New Delhi, Feb 8 The White Paper on Indian Economy tabled in the Lok Sabha by Finance Minister Niramala Sitharaman on Thursday lambasts the erstwhile UPA government for bringing “public finances to a perilous state” with runaway fiscal deficits.
"For six consecutive years between FY09 and FY14, the ratio of India's Gross Fiscal Deficit (GFD) to Gross Domestic Product (GDP) was at least 4.5 per cent. It was between 4.5 per cent and 5 per cent of GDP in three out of the six years, between 5 per cent and 6 per cent in one, and more than 6 per cent in two years,” the paper said.
Run-away fiscal deficits led the economy to the fiscal precipice, the paper said as it cited the comment of the Kelkar Committee for Fiscal Consolidation to back its claim: "The Indian economy is presently poised on the edge of a fiscal precipice…. A careful analysis of the trends in the current year, 2012-13, suggests a likely fiscal deficit of around 6.1 per cent, which is far higher than the budget estimate of 5.1 per cent of GDP, if immediate mid-year corrective actions are not taken.”
The special bonds in lieu of cash subsidy issued to the oil marketing companies, fertiliser companies and the Food Corporation of India by the UPA government totalled a little over Rs 1.9 lakh crore in the five years from FY06 to FY10. Their inclusion in the subsidy bill for each year swelled the fiscal deficits and revenue deficits.
As a result of its fiscal mismanagement, the UPA government's fiscal deficit ended up being far higher than it had expected, and it subsequently ended up borrowing 27 per cent more from the market than what it had budgeted for in 2011-12, the paper pointed out.
The White Paper also highlights the restoration of the fiscal health of the country undertaken by the Modi government which has slashed the fiscal deficit and reduced market borrowing.
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