The House re-assembled after lunch at

one minute past two of the clock,



MR. DEPUTY CHAIRMAN:  Now we will take up the Finance Bill, 2007 and the Appropriation (No.2) Bill together for discussion.  Shri P. Chidambaram.






       That the Bill to give effect to the financial proposal of the Central

Government for the financial year 2007-08, as passed by Lok Sabha, be taken into consideration.

       Sir, I also beg to move:

       That the Bill to authorise payment and appropriation of certain

sums from and out of the Consolidated Fund of India for the services of the financial year 2007-08, as passed by Lok Sabha, be taken into consideration.

The questions were proposed.

SHRI ARUN JAITLEY (GUJARAT):  Mr. Deputy Chairman, Sir, the Finance Minister has moved for consideration and discussion of this House the Finance Bill for the year 2007-08.  I stand here to speak on this fully conscious of the limited authority and jurisdiction of this House on matters of finance of the Government.  I also stand here with a mixed feeling and my mixed feeling really arises out of the fact that I have great personal regard for the Finance Minister.  I have seen him not only as a Member of Parliament and a Minister with very great articulation and persuasive powers, but also as a lawyer with a brilliant and analytical mind, and I must say, with the high hopes that I have in him, that the finance management of the Government has left me with a deep sense of disappointment.  The Finance Minister had two innings as Finance Minister.  His first inning was in a rather or somewhat adverse circumstances.  He was the Finance Minister of the United Front Government and that Government had even the participation of some Left Members as part of the Government itself.  But despite various adversities--I distinctly remember that during the period 1996-1998, both through his budgeting exercises and also various steps he took in the economic direction, he knew that he was surrounded by a lot of people who were obstructing the reform process--he was conscious of the fact that the reform process had started in 1991 and yet, during that period, he did demonstrate that, despite political opposition from several quarters, the economy must move on and the reform process must move on and it did demonstrate that the reform process was the art of the possible itself.                                         (Contd. by RG/2A)


SHRI ARUN JAITLEY (contd.):  But, in the last three years, we have seen, at least, four budgeting exercises by the Finance Minister and four Financial Statements in terms of Finance Bills by the Finance Minister himself.  And I find that the Finance Minister now has been reduced to, at best, I can say, a former reformist.  If he has that great desire to bring about reforms, he finds himself unable to do so.  If I may put it in one sentence, whereas during his first tenure, he did demonstrate that even under adversity, reforms were the art of the possible, it is in the present tenure that I get a distinct impression that the absence of reforms by this Government is really the art of survival.  They know that they have to survive in office.  They know that the country needs a particular economic direction.  They know that there are both obstructions within the UPA and from the supporting parties.  Therefore, one of the facts, which is very glaring about the entire financial management, is the absence of bold decision-making as far as the Government is concerned.  Sir, how do we judge this entire exercise that the hon. Finance Minister is now indulging in?   As far as this Government is concerned, whenever they are shrouded in controversy, they have a step of retraction.  I think, going through his last three speeches while presenting his last three Budgets, barring some marginal changes and alterations, even the sub-heads of the various proposals, he has in mind, broadly remain the same.  I was wondering how the Finance Minister would like himself to judge this Budget.  He has had a very distinguished career as a Minister.  For a brief period when the NDA was in power, he was out of Government.  And, when out of power, he had donned the mantle of an independent commentator on Political and Economic Affairs.  Week after week, we were educated of his views.  And, while we were in Government, we were also told where we went wrong.  I remember, when the NDA was in power, if, as a part of the economic decision-making, say, a decision on the Cabinet Committee on Economic Affairs or an agenda on a Cabinet Committee for Disinvestment, some decision was deferred or postponed by a week or two weeks, we did attract adverse comments as to whether we were in two minds about the direction in which we wanted to take this country.  I was going through the compilation   of articles which the hon. Finance   Minister  wrote  during  that  period, and   I do remember that when this    publication   was  released,  he was modest enough himself to say that for an active politician, to put his views in writing at a given point of time, and then to compile them, has one inherent danger in it because then the book is repeatedly quoted, on what you said earlier, against you, when you are expected to deliver.  I remember, Sir, when two of our distinguished colleagues in this House and my party, Shri Jaswant Singh and Shri Yashwant Sinha, were presenting their Budgets, we had very valuable comments coming from the present Finance Minister.  When Shri Jaswant Singh presented his Budget, I just want to remind him as to what he said.  He said, "This is the test by which a Finance Minister is really going to be judged."  And, if I quote from his writings which he wrote at that particular time, he said, "After observing the behaviour of political parties during the last few months, I have reached a sad conclusion that political support for economic reforms, real reforms, is shrinking.  Every political party has taken a step backward on key issues.  Reformers in every party seem to have taken a vow of silence".                            (Continued by 2B)


SHRI ARUN JAITLEY (CONTD.):  And, today, when I see the complete silence of the Prime Minister, who was a very distinguished Finance Minister during the period 1991 to 1996, can I say, without fear of contradiction, that he has taken a vow of silence and that vow of silence is really intended to facilitate the art of survival, as if that is what is going to cause economic planning as far as this country is concerned? 

