New Delhi: Soon after the Union finance minister Nirmala Sitharaman announced a cut in corporate tax on Friday – a move that Prime Minister Narendra Modi termed “historic” – political parties either cautiously supported the decision or entirely opposed it.
While leaders like Jairam Ramesh of the Congress welcomed the move but expressed doubts over whether investments and demand would revive because of this, the Left opposed it, saying that instead of the government increasing its spending to generate employment to boost demand, it decided to subsidise the rich further.
A headline-itis afflicted, panic-stricken Modi Sarkar has cut corporate tax rates less than 3 months after a Budget and 4 months before the next one. This is welcome but it is doubtful whether investment will revive. This does nothing to dispel fear that pervades in India Inc.
— Jairam Ramesh (@Jairam_Ramesh) September 20, 2019
However, at a press meet, Congress national spokesperson Randeep Surjewala attacked the Modi government. He said, “The latest announcement by BJP government slashing corporate tax worth Rs 1,45,000 crore a year is another panic reaction to tide over choppy Sensex index instead of laying down sound economic vision and fiscal policy for the country.”
He termed the ongoing economic slowdown as a “BJP-made economic anarchy” made possible by an “experimental prime minister and the greenhorn finance minister.”
He asked whether the potential annual loss of Rs 1.45 lakh crore would be compensated by “taxing the common man and the farmer in shape of taxes on petrol, diesel, electricity and other household products.”
He also said whether bleeding the profit-making public sector units like LIC will be made to continue because of the relief given to corporates. He said that the government does not seem to have a proper plan to control the fiscal deficit, which is likely to increase because of the move. This, he said, can lead to a further slump in the growth rate and have a negative impact on inflation.
“Almost the entire budget proposals presented by the FM and approved by parliament have either been rejected or amended or rolled back over last one month,” he said, adding that while corporates were given relief, the salaried people, middle classes, youth and small businessmen were kept out of any rebate measures.
“Prime minister and finance minister must understand that stimuli do not help beyond a certain level. What the economy requires is sound leadership, mature thinking, financial prudence, fiscal discipline and honesty of purpose. The BJP government lacks all of these,” he said.
The Communist Party of India (Marxist) took a more radical line. “The misappropriation of the reserves of the Reserve Bank of India to the tune of Rs 1.76 lakh crore is now being transferred to the corporates instead of it being used for increasing public investments that will generate employment and increase people’s purchasing power,” the party said in a statement.
It said that the relief in corporate tax is unlikely to stem the current economic recession and “people do not have the purchasing power to buy”. It also hit out at the government for reversing the budget announcement by slashing corporate tax. The government had announced a surcharge on capital gains which has now been withdrawn.
“In a situation of alarmingly rising unemployment, layoffs, retrenchment and fall in real incomes of the working people, none of these measures can help improve people’s livelihood or reviving the economy. What is needed is large doses of public investment to create employment and increase people’s purchasing power. The government is pursuing the exact opposite which is nothing else but loot of the Indian money for the private corporate benefit and speculative profit,” the party said, calling for the Rs 1.76 lakh crore taken from the RBI reserves to be used for public investment rather than for giving relief to corporates.
The AIMIM chief Asaduddin Owaisi launched a full attack on the government. He likened the tax relief for corporates to punishing the poor. “Why is there no “stimulus package” for working families, including a reduction in tax rates?…Debt-ridden farmers & unemployed young men with education loans are asked to fend for themselves. Rob the poor, reward the rich,” he asked.
The cost of this magnanimity is ₹ 1.5 lakh crore. Instead of going to the public’s purse, it’ll line the pockets of big businesses
GST collections fell by another 1.5 lakh crore. Where is @nsitharaman going to find 3 lakh crore of revenue to fund essential public work?
— Asaduddin Owaisi (@asadowaisi) September 20, 2019
Bahujan Samaj Party chief Mayawati was more contained in her criticism. She hoped that the government’s claims that the stimulus to corporates will help revive the economy is true. But she asked if this was the case, why did the government announce a surcharge on the corporates in the budget which stands withdrawn now.
केन्द्र सरकार कार्पोरेट टैक्स में आज की गयी कटौती को ऐतिहासिक बता रही है जिससे देश की आर्थिक मंदी व तंगी दूर होगी। काश ऐसा ही हो और लोगों की रोजी-रोटी पर आया गंभीर संकट समाप्त हो जाए। लेकिन मूल प्रश्न यह है कि ऐसा कदम पहले क्यों उठाया जिसे अब वापस लेना पड़ रहा है?
— Mayawati (@Mayawati) September 20, 2019