Not many to believe what the Finance Minister claims!

p-chidambaram_81The Finance Minister  Mr. P.Chidambaramis supposed to be the brainy minister in the Cabinet. But is he trust-worthy? Do the fellow politicians  take him seriously? There are now so many, politicians and others, investors, not to speak of the public who take his claims on what  he assembled as his interim budget?

Not many are there.

Already there are serious criticisms about the deficit, about the growth rate of the economy and also the many things the finance ministry had done in the recent past like borrowing every time to pay for the interest on the previously accumulated government debt.

Lastly, not the least is his attitude towards the common man. To whom in the end the budget and the budget speech of the person who presents it make a speech by way of explaining the rationale behind the exercise?

Take the  economy’s performance.

Why the FM never said that the economy’s growth this year is only just 4.5 per cent, as the CSO has already  gave out? Why the FM takes so much effort to go over the trend rate etc and then claim that it is above 5 per cent?

After all the media reports have revealed that this 4.5 per cent growth is just the lowest in a decade?

How long the government ,one as such the UPA 2 with all its plus and minus points had forfeited the trust of the people and stands now on the eve of the elections as the one that is likely to be defeated. What is the point of making claims that are already not trusted.

The FM’s budget exercise, already is in the public domain and anyone cares to scrutinise the figures can do easily and   the government would win credibility by being simply honest and straightforward and  say what is the real state of the economy.

Of course, it is not the fault of the Indian government for the economic climate globally is equally bad and India can’t do miracles unless the very many facts also contribute to the  economy getting its momentum at a more favourable  rate.

The one  big claim of the FM is that the fiscal deficit is at 4.1%.Fince then, there are other drastic cuts made to bring down the deficit down to this level. Plan expenditure is now 14% lower than what was proposed in the 2013-14 budgets. So too capital spending by 17% lower than what was proposed. Tax revenues fell short of estimates by 6%.Capital spending cuts will starve growth next year.
So, the claims of the FM as to have brought down the fiscal deficit is only half truth, says media reports.

Then comes the question of subsidies. This is the government’s Achilles Heel.
Populism runs riot with this government. May be this is one reason why the Prime Minister, an economist known for his prudence, with all his other faults, is not seen anywhere in the economic debate. Even not as a casual observer, no casual remark anywhere.

Even otherwise, this silence (or disagreement?) is not at all justified, given the fact the PM is both the leader of the Parliament and also he is the leader of the people. He must at least be seen s one who is leading from the front. Just the irony is heightened by the total disassociation of the PM is the last months of this Lok Sabha.

What a pity. What a fall for the prestige of the government. Now, as for the subsidies, total subsidy bill now is higher by 11% than projected  for the year. Petroleum subsidy, the least merit, went off the target by as high as 32 %.
Food subsidy? It grew by a fantastically unbelievable 257% during the last 10 years of UPA-from Rs. Rs.25,798 crores to Rs. 92,000 crores!

Then, the very growth of the economy. Economy grew at sub 5 per cent  for two consecutive years. Consumer price inflation has been in double digits  for two years. Quarterly growth has picked up and inflation has slowed down, but spending cuts could hurt the growth.

What sort of budget the UPA leaves behind for its successor government?
Special dividends from PSUs and the telecom spectrum auction bumped up revenues in 2013-14.And more importanyl,Rs.35,000 crores petroleum subsidy postponed to next year. This important decision is to show that the current fiscal deficit is contained.

Is it accounts jugglery or plain truth?

So, the overall conclusion is this: Though the fiscal deficits to be contained in 2014-15 are claimed at 4.1 percent in 2014-15,this claim is unlikely to be realised and at  best seems an impossible claim.

To that extent the FM’s other claims and his long-winded speech all look very unconvincing  and therefore over all, the budget is only a wish that is unlikely to be fulfilled!

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