"The focal point", the present Finance Minister had written, Sir, "of reforms is the Ministry of Finance.  The Finance Minister is -- to borrow the language of football or hockey -- the play-maker", and then, after calling the NDA Finance Minister, "You have the role of a play-maker", what was his advice to them?  He was disappointed with them and said, "With every passing day, there is a new controversy.  First, it was about disinvestment.  Now, it is about direct and indirect taxes.  A few days ago, the Minister of Labour made some incomprehensible remarks about reform of labour laws.  The Food Minister is not able to quell the rebellion on sugarcane prices or spell out a policy".  He was disappointed with us, Sir, for he thought, at that time we were going slow on disinvestment; that we were not being able to adequately bring about direct and indirect tax reforms; there was a lack of movement as far as labour reforms were concerned.  And then he said, "The NDA Government is like a football team that kicks and passes the ball aimlessly while waiting for a referee's whistle.  No attempt is made to score a goal, the object being to prevent a self-goal" or, a goal against the NDA side.  Sir, his charge really against us was, "You are moving but not fast enough".  But, what do I say about a Government today which for the past three years has almost let the economy move on an auto-gear without any policy initiatives coming from the Government itself.  I must say, Sir, that the Finance Minister is, indeed, a very lucky Minister.  He is lucky because when he stepped into office, he inherited an eight per cent growth rate and when he inherited the eight per cent growth rate, this was the environment in the country where several domestic factors favoured the Indian economy, where you had an international climate which was favouring us, where India seemed to become a global flavour and a few bold steps by the Government really at this stage could have seriously given a push as far as the various reforms were concerned and accelerated our growth factors.  However, what happened in the process was, and I hear it repeatedly from the speeches of even the hon. Prime Minister, that there is a kind of an exercise at self-deception, as though the increasing growth rates in the economy are in any way attributable to any steps taken by the UPA Government.  Let us, Sir, be very clear.  If we see the structure of growth in this country, our manufacturing sector is growing; it is growing now between nine and ten per cent.  What are the steps that the UPA Government has taken to facilitate the growth?  I can quite understand that from the period 1991 to 2004, successive Governments took a large number of steps which brought the economy to that level.  The services sector is growing. The agricultural sector where a lot of governmental investment is required, is still a cause for worry.  And the growth substantially in those two sectors, let us be clear, is today entrepreneur-driven; it is not driven by any fresh policy initiative taken after 2004.  And if the growth process is entrepreneur-driven or driven by the various factors of policy decisions which were taken in the past 14 years, and not in the last three years, at least, the present Council of Ministers cannot claim the satisfaction of having driven that growth rate.  If they do that, then, I am afraid the Government would be living in an exercise of self-deception.                                                (Contd. by 2c/tdb)


SHRI ARUN JAITLEY (CONTD.) Sir, one of the great difficulties why the Government is not able to accelerate the whole process is very clear. The present Government in terms of its policy was not a pre-poll alliance. Their programmes and directions were set up after the elections. And when they were set up after the elections, the conditions imposed by those who keep them in power were very clear, 'you can go so further and not far beyond that'. And, every time there is a proposal, that there is a step required to be taken which would take the economy in a given direction, there are threats, threats of a bite which never takes place. And as a result of which the Government, probably, considers that inaction, perhaps, is the best route of survival itself.

       Today, Sir, we have a situation that if any decision is even being discussed, I am not necessarily in favour of each of those decisions, you have the Government being halted by correspondents which is regularly written by somebody who is either a part indirectly of the Government itself or of the supporting parties itself. The difficulty is that all these letter-writers who are the fundamental obstructionists to any growth process come from within. If any reform process is to be initiated, a new policy is to be taken up, there is a political temptation and the political temptation is, let the Government dominate the policy domain by being in power, let it enjoy the flavour of being a ruling party and let us try and see if opposition to this policy, the opposition space can also be occupied by us. It is, therefore, not surprising that you will find either in the UPA Chairperson or in the General Secretary of the CPM regular letter-writers, whose principal object would be to obstruct decision-making processes that take place in the Government. And, I am sure, inspired by these, my friend Jairam is there, I read in the newspaper today that now instead of drafting letters for others, he is sending them in his own name because he has also joined the ranks of those illustrious letter-writers, and from a one-time reformist that I thought Jairam was, he now has joined the distinguished ranks of the letter-writers who will keep cautioning the Government at every step that the Government is either contemplating or not really able to take.

