promises were not fulfilled, the situation is that for the last 25 months, real rural wages have been on decline continuously.
Explaining how the decline in income and rise in inflation in the last one decade during the BJP regime has resulted in the fall of its vote share in rural India, the AAP MP said in 2014, a daily wage labourer could buy 3 kg of tur dal from his daily wages, today in 2024 the same daily wage labourer is able to buy only 1.5 kg of tur dal from his daily wages. This means that inflation is also increasing, and his income is also decreasing. The result of this was that BJP’s vote share decreased by 5% in rural areas. Their own Union Agriculture Minister lost the election. Out of 398 seats in rural India, they got 236 seats in 2019 and now they got only 165 seats. This means that they have been rejected in rural India, he added.
Raghav Chadha said secondly, the economic condition of the country today, due to which they have this condition in the elections, is due to food inflation. Prices of flour, milk, curd, rice, every item is affected by inflation, GST. “Food inflation is constantly increasing in this country, food inflation is hovering around 9 to 9:30 percent,” he said.
The AAP MP said the third reason is unemployment. Be it informal sector or formal sector, unorganized sector or organized sector, unemployment is everywhere and CMIE report shows that unemployment rate in organized sector is 9.2% in this country. “368 jobs were advertised for the post of peon in Uttar Pradesh government secretariat and 23 lakh people applied for them, 63000 posts were advertised in Indian Railway’s Group D employees and 2.5 crore people applied for them, 2.5 crore is more than the population of Australia. As many as 9900 constable posts are advertised in Bihar Police and 11 lakh applications are received for them, 7000 people applied for the recruitment of 12 waiters in Maharashtra secretariat’s canteen which included many postgraduates and graduates. This is the state of unemployment,” he said.
Fourthly, there is stagnation in sectors like construction and trade in this country and the appointments that are created are stagnation-coming and the industry’s investment, as we call it, Gross Fixed Capital Formation, is continuously decreasing and
I am sad to tell you that new private investment has come down to 25 crores in the first quarter of the financial year 24-25, which means that the industry is not investing today. India’s tax revenue is also increasing day by day.
Giving eight valuable suggestions to the government in the interest of the economy of the country, Raghav Chadha said the first suggestion is to index minimum wages with inflation. Inflation erodes purchasing power. Inflation is the termite that eats away your purchasing power, your wealth. That is why today I want to say that just as countries like Belgium have implemented automatic indexation of wages, similarly, there should be automatic indexation of minimum wages in our country too. “Here I would like to tell that my leader Arvind Kejriwal ji, our Aam Aadmi Party government has given the highest minimum wages in the country in Delhi,” said the AAP MP.
He said my second important suggestion is to rework the agricultural pricing formula, that is, when a farmer goes to sell his crop in the open market, there should be a minimum reserve price. That is, the minimum price, the farmer will get for his produce. “This will save the farmer from price volatility, the farmer will get economic security and there will be continuity in production,” he said.
Raghav Chadha said the third suggestion is legal guarantee to MSP in accordance with the Swaminathan Commission report. “Swaminathan Commission report has not been implemented till date. I would request the government to give that legal guarantee to the farmers of the country,” he said.
“My fourth suggestion is to restore indexation on long term capital gain. All over the world investors are incentivised to promote investment. By removing indexation in this country, we are disincentivising the investor class to invest. Removing indexation is not imposing tax but penalising investors. Inflation ravages the value of money. That is why we calculate capital gain tax by indexing the cost of acquisition,” he said.
Cautioning the government about the ill-effects of not restoring indexation on the country, Raghav Chadha said, “If you do not reimplement indexation, then three things are going to happen in this country. First, investment in real estate is going to fall and people will never be able to buy their dream home. Second, there will be undervaluation of property deals, everyone will buy and sell property at circle rate, no one will tell the actual price. And the third thing that is going to happen in this country is that a huge amount of black money is going to come in the real estate sector if you do not restore indexation,” he said.
Raghav Chadha’s fifth suggestion to the government is to incentivise financial savings in debt, equity, mutual funds, bank deposits, financial investments and especially incentivise people who keep their investments for more than 24 to 36 months. “Do not tax them, do not penalise them,” he said.
The AAP MPs sixth suggestion to the government is to review, revise and simplify GST. “My suggestion to the government is to comprehensively study the entire framework of this GST and then revise it. Reduce GST in export- oriented sectors so that we can become globally competitive,” he said.
Raghav Chadha’s seventh suggestion is to give more to the states. “India is a union of states. Put some money in the pockets of the states. We understand the compulsions of coalition politics, we understand that you should have given more money to Bihar and Andhra Pradesh. But those states which voted for you in large numbers _ Gujarat, Delhi, Madhya Pradesh, Odisha, Jharkhand, Chhattisgarh _ those who put almost all the seats of their states in your lap, what was their mistake? You gave a toy to each of those states and showered everything to the other two states. So, this should not be discriminatory federalism, it should be cooperative federalism,” he said.
His eighth suggestion is that GST compensation which has been stopped for the states should be given at least for five more years. There are many states like Tamil Nadu, Maharashtra, Punjab, Gujarat whose economy is dependent on GST compensation today. “Today 10 to 15% of our budget comes from GST compensation. I would like to request the government to help these state governments by giving GST compensation for at least 5 more years,” he said.
Urging the government to do a comprehensive review of this tax framework, Raghav Chadha said, “This budget has sucked the blood of the common man of this country by increasing taxes. I would request that whether it is direct tax or indirect tax, this entire system should be reconsidered once again.”
