“Worried About Fiscal Arithmetic” Of Budget, Says Manmohan Singh

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NEW DELHI: Former Prime Minister Dr. Manmohan Singh said today he was “concerned” about the “fiscal arithmetic” of the Union budget and wondered how the government was planning to keep its promises. In the last full budget before next year’s general elections, attention has been focused on agriculture and rural sectors. Finance Minister Arun Jaitley has announced a new health insurance plan for the 10 million economically backward families, which he described as the world’s largest health plan financed by the government.

The opposition parties have called it an “electoral budget” and accused the government of not addressing the problems of the rural and agricultural sectors.

Dr. Singh, a well-known economist and the architect of liberalization in 1991, however, said he did not blame the budget for “being motivated by points in the elections.” But “fiscal arithmetic is to blame,” he said, reiterating criticism that it would be difficult to finance the promised gifts. The “reform budget,” he said, was a “badly used word.”

“How will you comply with the MSP plus the 50?” Dr. Singh added, referring to the promise to provide a production cost plus 50 percent as the minimum support price for farmers. The promise, made before the 2014 elections, was a key part of the rural budget approach. “The government will establish MSP at one and a half times the cost of producing kharif crops,” Jaitley said in his budget speech.

But critics say that although the government has upped the MSP, there is no clarity on how it will be implemented. Previously, the government had told the Supreme Court that it could not fulfill the pre-election promise. This time, the group of government experts Niti Aayog is expected to work on the institutional mechanism together with the state governments. Critics have said that this will take time and will not provide any immediate relief to the farming community.

The leader of the Congress, P Chidambaram, who was finance minister in the government of Dr. Singh, criticized the budget in the same line. Jaitley “did not pass the fiscal consolidation test” and this would have “serious consequences” on the economic growth rate, Chidambaram said.

It’s a tweet, he also said that the fiscal deficit limit of 3.2 percent in 2017-18 had been violated and is now estimated at 3.5 percent. “For 2018-19 also against 3.0%, he (Jaitley) has set a fiscal deficit of 3.3%,” Chidambaram said. “This failure will have serious consequences.”

The BJP was enraged by the criticism. “This is the Modi-ji government, not the Manmohan Singh government,” said Union Minister Ravi Shankar Prasad. “There were only two mobile factories when Manmohan Singh was prime minister, we give 4.50,000 crores under Mudra Yojana … the ration, the subsidy is being provided through Direct Benefit Transfer, the common man is happy today,” he added.