Cong to FM: open purse-strings, forget FRBM, this is election year

“This only reflects the fact that the Finance Ministry is absolutely working in the opposite direction from the mandate of the Congress Party,” says the note.

It was prepared by an AICC think tank, Department of Policy Planning & Coordination (DEPCO), headed by Veerappa Moily.

Those involved in drafting the note include Arjun Sengupta, Milind Deora, and KS Rao, among others. Congress President Sonia Gandhi is said to have approved the note before it was sent to the PM, sources said.

Asked about the note, Sengupta declined to comment. Moily, out of the country, could not be contacted.

The note also points out there’s a public “perception” that while the NDA government expedited infrastructure projects, particularly roads, the UPA government failed to fast-track them in both road and power sectors.

“The GBS sought by various ministries is largely in line with the focus of the Eleventh Plan. However, in the second year of the Plan itself, there is a shortfall and that, too, particularly when we will be facing election in many states this year and general election next year,” says the note.

It refers to reports about the FM’s plan to provide only Rs 2,28,725 crore GBS against the demand of Rs 3,44,761 crore.

“The reduction in an election year will be disastrous for the UPA government’s prospects. It has to be halted,” says the note.

It also wants some tax cut to demonstrate “visible reduction” apart from rationalizing the slabs. And favours lower slabs for women and SCs/STs.

In the note, the party has recommended loans at very low interest rates to farmers, artisans, SCs/STs and BPL borrowers, It has also asked for a loan waiver up to Rs 50,000 for these categories of people.

As for the FRBM Act, it says that 2008-09 was the target year for its implementation — reduction of fiscal deficit to three per cent of the GDP and zero revenue deficit.

A “rigid adherence” to FRBM targets, the note says, will lead to curtailment of Plan expenditure and, therefore, it calls for postponing the targets by three years.

While the note favours no hike in prices of petroleum products — it calls for excise duty reduction instead — it adds that if oil prices had to be increased, it should be done immediately.