Sunday, February 08, 2009

UPA's economic mismanagement

DNA has a slew of articles today pillorying the UPA for its economic mismanagement.
Really?? The famous 'reformers' montek, manmohan and chidu fell asleep at the wheel??? Who would have known!

I have recently switched to DNA after noting that the Indian express has started sounding a like congress mouthpiece as well (much like TOI and HT always did).
DNA struck me as being fairly neutral.
Or perhaps this is only a temporary phenomenon, till their editors too get purchased with padma awards.

The reason why the centre's finances are in a shambles is populism. In last year's budget, the centre announced a Rs60,000 crore farm loan waiver. Then there was the Sixth Pay Commission report, and the huge oil and fertiliser subsidies. The net result: as at the end of December 2008, the centre's fiscal deficit -gap between revenue and expenditure that has to be bridged by borrowings - had already spiralled to Rs2,18,262 crore. And this is merely official deficit. Unofficial deficit - which includes oil and fertiliser subsidies that are not shown in the budget - is much higher at Rs3,04,204 crore. And that's a conservative estimate.

The 2008-09 budget had pencilled in only Rs1,33,287 crore as fiscal deficit. The gap between the real fiscal deficit and the budgetary claim has resulted in huge additional borrowings and a frenetic printing of notes.
A downgrade would mean India becomes non-investment --- or junk --- grade. That would force many foreign funds to exit, because investor covenants bar them from investing in lowly-rated economies.
The government's ambitious plan to build the country's rural electricity infrastructure under the Bharat Nirman programme is miserably short of its target. Four years after its launch, only seven of the 27 participating states have finalised plans. The scheme is to end in March-April 2009.
The current UPA regime is likely to end without many user-friendly telecom initiatives taking off. While the third generation (3G) auction issue has been referred to a group of ministers (GoM), thereby indicating a long delay, many other ambitious projects have either not happened or have not been so successful. These include mobile number portability (MNP) and preventing unsolicited commercial communication


Shahryar said...

Seems the UPA is taking a leaf out of Dubya's playbook - leave the country in a financial mess for the next lot to sort out! Passing on a poisoned chalice.

Shahryar said...

Finland is going ahead with implementing a 4G network - why is India bothering with 3G at all?