THE MINISTER OF STATE IN THE DEPARTMENT OF COMMERCE, MINISTRY OF COMMERCE AND INDUSTRY (SHRI JAIRAM RAMESH): I have to undo the damage that you did when you were the Commerce Minister.

SHRI ARUN JAITLEY: I will, Sir, necessarily deal with my friend, Jairam when he speaks in terms of the damage we did. Sir, let us be very clear about the direction and the state, as far as the economic decision-making is concerned. The first, the UPA has to realise that the present growth rate in the economy is not because of the UPA. It is in spite of the UPA. There is no policy decision that they have taken which has carried this process further. Second, the process of economic decision-making in the Government stands completely paralysed. There is no significant decision which the Government is able to take. Three, the Government keeps speaking in terms of helping the farm sector in various ways. The problem of the farm sector was made a major political issue in the year 2003-04. But, post-2004, we have seen the problem of rural indebtedness and the kind of casualties that have been inflicted upon the farmers and the agricultural sector leading to an unprecedented number of killings and suicides, as far as the farmers are concerned. Four, as far as the management of the economy is concerned, we have a very distinguished economist in the Prime Minister and he is, probably, the first amongst the economists to become the Prime Minister of this country. But, when we look at inflation and the economic management of the country, it almost appears to be inversely proportionate to his experience as an economist.           (Contd. by 2d)


SHRI ARUN JAITLEY (Contd.): You had an unprecedented price rise as far as food items are concerned. In that unprecedented price rise of food items, you have a complete mismanagement which has taken place, as far as the supply side is concerned. To find a solution to this rather than tackle with the problem on the supply side, because there would be domestic shortages, instead of addressing that problem, and subsidising getting food from somewhere else because people cannot starve if there is shortage domestically, you have to look beyond your nose and realise where the shortages are.

       This Government started a backward movement in terms of the credit squeeze policies and the hike in the interest rates which has taken place.  People already inflicted with an unprecedented price rise burden, a huge number of population --- India's urban population is on the increase which aspire to have a roof on its head --- suddenly find that the floating interest rates have now completely upset its budget. Its desire of an acquisition even in future seems to disappear.

       As far as infrastructure is concerned, Sir, you carried out whatever programmes existed in the past, from the rural roads to the national highways. But, there seems to be a significant slow down rather than acceleration, an economy which for four years grows at 8 to 9 per cent, we would certainly require a lot more investment into infrastructure and physically you should be able to see the development of that infrastructure. Barring a significant reform which seem to have taken place as far as the aviation sector is concerned, in other areas of infrastructure, you find that the priority of the Government almost does not exist.

At times when you see statements coming from Ministers, my friend Jairam Ramesh found it very convenient to say that his letter was undoing the damage which I had done as a Commerce Minister; I would only urge him not to use my shoulders to fire at his own Commerce Minister. We being out of office for the last three years, and your distinguished Commerce Minister could have rectified those damages three years ago. But this entire process in the Government; it is not only in this case; yesterday, when Mr. Yashwant Sinha put a query as to in what capacity was the Minister of Sports answering a question. The Prime Minister says that we must host the Olympics. But, when it comes to the Asian Games, the Sports Minister says, it is a waste of money! The Prime Minister appointed a Minister for Sports, he turned out to be a spoilsport!

You have a situation today where on various policies the Commerce Ministry and the Finance Ministry seem to be at war. You have decision making where the UPA Chairperson and the Government seem to be at war. You have a series of policies where you find the Left parties supporting the Government on almost every decision seem to be at variance with them. Sir, collective responsibility of the Cabinet is the age-old dicta we had heard. This appears to be a Cabinet of Collective Irresponsibility where every Minister starts moving in a different direction and starts making announcements at various directions as though there is some kind of a civil war going on in the Cabinet itself!

