YSRCP: Country being misled by Chidambaram

Hyderabad, Feb 17, 2014: YSR Congress Party on Monday accused the Union Finance Minister P.Chidambaram of misleading the country with his false claims that the Fiscal Deficit for the current year (2013-14) will come down to 4.6% of GDP from the budgeted 4.8%.

Addressing media persons here, Party PAC member DA Somayajulu said that in a Vote on Account Budget, no major policy initiatives are expected. “What is however shocking is the way the Finance Minister tried to mislead the Country by claiming that the Fiscal Deficit for the current year (2013-14) will come down to 4.6% of GDP from the budgeted 4.8% . Similarly, he claimed that there will be no change from the budgeted revenue deficit to GDP ratio of 3.3% for 2013-14,” he remarked.

Both these claims are absolutely wrong, he said, adding that the Union Finance Ministry hosts every month on their website Monthly Economic Report and similarly the Central Statistical Organization periodically updates the GDP figures.

“As per FRBM Rules, 2004 GDP means GDP at current prices. As per the advance estimates released by CSO on 7th February 2014, the estimate for GDP at current prices for 2013-14 is Rs 105.4 crores,” he said.

As per the latest Monthly Economic Report, which covers the actual receipts and payments of the Union Government for the period April-November (2013-14), actual revenue deficit for the eight months period ending on 30th November, 2013 was Rs. 3,93,019 crores, as against the budgeted revenue deficit of Rs. 3,79,838 crores for the whole year, which means that the revenue deficit at the end of eight month’s period overshot the whole year’s budgeted figure, said Somayajulu.

“At this rate, even on a conservative basis, the actual revenue deficit at the end of the current fiscal will be minimum Rs. 5 lakh crores, which means a revenue deficit of 4.76% of GDP for current fiscal 2013-14. How could the FM claim that the revenue deficit will be just 3.3% for 2013-14? “he asked.

Similarly, as against the budgeted fiscal deficit of Rs. 5.42 lakh crores for the whole of 2013-14, the actual fiscal deficit for the first eight months of the current fiscal amounted to Rs. 5.09 lakh crores, he said. “At this rate, even on a conservative basis, the fiscal deficit for the current fiscal will not be less than Rs. 6.5 lakh crores, which means a fiscal deficit of 6.2% contrary to what the Finance Minister claims to be 4.6%.  In the light of these facts, it is surprising as to how the Finance Minister tried to cover up the truth and tried to take credit that the fiscal consolidation of the Union Government is on track. Either the figures published in Monthly Economic Report and CSO are wrong or those claimed by Finance Minister are wrong. This should be clarified,” Somayajulu demanded.

Another matter of great concern is the growing dependence of Union Government on borrowings for meeting the ever mounting revenue deficit. The interest payments as percentage of revenue receipts for the FY 2012-13 were as high as 36%. When it comes to the current fiscal, for the first eight months ending on 3o November 2013, the interest payments accounted for 40% of the revenues. The interest payments were Rs 2,14,434 crores as against the revenue receipts of Rs 5,02,691 crores. This is highly disturbing to say the least.

Although the Finance Minister laboured to reject the criticism that the economy of the country suffered reversals mainly on account of policy paralysis of the Union Government, the fact remains that there has been both policy and action paralysis leading to GDP growth rate falling to an estimated 4.9% for the current fiscal from a high of 9.3% for FY2010-11.

Overall, the country suffered heavily on account of complete mismanagement of the economy by the UPA2 Government. The sooner it exits, it is better for the people of the country, he said.