The state of government finances, in our opinion is already weak, though not yet precarious. Signs of an empty Indian treasury already abound. Income tax collections for this year are expected to fall short by about Rs.70,000 crores of the revised target and that too after illegally withholding refunds of at least Rs.1.50 lac crores. The GST collections are falling short of target, month after month and will end with an annual shortfall of Rs. 1 lakh crores. To meet its expenditure, as also to window dress and meet the projected fiscal deficit target of 3.4%, the government is desperately seeking to raise funds. Mr. Jaitley claims that the government has exceeded its disinvestment target of Rs.85,000 crores, but that has been mostly achieved by one PSU buying another, as in the case of the PFC buying the REC for Rs.14,500 crores and the various government owned ports, buying the DCI, which is truly not disinvestment, but government money going from one pocket to another. The government has been eroding the balance sheets of its entities further by squeezing out large dividends by any means, including forcing the RBI to declare a huge interim dividend of Rs.28,000 cr. and arm twisting the likes of IOC and ONGC to give a second interim dividend. IOC and ONGC have been compelled to further buy back government shares, in order to put money in its empty pocket.
Along with this funds raising jugglery have been other tactics like resorting to borrowing/expenses through government departments and PSUs, to the extent of about Rs.1.50 lac crore, popularly called off the budget funding, so that it does not count as a government borrowing, in order to manipulate the fiscal deficit calculation. It is also said that vendor payments of over Rs.75,000 cr. too have been postponed by the government to manage its fisc. Amidst such a scenario, the government’s claims of fiscal deficit for the year being at 3.4% of the GDP, is just not convincing and the actual figure could be much more.
While the state of the Indian treasury is clearly not good and needs a lot of caution in spending, in the run up to the polls, the political parties are resorting to showering atrocious and financially risky poll promises. It all started with Rahul Gandhi promising farm loan waivers, as part of his election goodies in the campaigning for state elections in Rajasthan, MP and Chattisgarh. The Congress won and its sycophant thinkers attributed it to the loan write off promises of Rahul Gandhi. Emboldened by it and in order to pre-empt any attempt of the BJP to announce a universal basic income scheme and take political credit for it, in a rally at Raipur in January, he announced a most ambitious income guarantee scheme, with no concrete details whatsoever. The Congress too was taken by surprise and said that while the details of such a scheme were not known, they would be worked out. Even the likes of P. Chidambaram remarked that while the sources of funding such an ambitious scheme are not known, they will somehow be arranged to meet Mr. Rahul Gandhi’s promise. The Congress said at that time that such a scheme will be part of its poll manifesto, as part of its flagship political promise.
Rahul Gandhi has finally announced a rash and audacious grand minimum income guarantee scheme, which the Congress would implement if elected. He said that if voted to power at the Centre, the government will give a minimum income of Rs.12,000 per person per month, and will cover at least 25 crore Indians, costing the government a total of Rs.3.60 lac crores per year. He calls it a historic scheme, which has not been undertaken anywhere in the world and termed it to be an extremely powerful and well thought idea, which is fiscally prudent. A critical BJP called it a bluff, blaming the Congress for India’s legacy of poverty,
The Indian treasury is near empty and with an expected continued fall in GDP growth and languishing corporate profits and consumer spending, it is expected to be so in the coming year too. It is most unfortunate that such reckless announcements are being made to lure or rather bribe voters to vote for the Congress, which seems to come up with no other meaningful agenda, for the country’s growth. Instead of building a strong treasury and a strong economy that gives a gainful/profitable employment to all, it talks about doling out incomes, out of government funds that may soon not exist. But as we said earlier, how does that matter to Rahul Gandhi. He is an opposition leader with no responsibility to run the government. He can recklessly and impulsively announce schemes to lure voters, hoping to come to power, riding such jumlas and unmindful of its assault on our public finances and our economy. He is right in claiming that it has not been implemented anywhere in the world. It is thoughtless and not prudent and it anyway cannot be.
As an independent media platform, we do not take advertisements from governments and corporate houses. It is you, our readers, who have supported us on our journey to do honest and unbiased journalism. Please contribute, so that we can continue to do the same in future.