The only issue, Sir, of consensus which I see -- when I hear leaders from the Left parties, the UPA, the Congress, and even members of the Government, on which there seems to be a consensus, and I can assure you, we are almost a part of that consensus -- is where we all jointly accuse the Government and its failure on the issue of inflation as one of the principal reasons why the Congress party is losing elections in State after State. Your own party, the Finance Minister must understand, your supporting parties within the Government, your parties outside the Government, we in the Opposition also wonder as to what is the reason the Maharashtra cities, Punjab, Uttaranchal, Delhi, every election which is being tested one after the other; the outcry against this Government is on account of the failure of the Government to maintain prices on food items. There seems to be a consensus; in fact, I am sure, in the next couple of weeks, when the results of Uttar Pradesh and Goa also come out, Sir, we probably will have a similar kind of an analysis emerging. This seems, Sir, now, the virtual approach which the entire political system has been taking. (Contd. by sss/2e)


SHRI ARUN JAITLEY (CONTD.):  Sir, I must tell the Finance Minister that the Finance Bill really reflects the policy of the Government, if one exists, which he has enunciated in the Budget document and in the Budget Speech itself.  I have, Sir, various disappointments on account of this entire approach which the hon. Finance Minister has followed.  My first disappointment, Sir, if I look at the big picture is, this was the time for a bold economic decision-making.  This was the time for a bold Budget.  This was the time where our economy is becoming increasingly competitive and if we are wanting to make our economy increasingly competitive, let us remember that globally we have one great advantage which along with our neighbours, China, countries like India also have, that in this era of globalisation the world is going to buy products, it is going to hire services which the world gets at a cheaper cost and of good quality.  The concept of global trade in the last decade or so has significantly changed and because of this significant change and people across the world looking for cheaper services, better quality services, cheaper goods, the scales of the economy globally are going to favour the low cost economies.  Now, in case you are looking around for low cost economy with mass production, with mass service sectors, and that is what really will exhilarate the whole growth process, you require certain bold decision makings.  What do we see in the process?  I can quite appreciate and agree with the Finance Minister's proposals where he requires a lot of money for  social sector expenditure.  In a country where a large part of the population deserves the right of national resources, I do not think there can be a disagreement with the Finance Minister at least on that.  Even to get more money in the pocket of the Government itself you need to create an environment where business profitability in various sectors increase, where enriched Governments increase economic activities, larger revenues from larger economic activities and eventually you have larger job creation and this increased revenue in the pockets of the Government, enriched Governments does not impose extra burden on tax payers but by volumes of the economic activity itself is able to sustain that activity and even the expenditure both on agriculture and various social sectors where it is required.  You then need bold decisions to unlock resources which are lying in various sectors of the economy locked.  When the Finance Minister was writing these articles and some of these views, I must say, are views that at least I agree with, in some of them, he in fact, egged the NDA that why don't you expedite your decision making process.  Today, with this Government, privatisation and disinvestments are a bad word.  The playmaker in the football field cannot do anything about it but what the Finance Minister said when he wrote these articles in September 2002, he said, "The initiation of the process of disinvestments to a strategic investor has lifted the share prices of the PSUs concerned.  When this news broke out the Ministers started stalling tactics and price as well.  One can see the contours of emerging consensus of privatisation amongst the political parties, barring the Communist Parties."  So, at that time you felt only the Communist Party was out of the political consensus.  The others were all coming in.  And today, can I only accuse the Left of breaking down this consensus?  The Left's decision is very well known.  I cannot accuse them because it is an ideology which is very dear to them, they are entitled to it.  But those who are accusing us of expediting the process, today what do we face with.  We face with a situation where a large part of our revenue collections and various capital receipts of this Government have indicated in this whole planning are going in the direction of debt servicing.  You don't have them available for the purposes of social sector expenditure.  You don't have them for the purposes of creating better infrastructural environment in the country and if you are to unlock and if you have to take bolder decisions in order to make our own industry competitive, then at times you have to choose whether to merely claim at the end of the day that I was in power for such a long period, whether that is the more important priority or what steps did I take when I was in power.     (Contd. by 2F)

-SSS/NBR-ASC-LT/2F & 2G/ 2.30 & 2.35.

SHRI ARUN JAITLEY (CONTD.): Are you merely going to leave behind the 'duration' in power, or, are you going to leave behind footprints when you were in power?  And, I am afraid, with this kind of approach, the hon. Finance Minister would realize that this is really not being done.

