India’s questionable growth story :
While the government’s overall inflation figures remained at record lows of 0 to 1.5 %. The average wholesale price of food items had increased by a whopping 17.5 % in past one year as per the government announcement yesterday
Despite the good growth , the country’s fiscal deficit at the end of the first half of the current year ( April – September 2009 ) stood at 7.9 % of the nominal GDP compared to 4.4 % in the corresponding period last year . It is very difficult to contain the increasing deficit at budget targets . Pranab Mukherjee has estimated the full year fiscal deficit in the budget 2009 presented in July at 6.8% . A sharp pick up in the economic activity will not help bridge the gap as the tax collections remain depressed.
If we strip the government consumption , then the real growth for the rest of the economy was 4.9 % in the September quarter, at 1999-2000 constant prices. That’s lower than the 5.5. % year-on-year growth notched up during the preceeding quarter. The last instalment of the pay commission arrears has already been paid , so no further boost to government consumption is expected. What will happen to growth realising that the rain God were not approving the plight of farmers under the current government and thought it wise to boycott India !!
How will the government fund ambitious schemes ?
What is the plan to bridge the deficit ?
Is selling off or divesting PSU’s a short sighted goal ? After a few years , when the deficit grows . We will be left with nothing to sell except this nation !!
Rajendra Pratap Gupta
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