<!--QuoteBegin-->QUOTE<!--QuoteEBegin--><b>Budget in wonderland</b>
pioneer.com
PNS | New Delhi
<b>UPA set to leave economy in mess for next Government</b>
With tax collections falling and expenditure going through the roof, it is a perfect economic mess the UPA Government leaves behind for its successor. <b>The current state of the nationâs economic health is nightmarish and it may take several years to get the economy back on track</b>.
The Government proposes to finance the unprecedented fiscal deficit (6 per cent of the GDP) through <span style='color:red'>huge borrowings, which could lead the country into a debt trap.</span>
Consider these figures: <b>The total receipts of the Government for 2008-09 are estimated at Rs 5,74,438 crore, down from Rs 6,17,517 crore projected at the time of presentation of the last Budget by then Finance Minister P Chidambaram, down by Rs 43,159 crore. The total expenditure has been estimated to be Rs 9,00,953 crore, up from Rs 7,50,884 crore, or over Rs 1,50,000 crore against the projected figure.</b>
This leaves a yawning gap of Rs 3,26,575 crore, called the <b>fiscal deficit, or 6 per cent of the GDP</b>, which is up from Rs 1,33,287 crore or 2.5 per cent projected by Chidambaram. This gap is proposed to be financed through borrowings, whose interest payment would again be huge.
Mukherjee, who is now holding the charge of finance portfolio also, did not propose any tax changes but made a valiant attempt to hide the dire straits the nationâs economy is in. His 90-minute speech mainly focused on popular schemes the UPA Government had introduced in the last four years. His last 10 minutes of the âelection speechâ disappointed everyone when he failed to give any policy outlines for the revival of the economy. <b>As a result, the sensex plunged by 329 points and closed at 9,305, down by more than 3 per cent</b>.
According to Mukherjee, <b>the fiscal deficit in 2009-10 is expected to be 5.5 per cent </b>or at Rs 3,32,835 crore. The marginal drop of 0.5 per cent, according to him, would be possible due to higher growth in GDP and not in real value. With industrial and services sectors growing at a negative rate, how the GDP will go up remains unexplained.
<b>Mukherjee explains that the spurt in expenditure in 2008-09 was mainly due to the Sixth Pay Commissionâs implementation, increase in food, fertiliser and oil subsidies and farmersâ debt waiver</b>. Of this, subsidies alone accounted for Rs 1,29, 243 crore, up by almost Rs 60,000 crore estimated by Chidambaram. This is expected to come down to Rs 1,00,000 crore in 2009-10, by merely Rs 29,000 crore. It should have been more, given the fact that oil and commodity prices are down to where they were at the beginning of 2008.
The fall in subsidy bill by Rs 29,000 crore, however, is getting offset by the rise in interest payment to Rs 2,25,511 crore from Rs 12,694 crore in 2008-09.
This, according to experts, would be a huge burden. <b>With the Government borrowings now at Rs 3,30,000 crore, the investment would be a major deterrent to economic growth and will have an impact in the value of rupee and inflation</b>.
This will pose the biggest challenge to the incumbent Government in May 2009, which will have to deal with the unprecedented borrowings by the Government and servicing of the loans. If the economy fails to respond in the next 12 months, the servicing of huge borrowings would be the single biggest challenge and the Government may have to borrow more to pay interests, leading itself into a debt trap.
See Edit: Mocking at aam admi â Congress insists all is fine at time of crisis
<b>What Interim Budget contains</b>
Revenue receipts in 2009-10 budget estimates at Rs 6,09,551 crore against Rs 5,62,173 crore in 2008-09 revised estimates
Capital receipts in 2009-10 interim budget at Rs 3,43,680 crore against Rs 3,38,780 crore in revised estimates of 2008-09
Non-Plan expenditure at Rs 6,68,082 crore
Fiscal deficit at Rs 3,32,835 crore
Rs 1,31,317 crore for Govtâs flagship programmes
Allocation of Rs 30,100 crore to National Rural Employment Guarantee Scheme in 2009-10
The scheme has been extended to all districts
For Sarva Shiksha Abhiyan, an allocation of Rs 13,100 crore has been proposed
India Post gets 55% hike in outlay; 5,000 POs to be networked
To lend Rs 607 cr to public enterprises in FY10
To raise Rs 1,120 crore through disinvestment
Raises farm sector allocation by 5 pc to Rs 15,000 crore
Hit hard by economic slowdown, Centreâs tax kitty slated to have shortfall of about Rs 60,000 crore this fiscal against original estimates
Collections this fiscal are slated to be lower for both direct and indirect taxes
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UPA social engineering had ruined wealth what NDA was able to create in 4 years.