       Secondly, the entire approach of the last three years, on various Finance Bills, is completely contrary to what the approach was, let me say, from 1991 to 2004.  It is contrary to the approach between 1996 and 1998.  It is for the first time, post-2004, when tax rates were being rationalized with increased economic activity, you now have a situation in the last three years, where I feel uncomfortable in saying this but I cannot hide the reality, that in the first avtar the Finance Minister rationalized the tax structure.  In his second innings, he is a high-tax Finance Minister.  Even I say this that you are a high-tax Finance Minister in this tenure, look at the new Heads that you are creating one-after-the-other.  You now have the basic rates of taxation.  For the corporate, you have depreciation calculation procedure altered by which their liabilities went up.  For individuals and everybody else, you have the surcharge for some time now. You have the Educational Tax.  You have the F.B.T.  You have the Service Tax which is expanding from one activity to another year-after-year.  And, I can quite appreciate that why should services not be taxed?  Therefore, expand the base.  This was the original rationale.  But, if Service Tax is to be imposed, then the approach has to be how do I give relief elsewhere as far as manufacturing is concerned.  Is there somebody else in the economy, with this increased base of taxation, new points of taxation, new methodologies of taxation which are emerging?  Is relief coming anywhere else?  Last time we found in the Budget from cleaning services to cooperative societies and this time from rentals of commercial properties beyond a certain point, taxations have been expanded.  And, this expansion in this entire taxation is really burdening.  The hon. Finance Minister would appreciate when he deals with the issue of how to tackle inflation at various ways, is this increased taxation by Government, in various fields, also contributing to this entire process?

       Thirdly, Sir, your entire approach as far as the manufacturing sector is concerned, it requires to be altered.  I am conscious of the limitations of coalition politics.  Therefore, in a Government, with coalition politics, a large number of steps to be taken by the Government may not be possible.  But, then, we have a situation where this time I read in the Economic Survey that the contribution of agriculture to the GDP has now come down even below 20 per cent.  If 60 per cent of population has 20 per cent of the GDP, it shows the kind of overcrowding, underemployment, unemployment in the agriculture sector.  World-over, when this phenomenon has taken place, people have emerged out of agriculture sector and with the expansion of industry got involved in the industrial jobs.  Therefore, there is a rapid need to expand the manufacturing sector.  In fact, in China, the manufacturing curve went up by 12 per cent and 14 per cent which not only accelerated their growth rates rapidly but which also brought in a large number of jobs where people from agriculture went into manufacturing.  Therefore, this plight of agriculture sector, which seems to be overcrowded, was substantially altered.  Now, in the manufacturing sector, you cannot have a situation where 80 per cent of your taxation comes from this sector. If you have got a huge base now of Serviced Tax which is increasing year-after-year and other forms of taxation, are you going to think in terms of incentivising this manufacturing sector in some way?  It needs to be competitive in terms of its taxation structure.  It needs to be competitive in terms of cost of the capital that it has to pay.  It needs to have trade facilitation in terms of infrastructure, in terms of ports, highways and in terms of various other facilities.  I am consciously not referring, knowing the limitations of a coalition Government, to other kinds of reforms which should be required in a sector of this kind. 

       Sir, where is the big idea as far as this Budget is concerned?  As I said, in the absence of any big idea behind this Budget and the Finance Bill which comes out of this Budget, what really happens is this.  I have compared all the last three Budget speeches of the hon. Finance Minister.  Each one of them, head-after-head, all you have to do is to alter the amounts that you are giving for scheme "A" or scheme "B" or for sector "A" or sector "B."  Now, this is an exercise which can even be done by the Revenue Secretary or the Expenditure Secretary.  This is for the Finance Minister whom we have seen the Finance Ministers in the past had ideas.  I can see a lot of ideas in this particular publication that he has been brought about.  For that kind of a Finance Minister, an individual with that talent, we certainly require to have some larger bigger idea than having the same routine exercise that is going on.  For example, in a country where 70 per cent of people are deprived of sanitation, you have Rs. 240 crores budget for sanitation.  Health will get marginally more.  What happens to the much celebrated NREG Scheme?  The outlay is increased by Rs. 700 croes.  But, instead of 200 districts will now be spread to 330 districts.  It means, the-per-district-expenditure of each district will decline.   And, that decline is from Rs. 56.5 crores per district, it has come down to Rs. 37 crores.  This is what clearly appears from the speech and the documents accompanying the speech.  If the hon. Minister disagree with me, he can clarify as far as this position is concerned...(Interruptions)...

SHRI JAIRAM RAMESH: You should understand how the NREG Scheme functions?

SHRI ARUN JAITLEY: Sir, Mr. Jairam Ramesh will write a letter and explain the error in which I have fallen. 

Sir, the management of food economy by this Government needs much to be studied.  Now, it is almost admitted in statements emerging out of the Government and those statements emerge particularly when the blame-game starts as to who is responsible for it.  I said, we are not looking at one individual or the other.  Inter se, as I said the Cabinet of collective irresponsibility, you may put the blame from one to the other.  But, the fact is, you have completely bungled as far as the supply side is concerned and, as a result of the bungling on the supply side, you have had for the last almost one year a skyrocketing inflation as far as foodgrains are concerned. 

