mar 2nd, 2009
chidambaram has done what he's good at: take a fast-growing economy and bring it back down to the "nehruvian rate of growth". i did predict this back in 2004 on this blog. because that's his specialty, and he did that the previous time he was finance minister, too: took a growing economy and reduced it to garbage.
much like the i-bankers and the bush guys (note: bush and chidambaram and ramalinga raju are all harvard business school alumni, as are many of the top i-bankers)set the stage for huge debts down the road, chidambaram and manmohan singh and montek singh ahluwalia have in essence printed 200,000 crores of rupees, almost all of which has been a) diverted to congress cadres in the guise of 'national rural employment guarantee' scheme and other boondoggles, b) given to various vote-banks such as mohammedans and christists and central government employees, c) transferred out to numbered swiss accounts.
india's children will thank him for the huge debt burden: the budget deficit is 10.3%, the highest in the world. who will pay? india's children and grand-children.
this is yet another demonstration of how the nehruvian state is the worst of all possible worlds: worst of capitalism and communism.
it does not benefit from buccaneer capitalism -- so when the good times were rolling, india didn't do anywhere near as well as the chinese did. when the bad times come around, therefore one should imagine non-globalized india would not be hurt as much as china by the falloff in trade. and that is true.
but the other side is that communist/socialist policies have wasted 200,000 crores of rupees, which will only lead to massive inflation down the road, and no actual improvement in the situation on the ground. half the world's desperately poor, two-thirds of the world's malnourished, and 80% of the world's blind are in india.
india will come out of the world recession in far worse shape than it should. when the next boom happens, we will be sitting on the sidelines, suffering from the effects of wild inflation due to all the money printed by chidambaram (as well as the pakistanis who keep sending container-loads of their very good imitation of indian currency to india).
thank you, nehru and manmohan and particularly chidambaram!
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From:
Girish http://www.thehindubusinessline.com/2009/03/03/stories/2009030350080900.htm
The cause for the fiscal discipline going haywire is the reckless deficit spending resorted to by the Government over the past two years on subsidies and hiding the real deficit numbers by ingeniously pushing quite a few large expenditures as off-balance-sheet items. There was frequent and large-scale resort to the issue of bonds to oil marketing and fertiliser companies towards compensating a part of their uncovered losses.
Then there was the politically motivated farm loan waiver scheme, worth Rs 60,324 crore, announced in the last year's Budget, which was subsequently expanded to Rs 71,680 crore. The actual debt and debt relief to farmers so far has amounted to Rs 65,300 crore.
Also, the Sixth Pay Commission award for the Central Government employees will involve an additional cost of Rs 30,062 crore to the exchequer. In addition, State governments will also be extending the benefits of this award to their employees.
To add to the fiscal burden further, the Finance Minister announced on February 24, an across-the-board cut of 2 per cent in excise duty and service tax involving an additional revenue loss of Rs 30,000 crore.
Huge borrowings
Faced with a surging expenditure bill and dwindling tax revenue, the Central Government has resorted to massive additional borrowings. In the second week of February it announced additional borrowing of Rs 46,000 crore. As a result, as against the Budget estimated borrowing of Rs 1,35,000 crore for the current fiscal, the Government's overall borrowing will be Rs 2,51,000 crore. Thus, the total additional borrowing, over and above what was budgeted, will amount to Rs 1,16,000 crore.
According to available data, as of January 30, 2009, the Government had already printed currency worth Rs 66,946 crore and it need not come as a surprise if it prints more money by the end of the current fiscal. The printing of money constitutes more than a quarter of the current year's fiscal deficit.
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