"Worried About Fiscal Arithmetic" Of Budget, Says Manmohan Singh

Budget 2018: Manmohan Singh, a well-known economist, said he did not blame the budget for "being motivated by scoring points in elections", but the "fiscal arithmetic is at fault".

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'Worried About Fiscal Arithmetic' Of Budget, Says Manmohan Singh

Budget 2018: Former Prime Minister Manmohan Singh said the government's fiscal arithmatic is at fault.


New Delhi: 

Highlights

  1. Dr Manmohan Singh said it would be hard to fund freebies in the budget
  2. He also said "reform" budget was a "much misused word"
  3. Dr Singh is known as the architect of liberalisation in 1991
Former Prime Minister Dr Manmohan Singh today said he was "worried" about the "fiscal arithmetic" of the Union budget and wondered how the government was planning to meet its promises. In the last full budget before next year's general election, the focus has been on agriculture and rural sectors. Finance Minister Arun Jaitley has announced a new health insurance scheme for the 10 crore economically backward families, which he called the world's largest government-funded healthcare scheme.  

Opposition parties have called it an "election budget" and accused the government of failing to address the problems of the rural and farm 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 scoring points in elections". But the "fiscal arithmetic is at fault," he said, reiterating the criticism that it would be hard to fund the promised freebies.  "Reform budget", he said, was a "much misused word".

"How will you meet the MSP plus 50," Dr Singh added, referring to the promise of providing production cost plus 50 per cent as the minimum support price to farmers. The promise, made ahead of the 2014 elections, was a key part of the budget's rural focus. "The government will set MSP at one-and-half times the cost of production for kharif crops," Mr Jaitley said in his budget speech.

But critics say though the government has hiked the MSP, there is no clarity on how it will be implemented. Earlier, the government had told the Supreme Court that it would be unable to keep the pre-election promise. This time, the government think tank Niti Aayog is expected to work out the institutional mechanism along with the state governments. Critics have said this will take time and won't provide any immediate relief to the farming community.

Congress leader P Chidambaram - who was finance minister in Dr Singh's government -- criticised the budget on the same lines. Mr Jaitley has "failed the fiscal consolidation test" and this would have "serious consequences" on the economic growth rate, Mr Chidambaram said.

It a tweet, he also said the fiscal deficit limit of 3.2 per cent in 2017-18 had been breached and was now estimated at 3.5 per cent. "For 2018-19 also against 3.0 per cent, he (Mr Jaitley) has fixed fiscal deficit at 3.3 per cent," Mr Chidambaram said. "This failure will have serious consequences."

The BJP bristled at the criticism. "This is Modi-ji's government not Manmohan Singh's government," said Union minister Ravi Shankar Prasad. "There were just two mobile factories when Manmohan Singh was Prime Minister. We gave 4,50,000 crores under Mudra Yojana... ration, subsidy are being provided through Direct Benefit Transfer. The common man is happy today," he added.


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