Sir, I have already referred to the steep hike as far as housing interest rates are concerned.  Now, this is one sector -- real estate -- of the economy which had been growing very rapidly.  The kind of urban expansion in India which is taking place it is now anticipated that over the next 25-odd years a very large part of India, as the economy itself grows, may become an urban-centric itself.  Now, in a situation of this kind, where everyman desires to have a roof over his head, the NDA had created a situation where rentals were costlier and interest rates were cheaper.  It was costlier to take a house on rent. But, it was cheap to take loan and pay interest on it.  Interest rates have come down to 6.5 per cent in some cases.  Now, the going back of those interests almost doubling to that figure is not only going to affect a very vast middle class and the lower-middle class which desires a small roof over its head, it is going to slowdown the entire growth process as far as this sector is concerned.  It is going to have a spiral effect as far as several sectors of the economy, like cement, steel and even employment generation through housing sector are concerned. This brings me to the three important issues which the Government is really faced with.



SHRI ARUN JAITLEY (CONTD.):  And, at times, it appears that the Government is unable to decide, or, there seems to be some kind of differences within the Government itself.  So, the country is really in the dark as to what to do as far as these three issues are concerned.  The first is the issue of the Special Economic Zones.  I had said, while commenting on the hon. Finance Minister's performance in his earlier tenure from 1996 to 1998, that he plus others who have been Finance Ministers in coalition Governments had demonstrated that carrying this process forward is an art of the possible.  Now, the Special Economic Zones were conceived of and were, probably, required essentially because their products had to be in terms of quality superior and cheaper and, therefore, these products were required to be sold in the international market.  When you sell products in the international market, you are not in competition with your own domestic competitors, but you are competing with the competitors from everywhere in the world.  And, those who can sell cheaper and a better quality will, then, score a march over you.  The entire idea behind this was that you create these manufacturing zones and, in these manufacturing zones, you exempt them from certain forms of taxation.  And, the idea behind exempting them from certain forms of taxation was that you could export your products but nobody in the world is prepared to buy your products.  So, if your taxes are high people will say 'no' to your products.  Therefore, your products must be cheaper.  Now, the manner in which it has been implemented is such that we have the example of West Bengal in front of us, which created a big crisis and put the whole issue in controversy; we have no controversies in several other parts of this country.  We, in the BJP, have also examined this at length.  And, we have an inner party document that we have prepared, where we have made certain valuable suggestions with regard to the kind of land that you must really acquire for this purpose.  But if in a rare situation if somebody's land is acquired how to share a part of developed land with them.  But, that apart, I would urge the Finance Minister -- I do not know whether my urging him would be sufficient because it is an issue which also concerns the Government collectively, the Commerce Minister is not here -- to seriously consider that we are the largest peninsula in the world.  We have a lot of non-fertile land all along the coastal zone.  And, some States, like Gujarat, which have used the non-fertile land in the coastal areas for SEZ creation, have created these manufacturing zones and have not had any problems with the farmers in relation to acquisition.  In a country, which have such a large coastal zone, to allow the idea to move further so that you can have the idea moving further without a confronting situation taking place in the society so that a reform goes on, and I said, from his past experience, even his other colleagues, who have been Finance Ministers, would realise that this is really the art of possible itself, we are all confused about what this Government's policy about the FDI retail is.  We were told that the Government was, at some stage, was not in favour of it.  But, in the last three years, step by step, the Government has been consciously moving in that direction.  Since the Government has been moving in that direction, the 'cash and carry' business seems to have been legitimised.  The 'cash and carry' business, being marketed as a wholesale business, seems to have been legitimised.  The past experience has shown that the Government itself was in possession of evidence that 'cash and carry' business was not merely a wholesale business, but also indulging in retail sales.  Now, that business has been legitimised.  You now have the single brands that have not been permitted.  You have other kinds of arrangements that are going to come in.  I would urge the Government that under no circumstances can we have a situation where the world starts making mockery out of the Government policy.  If you are not allowing it, then, be very clear about it.  And, there is good reason for presently not allowing it because there is a large sector of domestic retails, small retails, which is a huge employer, which has a legitimate fear -- we agree with that fear -- that it would be adversely affected.  But if you are honestly in favour of not allowing it, then, these exercises must be stopped; otherwise, what appears is that slowly but surely you are telling the country that there is no FDI in retail, but you are slowly moving in that direction itself.                                    (Contd. by 2J -- PK)


