New Delhi: The opposition today targeted the government over demonetisation, terming it as a “psychological shock” based on “spurious and dubious” economic logic but conceded that it was a smart political strategy for the BJP ahead of the Assembly elections.
During a debate on General Budget in the Rajya Sabha, the opposition parties also alleged that the country’s economy was driven by the US dollar and not the Rupee.
The Congress also attacked the government for making Aadhaar mandatory for all government schemes, which it said was in violation of the Supreme Court orders.
Congress member Jairam Ramesh said during the 10 years of UPA, the economy grew at 7.4 per cent on an average whereas it has slowed down during the NDA and investor sentiment is down.
“Demonetization may well have been a smart political strategy (by the government) but I still maintain that demonetization is based on spurious and dubious economic logic,” he said.
“It is beyond doubt that demonetization was a psychological shock,” the former minister added.
He said there was no country in the world barring Burma, North Korea and a collapsed Soviet Union that had adopted demonetization a strategy.
Noting that a lot of debate has taken place on demonetisation, Ramesh said the BJP will undoubtedly look at UP election results as a vindication of the note ban drama.
He was clearly referring to the resounding victory of the BJP in Uttar Pradesh in the recently-held Assembly polls.
D Raja (CPI) said the Budget does not have adequate steps to contain inflation, create more jobs as promised by Prime Minister Narendra Modi.
There is also no increase in direct taxes on the rich but assurance to reduce corporate tax, he added.
“There is a burden of indirect tax on the poor people.
The government talks about reforms but there is no visible tangible action against defaulters by the rich, corporate houses,” Raja said.
He said the IMF had pointed to growing inequality in the country and lower spending on health and education.
“Since 1991 onwards, our economy has been highly dependent on foreign exchange inflows where it is dependent more on foreign exchange, on US dollars than Indian rupees. I can very well call that Indian economy is not a rupee economy.
It has become US dollar-dominated economy,” he said.
Raja said the current account and GDP of India are being determined more by inflow of American dollars and foreign investments.
“Our Current Account is always in a deficit, where the US dollar receivables by way of exports and services are less than what is payable to imports and services. We find that the US dollar is always premium. Currently, around six per cent of our economy is actually dependent on the US dollar,” he said.
Tapan Kumar Sen (CPI-M) said year after year, huge amount of direct tax is lying unrecovered and in every Budget the tax is raised but not realised.
“In the current year, this amount of direct taxes to be recovered is Rs 6.59 lakh crore,” he said, asking, “Can a government, constrained by the lack of resources, afford that luxury to continue like this?” .