Budget 2025: ‘Elon Musk’ MEA move and ‘pure magic’ math, per P. Chidambaram

I thank the finance minister for presenting the budget. There should be a philosophy behind a budget, but I will not attempt to divine one; because the budget numbers show that there was none. The budget was politically driven.

I would, however, congratulate the honourable finance minister for achieving her objective a few days ago. Congratulations, honourable finance minister.

I would like to start on an unusual note: The finance minister has asked this house to appropriate Rs 20,517 crore for the ministry of external affairs (MEA). Usually, the MEA doesn't figure in a budget speech, but I will explain why I am referring to the MEA.

In 2023–24, the finance minister asked the House to approve an allocation of Rs 28,915 crore for the MEA, and in the current year, the revised estimate is Rs 25,277 crore, which is Rs 3,600 crore less than what was allocated. Now for the next year, the FM is asking for only Rs 20,517 crore for the MEA, which is again Rs 5,300 crore less.

It seems the FM is doing an Elon Musk on the MEA. I wish the minister for external affairs were here, but somebody must explain what we are doing regarding the MEA. Are we closing down Indian missions and consulates abroad?

One other point: The MEA has stumbled badly, and I say it with responsibility.

It is now clear that the US informed India about the deportation of illegal Indian migrants and gave India the list of deportees. India verified the 104 names and confirmed that they were Indian citizens. So, it wasn't a surprise to the government but perhaps it came as a surprise to the rest of the people.

The deportation was known to the MEA. The external affairs minister met US secretary of state Marco Rubio a few days before the deportation. I ask the government, did the external affairs minister raise the matter with Mr Rubio?

Did he know about the SOP, which he has told this House has been in place for many years? And if he knew it, did he protest [against] it to the secretary of state? Did he know that the SOP requires them to handcuff the deportees and tie their legs with ropes? If he did, then did he protest against it [in his meeting] with Mr Rubio? If he didn't protest, then why?

Even more importantly, did the external affairs minister [make an offer to] Mr Rubio that India shall send an aircraft to bring our citizens back?

It's a serious matter that there is another list of 483 Indians who've been identified as illegal immigrants. I don't know when the deportation will take place, but I ask a specific question: Will the government send an Indian aircraft to bring back Indians?

***

Let me now come to the honourable finance minister’s ‘Trump card’ — no pun intended!

The income tax cut is her main thrust in the budget and indeed of this debate.

The House should know that only 3.2 crore persons pay income tax, as per the last figures available. The rest of the Indians may file IT returns, but they pay nil tax.

The finance minister has raised the threshold from Rs 7 lakh to Rs 12 lakh, and it applies to all taxpayers — right up to the highest taxpayer.

I have looked at the CBDT (Central Board of Direct Taxes) statistics of the taxpayers, the last available. My rough calculation is about 80–85 lakh taxpayers will go out of the tax net and 2.5 crore taxpayers will benefit.

This 2.5 crore not only includes the middle class but also includes 2.27 lakh people who returned a total income of more than Rs 1 crore each, 262 taxpayers who returned a total income of over Rs 100 crore, and also 23 taxpayers who returned a total income of Rs 500 crore.

So the tax cuts are not just benefiting the middle class alone — which is welcome — but also the richest of the rich.

The FM also claims that she has foregone Rs 1 lakh crore.

Yet, she has claimed that the net tax revenue to the Centre will grow by 11.1 per cent in 2025–26.

In 2024-25 also, it grew by 11 per cent, the same number. So, the question is, after foregoing Rs 1 lakh crore in this budget, how does she claim that the net tax revenue of the Centre will grow by the same 11 per cent?

Secondly, the finance minister says this Rs 1 lakh crore will go into consumption, which will boost the economy. However, in the last few days, even her cheerleaders have become sceptical about it.

I want to ask the hon'ble finance minister, will not part of the Rs 1 lakh crore go into savings?

The SBI chairman has hoped that part of it will come to him and the banking system. Will not part of the Rs 1 lakh crore go into repaying old household debts, for travels abroad, on education, etc.?

If you deduct all this, how [do you] claim that the money will go into consumption of domestic goods and services?

Let’s compare the figure to the size of the GDP, which is Rs 324 lakh crore, [so that] Rs 1 lakh crore only amounts to 0.3 per cent of it.

So, it must be asked if you seriously think that 0.3 per cent will grow the GDP?

My humble advice to the hon'ble finance minister would be to not rely on only one engine of growth. There are other engines, such as exports and capex (capital expenditure), which must be ramped up.