Only 10 Janpath bank balance is showing growth and ofcourse corrupt Babus.
<b>India fiscal deficit worrying, to review rating - S&P's</b><!--QuoteBegin-->QUOTE<!--QuoteEBegin-->The federal debt as a percentage of GDP and the rising fiscal deficit are two significant factors which are constraining ratings and that is something which also may pull them lower," he said, after the budget was presented.
Acting Finance Minister Pranab Mukherjee said the fiscal deficit for the fiscal year ending March would be 6 percent, compared with a budgeted estimate of 2.5 percent. It expects 2009/10 fiscal deficit at 5.5 percent.
Standard and Poor's rates Asia's third-biggest economy's local currency rating at "BBB - minus", or the lowest investment-grade level, with a stable outlook.
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<!--QuoteBegin-->QUOTE<!--QuoteEBegin-->The UPA's performance is marked by four paradoxes. Under this prime minister, it had the dream economic team. Yet, the dream economic team was doing little more than dreaming. Apart from VAT reform, a major achievement, the government did not take a single significant reform measure. Some of the current slowdown and pessimism about the economy is due to global circumstances. But <b>the blunt truth is the slowdown predates the global downturn while the government was asleep at the wheel.</b>
The UPA's irresponsible management of government finances ensured it had little room for manoeuvre when the downturn came. The government is announcing package after stimulus package. But it is unable to spend the money it has sanctioned. <b>Road constructionâan activity central for jobs, inclusion and growthâslowed down because the government endlessly procrastinated over simple contracting issues.
</b> (some of ABVs pet road-highway projects were killed due to pure spite and it was flagged as far back as early 2005)
The government wanted inclusive growth, yet it has done virtually nothing for small and medium enterprises and the informal sector, the real drivers of growth. Big industry could rely on captive power plants and special treatment, while small entrepreneurs had to bear the cost of bad public infrastructure. <b>It spent all its political capital on subsiding big business, creating SEZs that are, to put it simply, the largest granting out of private diwani rights since the coming of the East India Company.</b>
The second paradox has to do with its social programmes. NREGA was a well-intentioned programme for income support in rural areas. To a certain extent, it has succeeded. But the supreme irony is that the Congress itself does not seem to believe in its own programme. Except for Andhra, the best performing states under this programme are the BJP-ruled ones. More attention to agriculture was necessary, and the government has had partial success. In health, there is some innovation under various health insurance schemes and the rural health mission. But here, ironically, the states have been the sources of experimentation rather than the Centre.
The increased outlays on health were long overdue. But it is somewhat disappointing that even after five years we do not have much of a roadmap or architecture for what our health system looks like. The dream team has broken no new intellectual ground in the delivery of services. Education outlays and enrolments are up, but the quality indicators are abysmal. And higher education is one sector where there has been regress in terms of state control and further decline of public institutions.
The third paradox is that the UPA's main bedrock ideological claim is secularism. The government's focus on minorities and inclusion was laudable. But its social programmes, as in the past, are designed less to address the root causes of disempowerment than they are to send political signals to different communities. The fact that Narendra Modi would hijack the slogan that poverty has no religion suggests something of an intellectual bankruptcy with which this government approached social inclusion. To put it bluntly, it has tied social programmes to identity politics even more closely, and leaves the country nervous on caste, communal and regional issues.
The fourth paradox has to do with institutions and integrity. The prime minister's personal integrity has been much talked about. But it is impossible to make the case that this government has shown much integrity. Many ministries have acquired reputations for corruption, and our institutions look very fragile. <b>The government has assaulted and weakened every single constitutional office: the Election Commission, through bad appointments; the office of governor through partisanship; Parliament, through opportunistic alliances.</b>The PM had rated administrative reform as his number one priority. The government's single biggest initiative in this area was the Right to Information Act, a true landmark in governance reform. But on many other crucial areas of delivery of social services, identification, police reform, administrative reform, judicial reform, virtually nothing has moved.
