It is now in the public domain that the MCA data is full of holes. NSSO has found that 35% of the companies in the MCA-21 data base are bogus companies. The growth figures are a sham and what the government has done is a scam, said former Finance Minister P Chidambaram, in an interview with ETNOW.
ET Now: Today we saw a damaging report against the NSSO which alleges that dodgy data was used for the GDP series calculation. You have held a press conference. Should the NSSO never have relied on the corporate data they took from the MCA website?
NSSO did not rely on the data. It is the CSO which rely on the data. And many economists have over several months have demanded that MCA-21 data be put in public domain, but the government has refused. Now we know why the government refused. It is now in the public domain that the MCA data is full of holes. NSSO has found that 35% of the companies in the MCA-21 data base are bogus companies. They either do not exist or have disappeared and the government has been relying on such bogus data to put out bogus growth figures. The growth figures are a sham and what the government has done is a scam. This requires a detailed and deeper investigation.
ET Now: When you say all of this, what are the areas of concern? The fact that it used data from the MCA website when it now turns out nearly 38% of the companies cannot be traced? They could be shell companies or also have a problem with the way the GDP series date was changed, the reference date was changed?
P Chidambaram: The base year is changed from time to time. that is not unusual. Changing the base year is one thing, changing the methodology is another… They changed the methodology and that is technical and that has been pointed out by several statisticians and economists. Now we find an even graver charge. It is not only change of methodology, it is use of bogus data. So you change the methodology, you use bogus data, you shift the base year and all this for what to show that India is growing at brisk rate when it was not growing. All other indicators are pointing southward, while GDP alone is pointed northward!
I thought Dr Raghuram Rajan and many others have pointed out that the reality on the ground does not reflect this robust growth rate that Mr Modi’s government is claiming. There are serious issues here which are not amenable to simple question-answer session. There are serious issues which have to be investigated thoroughly and those who are guilty and those who are complicit have to be brought to book. Changing base year, changing deflators not justifying the deflators, changing the methodology and using bogus data.
ET Now: The prime minister as well as the finance minister often point out that how tax collections have gone up; how with GST, the tax net is widening. They also talk about corporate tax collections which have gone up and say that this is all not indictors but actual data which shows growth in the economy. They also cite the IMF as well as the World Bank for calling India the brightest spot on the planet when it comes to global economy. What do you have to say to that argument?
P Chidambaram: When have the IMF and the World Bank said a bad word about India or any other country unless it is a basket country like Venezuela or Argentina? I have attended several IMF meetings and World Bank’s meetings. Every time they will say oh! what a bright star you are! That is the way IMF and the World Bank function because we are part owners of IMF and part owners of World Bank and we are an important part owner. Now be that as it may, which tax collection is robust? Tax receipts are 11% lower than estimates. GST is lower. Personal income tax is lower. Excise duties are lower. Which tax collection has met your tax targets? In fact, the fiscal deficit will not rest at 3.4%, which they put out in the interim budget. It is likely to go up to 3.8%.
ET Now: You are saying the fiscal deficit according to your estimates and your calculations is at 3.8%, not even the revised target of 3.4%?
P Chidambaram: I have not personally calculated it, but my colleague Mr Rajeev Gowda today at the press conference said if tax collections are lower by 11%, it is likely that the fiscal deficit will not rest at 3.4%, It is likely to be more. The logic is beyond question. How much higher than 3.4% will have to be calculated. But if tax collections do not meet even the revised estimates, the fiscal deficit is bound to be larger isn’t it?
ET Now: Today at the press conference you also said this is the weakest point of the Indian economy in five years, that perhaps the levels we are at go back to 2004. That is of course, when the UPA-1 came to power. Are you trying to say that in the last five years the NDA has undone what maybe UPA-1 and UPA-2 did because they say India was the fragile five during those two tenures of the UPA government?
P Chidambaram: Complete nonsense to call it fragile five. The world was fragile, the world economy was fragile after 2008 and even the US economy was a fragile economy. One thousand banks went bust in the US. Banks in Germany went bust, banks in UK went bust. So, this fragile five is alliterative nonsense. The point is that after 2008, the world economy went into a spin. It affected India, but we rebuilt the situation and between 2012 and 2014. We reduced the fiscal deficit, contained the current account deficit sharply, exports were back to the highest point at $315 billion. So, we rebuilt the economy in 2014 and gave it to them, when according to their own calculation, the economy was growing at 6.7% or 6.6% revised. Therefore, if you bequeath an economy of 6.6% with exports at the highest point, current account deficit compressed to a very manageable limits, fiscal deficit contained sharply, what are they complaining about? Also, what are they going to leave behind? Just wait for a couple of months. When the next government comes and presents the real numbers, then we will know what a huge scam and what a huge sham this government’s numbers are.
ET Now: When you said the next government is going to come to power and expose the NDA, are you convinced that Narendra Modi is not going to stay on as the prime minister? He has of course, been saying let us see if the Congress even makes 50 seats or if it is going to be 40 seats?
P Chidambaram: Mr Narendra Modi is given to gross exaggeration. When has he said anything which reflects the reality? Everything is a gross exaggeration. The point is the Congress has already crossed several times the 44, he knows that, we know that. Five rounds of elections are over, 425 seats have gone to the polls. There will be another government. Of that, I am sure.
ET Now: Is it going to be a coalition government — the Mahagathbandhan as it is popularly called? Various cabinet ministers are saying they are going to top the 2014 numbers in 2019. They are going to even better it is what the BJP is claiming.
P Chidambaram: Let us see. Let us see. I wish them well. We do not talk in the same language as they do. We wish them well. So let us see, wait for May 23.