SHRI ARUN JAITLEY (CONTD.): Lastly, Sir, on one question, Shri Jairam Ramesh mentioned that he had written to correct the aberrations into which the past has fallen into, as to what to do about all these FTAs.  Sir, we have a process today where the multilateral trade dialogue globally has come to a standstill, and there does not seem to be a visible sign that multilateral trade dialogue itself will significantly move forward.  Alongwith multilateralism, at some stage, the world also considered that bilateralism, plurilateralism  would simultaneously move with that process.  So, you had a large number of regional trade tie-ups and tie-ups with similar kind of countries.  There is nothing wrong with the idea of FTA or an RTA.  But, while entering into the idea and while setting the terms, I think, what we have to be very careful about is, what is the production pattern of the country with whom we are having this agreement.  If the production pattern of this country is such that it creates huge adversities as far as we are concerned, then, we have to really be on the side of caution and not enter into those areas.  If we enter into those areas with those countries which barely manufacture anything, but which are only going to trade those items from other parts of the world, and at cheaper prices send those items under an FTA or an RTA into India, then, we run into serious trouble.  We have a protection in terms of rules of origin, etc., but if seen in the context of the Sri Lanka FTA that even when some items from Indonesia and Vietnam were brought in and Sri Lanka was being used as a route to bring them into India, and, thereby adversely affecting a part of our production and our trade of certain items, we were unable to deal with it. Because of diplomatic reasons, we thought it would be imprudent really to start enforcing the rules of trade with an important neighbour, as far as we were concerned. 


Therefore, Sir, as far as these Free Trade Agreements are concerned, before we ink the final settlement on these, we must carefully study the production pattern of those countries and be sure that the Agreement at the end would not turn out to be a one-sided Agreement, which will open the flood gates, as far as India is concerned.  There is a lot more which I could have said.  The Finance Minister has a great experience in management of the economy in various Departments of the Government including finance.  The national expectation from you is much higher than what we are getting.  What we are getting is a routine exercise and not an exercise where any reform or relief is coming to the country on account of the announcements that you have made in the Budget.  As far as this Finance Bill is concerned, I would seriously urge him to reconsider that slowly in the last three years he has moved in the direction of a high tax Finance Minister, and this is one great error which he needs to correct immediately. Thank you.                            (Ends)

SHRI SHANTARAM LAXMAN NAIK (GOA): Sir, I stand here to support the Finance Bill, 2007.  The Finance Bill is a reflection of the Finance Minister's Speech in a statutory form.  It is a Bill which gives effect to the ideas expressed, promises made by the Finance Minister before the House in a statutory form.  In the other House, during his reply to the Bill, the hon. Finance Minister had assured and made a concession, which, especially, has reference to the State of Goa, to  iron ore export duty. A very heavy duty, which he had levied under the Bill,  has been reduced to a very substantial extent, giving much relief to the entire State.  Had it not been done, there would have been tremendous unemployment in the State of Goa for those who depend upon iron ore industry.  There would also have been environmental problems.  We had met the hon. Finance Minister in a delegation.  He considered our views; therefore, once, again, I would like to thank him on behalf of my Party and on behalf of my State also.                      (Contd. by 2K/PB)


SHRI SHANTARAM LAXMAN NAIK (CONTD.): Firstly, Sir, for the success of any statute or any law, much more for the success of a Bill like the Finance Bill, there has to be a responsible bureaucracy.  This is not a new issue, but it has to be repeated time and again because time is running out for us as we are stated to be going to a new era where we are going to be a dominant world power.  Therefore, the bureaucracy now has to be more responsible.  Though we enact legislation, the Executive also works on it. But ultimately a fine-tuning by the bureaucracy in the implementation of a legislation that we pass is what is most essential.  But, unfortunately, in many cases, we do not find that fine-tuning. I am using the word 'unfortunately' because the response of the bureaucracy in implementation of legislation, sometimes, is not what is required. Sir, you must have seen various episodes of 'Yes Minister'.  There is a similar one now in Hindi.  If you see three-four episodes of 'Yes Minister', you would know how our bureaucracy or the bureaucracy world-over functions.  Therefore, if there is to be an improvement in that, then our Ministers have to be very, very cautious. They say, 'Yes Minister', and they get things done from you which, sometimes, work against the aspirations of any legislation. So, we have to be very careful, especially, the Minister. When high profile bureaucrats put a file before a Minister, even a high-profile Minister, if he is not conscious, if he himself has not studied the file, can be led astray and the results would be disastrous.  Most humbly, I would like to submit my personal experience, which, I am sure, will also be the experience of most of the hon. Members. If you see the replies which are given to us, you will find that in most of the cases, the replies given to the questions raised by us are very vague and, in most cases, the replies are clubbed.  Suppose, a question has four parts, namely, (a), (b), (c), (d), the replies of all the four parts would be clubbed together and one concise reply would be given and, ultimately, you will not know what the reply is.  Therefore, Sir, from this platform, I would like to appeal to you, to the Chairman also, that some instruction may be given that no clubbing should be allowed in this respect, even if there is overlapping. If a Member is to be given a proper reply of a particular question, then the reply should be as per the format of the question. That means, if the question has four parts, i.e., (a), (b), (c), (d), then without clubbing the answer, the reply should also be in the form of (a), (b), (c), (d), so that we know what the answer of the Ministry is. This is only a typical example of what I have said earlier.