Genuinely inclusive growth requires not just profligate spending, but thinking about the architecture of the economy as a whole. How can you have social inclusion when key ministries like power, telecom, education, roads, remain in serious disarray? Other than the Indo-US nuclear deal, the PM did not invest any political capital on issues that truly matter. Given the choices, we may still vote for it. But the UPA has left a serious power vacuum and we can only hope it does not get worse. The most appropriate indictment of this government is that they squandered the good times. <!--QuoteEnd--><!--QuoteEEnd-->
<!--QuoteBegin-->QUOTE<!--QuoteEBegin--><b>Tricky UPA Govt dumping huge liabilities on GenNext</b>
pioneer.com
Pioneer News Service | New Delhi
<b>CAG says Centre manipulating fiscal deficit figures</b>
<b>Not appropriately reflecting them in Union Budget</b>
It is official now. The UPA Government is manipulating fiscal deficit figures and will leave behind huge burden on future regimes by its fiscal mismanagement. The Comptroller and Auditor General (CAG) has criticised the Centre for transferring significant liabilities to future generation without appropriately reflecting them in the Union Budget. The CAG report, placed in Parliament on Friday, <b>has exposed the Governmentâs mismanagement that has led to fiscal imbalances by not figuring massive amount of petroleum, fertilisers and FCI bonds.</b>
Blaming the Government for deviating from the norms of the budget, the CAG has pointed out that budget documents on issuance of bonds/securities by the Union Government is not taken as part of budgetary expenditure/receipts.
<b>âAs a result, not only the deficits in the budget are understated, it also raises the issues of transparency in fiscal operations and inter-generational equity in fiscal management of the Government,â </b>observes the Auditor General.
Pinpointing the Government for this escapism, the CAG has observed that such practices were rampant in issuing bonds. âFor instance, the Governmentâs outstanding liabilities on account of Petroleum Bonds alone has consistently increased and stood at Rs 71,288 crore as on 31 March, 2008,<b> thereby transferring significant liabilities to future generations without appropriately reflecting them in the Union Budget</b>,â said the report.
Stating that the Governmentâs attitude went against ensuring effective parliamentary financial control, the CAGâs report has described as unfair practice avoidance of the figures relating to high value bonds from the budgets. Advocating for transparency in the financial management, the CAG said the Government avoided the figures of crores worth of bonds from the âBudget at a Glanceâ and put on âthe off-budge items as below the line itemsâ of the âBudget at a Glanceâ.
Observing the frequent issue of bonds, even for public sector banks operations, the CAG said: <b>âThe issuance of bonds has been resorted to frequently for financing not only fuel, food and fertiliser subsidies, but also deferred liabilities with regard to bank loan waivers and contribution to capital of public sector banks.â</b>
The CAG has observed that the significant quasi-fiscal transactions to finance recurrent revenue expenditures through âde facto borrowingsâ not only created apprehensions about the quality of the fiscal consolidation process that is underway, but also raised the issue of transparency in fiscal operations and inter-generational equity in fiscal management and long-term macro-economic stabilityâ.
Detailing the status on the issue of all bonds for the past five years, the CAG observes that it was evident from the trends that the Union Government has been issuing securities as an integral component of restructuring plan of nationalised banks and other domestic financial institutions such as UTI, IDFC, IDBI as well as to IMF thereby âcreating extra budgetary liabilities.â
âThe extra-budgetary items have, however, become a significant component of liabilities in the recent past. The Central Government, besides providing explicit subsidies on petroleum, food and fertilisers, has also been periodically issuing special bonds to the oil marketing companies (since 1997-98) and FCI (in 2006-07) and fertiliser companies (2007-08) as compensation towards under-recoveries of their products,â said CAG.
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This is gift by Chor Government and Babus of India to next generation of India.
<b>India Q3</b> GDP growth figure has been declared at<b> 5.3%</b> versus the earlier figure of 7.6%,
<b>Rupee at historic low; why is it falling?</b>
February 27, 2009
The Indian rupee on Friday depreciated to an all-time low of 50.69 against the US dollar in early trade on continued capital outflow by foreign funds and increased dollar demand from importers
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Meanwhile, the outlook downgrade by rating agency Standard & Poor's too has increased the risk of further depreciation of the rupee in the near term. <b>S&P cut its outlook on India's long-term sovereign credit rating to negative from stable on Tuesday, citing worsening government finances, which could raise firms' overseas borrowing costs and weaken the rupee. </b>
Morgan Stanley has predicted that the rupee could test 52-53 levels in the next 4 to 6 months on balance of payments pressures.
