Former finance minister P Chidambaram has raised doubts over high Gross domestic product (GDP) growth projections for 2022-23 in Union Budget, and said these number are not credible. He said ‘I am cautioning the government that you (will) not get 8 per cent, 9 per cent or 9.5 per cent GDP growth. The world is going through a churning. IMF has lowered growth rate (projections) for all countries by 0.5 per cent to 2 per cent, I think we must settle for lower growth rate. We must achieve that lower growth rate.’
Chidambaram urged Finance Minister Nirmala Sitharaman that she must reassess these growth projections and tell the House about the more realistic nominal and real GDP growth numbers. He also suggested that lower growth rate can be achieved only if the government encourages private savings, household savings and fine ways to channelise that into private investment. It is a difficult year ahead and requires sound tax policies, financial management and economic management.
He further said ‘next year, Finance Minister expects that direct tax as proportion of GDP will increase to 5.5 per cent and indirect tax as a proportion of GDP will come down to 5.2, which means that we are reversing the bad trend in last five or six years’. He noted that Indirect and direct taxes together touched 11.2 per cent ( of GDP) in 2017-18 and this year it will be 10.8 per cent and next year it will come down to 10.7 per cent. He opined that if total taxes as proportion of GDP fall by as much as 0.4 per cent or 0.5 per cent then there is something seriously wrong with tax policies and tax administration.