***

The hon'ble finance minister has claimed in interviews — and she has given several after presenting the budget — that she hasn’t just met the fiscal deficit target but also improved upon it, [taking it] from 4.9 per cent to 4.8 per cent.

But the question is, how did she achieve it?

She cut the capex of the central government by Rs 92,682 crore.

She cut grants-in-aid for creating capital assets (another form of capex) by Rs 90,887 crore.

So, the total cut in capex by the Centre and the states in the current year will be Rs 1,83,569 crore.

By cutting capex by such a humongous amount, she saved on the fiscal deficit just Rs 43,785 crore. Is this good policy? I do not know.

But this is not good economics. You can't cut capex and compress your fiscal deficit.

On the expenditure side, where did the cuts fall?

• Health: Rs 1,255 crore

• Education: Rs 11,584 crore

• Social welfare: Rs 10,019 crore

• Agriculture: Rs 10,992 crore

• Rural development: Rs 75,133 crore

• Urban development: Rs 18,907 crore

Other unkind cuts include various schemes:

• Poshan,

• the Jal Jeevan Mission,

• the National Social Assistance Programme (NSAP),

• the PM Gram Sadak Yojana,

• the crop insurance scheme,

• the urea subsidy,

• and the PM Garib Kalyan Yojana.

Even more cruel cuts singled out...

• the Anusuchit Jati Yojana (PM-AJAY) for Scheduled Tribes

• the PM Young Achievers Scholarship

• the Post-matric Scholarship for Scheduled Caste Students

• and programmes for the development of Scheduled Tribes.

You make cuts in these crucial schemes and yet claim that your fiscal deficit has improved?

***

The greatest challenge facing India is unemployment.

The Periodic Labour Force Survey (PLFS) concluded that the unemployment rate is 3.2 per cent, a figure also reported by the Economic Survey.

If the unemployment rate has indeed fallen to 3.2 per cent, why are we worried?

We should be happy, as an unemployment rate below 5 per cent is considered full employment according to the London School of Economics and economic theories.

However, the PLFS also reports that youth unemployment is 10.2 per cent and graduate unemployment is 13 per cent. It's unclear how the total unemployment rate in India is 3.2 per cent, given these numbers.

Furthermore, there are millions of applicants for just a hundred jobs.

The Economic Survey emphasises the need to create 78.5 lakh non-farm jobs annually until 2030. I urge the finance minister to outline a plan for creating these jobs between now and 2030.

As the current government will be in power until 2029, they should clearly explain how they intend to create 78.5 lakh jobs every year until the end of their term.

***

In global manufacturing trade, India’s share stands at 2.8 per cent, while China’s share is significantly higher at 28.8 per cent. This clearly indicates that India is not a major player in manufacturing goods trade.

Under the current government, the share of India’s manufacturing in the GDP has declined. According to the Economic Survey by the World Bank, the numbers are as follows:

• 2014: 15.07 per cent

• 2019: Dropped to 13.46 per cent

• 2023: further declined to 12.93 per cent.

The Economic Survey also reports a decline in the proportion of manufacturing in the GVA from 17 per cent to 14 per cent.

This suggests that manufacturing as a proportion of GDP has not increased under this government. In fact, manufacturing and the production-linked incentive (PLI) scheme can be considered spectacular failures.

So, what does this government have to boast about in the last 11 years?

***

Look at the grand announcements in this budget.

One of the grand announcements was the Urban Challenge Fund (para 58 of the budget speech), with Rs 1 lakh crore announced — but only Rs 10,000 crore allocated.

The Jal Jeevan Mission (para 55 of the budget speech) claims to have provided water to 80 per cent of India's population and aims to cover the remaining 20 per cent, thereby extending the scheme.

However, the numbers tell a different story.

The budget estimate for the current year was Rs 70,163 crore — but the actual expenditure is only Rs 22,614 crore.

This is astonishing. Spending only a quarter or a third of the allocated funds and claiming to have provided water for everyone is, indeed, pure magic.

The present government has no philosophy and thus no policies.

In 1991, we faced the gravest situation.

A man entered this Parliament. He had an economic philosophy and followed it with policies. That required wisdom and farsightedness — qualities embodied by Dr Manmohan Singh.

To recapture the wisdom and farsightedness of Dr Manmohan Singh, I pose one last question to the government through the finance minister: Why has the Bharat Ratna not been conferred upon Dr Manmohan Singh?

*Excerpted from the address delivered in the Rajya Sabha during the debate on the union budget by P. Chidambaram, a former finance minister who presented nine union budgets himself