<b>Dalal Street losing Rs 100 cr every five minutes</b><!--QuoteBegin-->QUOTE<!--QuoteEBegin-->After a whopping loss of over Rs<b> 40,00,000 crore in 2008</b>, the stock market is continuing its free-fall and investors have lost an average of Rs 100 crore in every five minutes of trade in first two months of 2009.
Cumulatively, the total investors' wealth has got eroded by about Rs 2,82,000 crore so far this year.
However, the meltdown has been less severe so far this year, as compared to 2008 when an average of Rs 100 crore was wiped off in just two minutes of trade, as per an analysis of stock market losses during 2008 and first two months of 2009.
During 2008, the total investors' wealth, measured in terms of cumulative market capitalisation of all the listed companies,<b> plummetted from close to Rs 72,00,000 crore to about Rs 31,00,000 crore</b>.
So far in 2009, the investors' wealth on Indian bourses has gone further down to about Rs 28,60,000 crore, as per the current market value of the listed companies.
There were a total of 246 trading sessions in 2008, while so far in 2009 trades have been conducted on 39 days.
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<b>Rupee hits all-time low of 51.93/94 vs dollar</b> 52.345 (today)
Mumbai: The Indian rupee on Monday ended at an all-time low of 51.93/94 against the American dollar, cheaper by 1.58 per cent from the last close, due mainly to heightened worries about continued capital outflows from the equity market.
<b>Sensex plunges by 285 points to 8,607</b>
Mumbai: Indian bourses witnessed a virtual meltdown with the Sensex plunging by 284.53 points to over a three-month low of 8,607.08 on Monday on extremely weak global cues.
<b>Exports decline in January by 16 per cent</b>
New Delhi: Indiaâs exports declined by 15.9 per cent in January over the year-ago period, posting contraction for the fourth month running under the impact of a slowdown in major global markets.
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<b>Hedge Funds Offering India Companies to Private Equity, 3i Says</b> <!--QuoteBegin-->QUOTE<!--QuoteEBegin-->During Indiaâs five-year bull market, private-equity investors faced competition for stakes in companies from hedge funds, including San Francisco-based Farallon Capital Management LLC and New York-based D.E. Shaw & Co. While private-equity firms typically take stakes in companies that need cash to expand and seek to exit the investment over a set time frame, hedge funds can invest for any length of time, change their investment strategies, and have ready access to a pool of funds.
<b>Thatâs unwinding as investors pull money from hedge funds, forcing managers to dump assets. At the same time, global banks and insurers are selling assets after amassing $1.2 trillion of credit losses and writedowns since the start of 2007</b>. <!--QuoteEnd--><!--QuoteEEnd-->
<!--emo&:ind--><img src='style_emoticons/<#EMO_DIR#>/india.gif' border='0' style='vertical-align:middle' alt='india.gif' /><!--endemo--> "I want to demand today that the prime minister raise this issue strongly at the G-20 and ask to be provided with the details of the Indian wealth abroad," Advani told reporters here.
"I want to say that if NDA (BJP-led National Democratic Alliance) is voted to power, we will pursue this issue at legal and executive level and force Indian citizens to bring back their wealth to the country," Advani said, citing the "crusade" by western countries against tax havens provided by Swiss banks.
<!--QuoteBegin-->QUOTE<!--QuoteEBegin--><b>Govtâs inaction cost taxpayers Rs 6,333 cr</b>
pioneer.com
Nidhi Sharma | New Delhi
Delay in taking decisions on vital highway projects led to cost escalation
Rs 6333.79 crore â this is how much Governmentâs indecision has cost the taxpayer. <b>Delay in taking decisions on vital road and highway projects by the Government has led to cost escalation in several projects, files of which had been lying with the Ministry of Road Transport and Highways since 2005.</b> Putting it in absolute terms, this could have meant replacing the entire DTC bus fleet with 9,000 modern low-floor buses or two brand new Metro lines from IP Estate to Dwarka or nine expressways similar to Delhi-Gurgaon one.
<b>The Government had planned 48 highway projects in different States at a total project cost of Rs 47,181.08 crore. These projects fall in Phase III of National Highway Development Programme (NHDP). Of these 48, detailed project reports (DPRs) of five projects were ready in 2005, 13 in 2006 and remaining 30 in 2007. However, the Ministry of Road Transport and Highways was unable to push these projects for 2-3 years. Thanks to this indecision, there has been a cost escalation of 10-20 per cent. The total project cost of these 48 projects has now been increased to Rs 53,514.87 crore â Rs 6,333.79 crore more than the original project cost</b>.
