Member of Parliament from JD(U) NK Singh said that stimulus packages cant be effective unless they are backed by major structural reforms in the economy.
He criticised the government for not having initiated any structural reforms in the past four years. Governments who do not act in good times cannot pull rabbits out of their hat when times are bad, he said in the Parliamentary debate on the interim Budget in the Rajya Sabha.
Adding that the current UPA government didnt have any medium-term plans or benchmarks for sustainable fiscal management,Singh said,Fiscal rectitude should replace fiscal stimulus as the policy option. Singh further slammed the government pointing out that the states,too,were facing weakened fiscal positions as a result of the Centres move to implement the recommendations of the Sixth Pay Commission.
He added that the situation was further aggravated by the huge revenue release given by the Central government in the three stimulus packages,which would result in increasingly lower devolution of taxes to the state.
Singh advocated the feasibility of state-level stimulus packages claiming that theyre more easily absorbed by the economy and generate economic activity more quickly. Claiming that there have been several cost and time overruns in the governments major infrastructure development projects and schemes,he pointed out that of the 909 infrastructure projects worth Rs 4,18,567 crore,346 projects are running behind schedule and the cost overrun in the 346 delayed projects is estimated to be around Rs 24,689 crore,which is 13.34 per cent of the approved cost.
Giving his policy prescription for the ailing economy,Singh said,We need a deeper and more abiding exercise.