The note prepared by the Congress think-tank headed by Veerappa Moily asking the government to postpone FRBM targets by three years adds to the exercise in fiscal irresponsibility already underway. By pushing the oil, food and fertiliser subsidies off budget, the UPA government has made a mockery of the Fiscal Responsibility and Budget Management (FRBM) Act. As the recent IMF country study on India shows, there has been no fiscal consolidation under the UPA and the Central government deficit today, including this subsidy, is as high as 4.5 per cent of GDP. When the finance minister made the mistake of agreeing to push these items off the budget, he should have realised that this would only encourage his colleagues to ask for more and more money to spend. Appearing to meet FRBM targets without real fiscal consolidation is proving to be a mistake. Today, even though we are borrowing huge amounts from our children and grandchildren to consume cheap food, oil and fertilisers, we are not satisfied. The note, said to have been approved by Congress President Sonia Gandhi, supports increase in spending and reduction in taxes, with not even a semblance of fiscal responsibility. Taxpayer money is sought to pay for sops to the electorate in a year when, as the note says, there are many state elections, with general elections the next year. The sixth pay commission will also be a likely election year vote buying exercise, instead of an attempt to improve incentives and compensation for government employees.The UPA came in with big flagship welfare schemes with huge expenditures. The National Rural Employment Guarantee Scheme and the Sarva Shiksha Abhiyan have hit big difficulties in implementation. Right from the beginning of this regime the Left has not supported FRBM. West Bengal and Kerala have not signed the state fiscal responsibility acts. However, the Congress made a pretence of being fiscally prudent. It is a pity that even this illusion is being given up. But will greater spending guarantee the UPA votes in the coming elections? If it were that simple, no government need ever be voted out.