Had the five projects, where the feasibility reports had been prepared by 2005, been implemented in time they would have cost Rs 3,149.33 crore. However, now their total cost has been revised to Rs 3,780.15 crore âa 20 per cent increase.
As the project files went through the long-winding process of Government approvals, recession set in the last quarter of 2008. A senior Ministry official said: âWe floated bids but the projects did not elicit a good response from the private bidders. Had these bids been floated in time there wouldnât have been this additional burden.â
Ministry records, accessed by The Pioneer, reveal that the Government has taken the approval of Finance Ministry to increase the cost to make these projects more attractive to the private players. Escalation in project cost means the Government grant to private developers in the form of viability gap funding (VGF) will rise in the same proportion. The Government grant, or VGF, is currently capped at 40 per cent of project cost. With increase in project cost, this funding also increases as the Government has to provide them more funds.
A senior Ministry official said: âThis has been done to improve the bankability of these projects offered for bidding on Public Private Partnership (PPP) mode and also keeping in view substantial increase in price of key inputs.â
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<!--emo&:devil--><img src='style_emoticons/<#EMO_DIR#>/devilsmiley.gif' border='0' style='vertical-align:middle' alt='devilsmiley.gif' /><!--endemo--> Though Germany, France, England and the US are interested in going after the money hidden by their citizens in overseas tax havens, the Indian government is not so eager to do so. It knows very well that some very high profile political leaders in the country keep their pay-backs in Switzerland and Catholic holy places abroad.
<b>Slowdown hits government finances</b><!--QuoteBegin-->QUOTE<!--QuoteEBegin-->In fact, both the revenue and the expenditure sides of the Central Government's finances came under stress during FY09, even as the government took steps to reduce inflationary pressures in April-September 2008 - the first half of the fiscal.
The second half of the fiscal found the government engaged in arresting the moderation of economic growth, the RBI report on macroeconomic and monetary developments said, a day ahead of the central bank announcing its annual policy for 2009-10.
<b>As a result, key deficit indicators - revenue deficit and fiscal deficit - widened to 4.4 per cent (as a per cent of gross domestic product) and 6 per cent respectively in the revised estimates for 2008-09. This is higher than the budget estimates of 1 per cent and 2.5 per cent, it added.</b>
The RBI report also said that, though the adverse impact of an economic slowdown on the revenue receipts as observed during 2008-09 is expected to persist during 2009-10 too, there is likely to be some improvement. The revenue receipts during 2009-10 are budgeted to increase by 8.4 per cent from 3.7 per cent in 2008-09 (Revised Estimates).
The growth of gross tax revenue at 6.9 per cent would be higher than that of 5.9 per cent in 2008-09. The gross tax revenue relative to the GDP would, however, decline further during the year
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Here we were saying, Indian Government is cooking books before election.
I can still say, this is cover up. Indian financial foundation is crumbling under Moron Singh.
<b>India Cuts Interest Rates on Slower Growth Estimate </b><!--QuoteBegin-->QUOTE<!--QuoteEBegin-->April 21 (Bloomberg) -- Indiaâs central bank reduced interest rates for the sixth time in as many months to a record low after <b>forecasting the economy will expand at the slowest pace since 2003. </b>
The Reserve Bank of India cut the reverse repurchase rate to 3.25 percent from 3.5 percent, according to a statement in Mumbai today. Economic growth may ease to 6 percent in the year that started April 1 from 7.1 percent in the previous 12 months, the central bank said.
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Congress alway believes in 2 % growth, more poor , more vote.
NEW DELHI: Industrial growth nosedived to 2.7 per cent in November 2010 against 11.3 per cent in the same period a year-ago, pulled down by dismal performance of manufacturing sector, particularly the consumer non-durables.
In October 2010, the Index of Industrial Production (IIP) had expanded by 11.29 per cent.
The industrial growth during April-November of this fiscal stood at 9.5 per cent, against 7.4 per cent in the corresponding period last year, according to an official data released here on Wednesday.
"As on March 31, 2010, unutilised committed external assistance was of the order of Rs 1,05,339 crore," the Comptroller and Auditor (CAG) said in its report tabled in Parliament today.
The government has paid commitment charges of Rs 86.11 crore during 2009-10 in the form of penalty for not timely utilising the aid approved by multilateral and bilateral lending agencies.