       Secondly, Sir, for the successful results of any legislation, as I have said earlier, then people's grievances are required to be heard at all levels. About twenty years back, this exercise was started during Rajivji's time, and the Central Government offices established grievances cell for this purpose.  The State Governments were also requested to establish grievances cell in their respective departments. I would venture to say, Sir, that if grievances of the people are to be met in a genuine manner, in a business-like manner, then we should have a legislation on public grievances, a legislation which will regulate how, where and when the grievances of the people are to be heard.

Thirdly, Sir, there is one more aspect which we have been taking up with the Finance Minister for many years now. The concessions given to certain industrial units in certain States are causing damage and hardship to certain industrial units of other States. I am not naming any State.  But in some States, industrial units are given concessions in tax forms, and, therefore, the industries from other States go and flock that State as a result of which economy of those States where we don't have these concessions suffers tremendously. Sir, we thought that by 2007, all these concessions will go and there will be uniformity and no State will give concession to its certain industrial units industries in taxation, etc. But it is still continuing.               (Followed by 2l/SKC)    


SHRI SHANTARAM LAXMAN NAIK (CONTD.): But, it is still continuing. I would talk about my State. The industrial units in my State suffered; they have been shifting to the other States where these concessions are available. The hon. Minister needs to give us some assurance at some stage.

       Now, coming to SEZs, as far as SEZs are concerned, the policy is being reviewed, amendments are being proposed and suggestions are being made as to what type of land should be there, whether it should be in lease form or there should be outright sale, and so on. All these things would eventually get crystallised. But, I am only on one point, Sir. Whenever these SEZs are established, the basic aim of our Government is that these SEZs should provide employment to the people. Now, when people claim that their units would generate so much employment, their assurances must come in writing. If an entrepreneur approaches the Government saying that his unit would be exporting so much of goods and generate so much employment, that assurance must be given in writing and the assurance must be given in the form of an agreement wherein it would be stated that this many number of employees of a particular State where the unit is established will be employed. This condition needs to be imposed from the Central Government side, because once the unit comes into the State, nothing would remain in the hands of the State. Therefore, in the policy and in the concerned legislation governing the SEZ, this aspect needs to be stressed upon and things should be taken in writing.

       Then, Sir, I would like to touch upon another subject. Now, foreigners from Russia, Israel and other places come and purchase vast tracts of land, especially in my State. Sir, there are some RBI regulations governing these aspects. A reasonable number of days of stay and some other minor conditions are sufficient for people from outside the country to come and purchase the land. Therefore, land mafia from Russia and Israel are purchasing vast tracts of land in Goa. Now, Sir, these RBI regulations have to be provided in some stricter form. Firstly, if whatever regulations are there with respect to purchasing of land by a foreigner are to be made effective, the Registrar of land who registers the deeds etc. must have some power to check whether the RBI regulations have been followed or not. Today, the Sub-Registrars, under the Transfer of Property Act, those who register the deed, say that they have the power to scrutinise whether the regulations have been observed or not; anybody who pays the requisite stamp duty would just go and register. Despite the fact that regulations are there, the authority does not have any power to scrutinise whether he has followed the law of the land. Therefore, some amendment has to be made in the relevant legislation to make it compulsory for the Sub-Registrar to scrutinize these aspects.

       Then, Sir, the Finance Bill imposes Education Cess for the laudable purpose of providing Secondary and Higher Secondary education. But Sir, the Finance Ministry has also to monitor how and where this money is spent. Higher Education is a very broad subject. I have seen in many States, including my State, Secondary and Higher Secondary Teachers, who are given training, are being given training only in some teaching modalities. They are not even aware or being made aware of the fact that there exists a National Education Policy. No Teacher anywhere in the country knows that, or about the features of that policy on what they are supposed to do. No effort is being made to inculcate the principles of secularism in the minds of Teachers. If the principles of secularism are not inculcated in the minds of Teachers, you could imagine the fate of the students. Therefore, the forces that are anti-secular are able to pull Teachers towards achieving their objectives. If Constitutional objectives have to be achieved, if the objectives of the State have to be achieved, then this aspect of training needs to be looked into.                                                  (Contd. by 2m/hk)