Former Finance Minister Yashwant Sinha on Sunday said that huge expenditure on welfare schemes by the Modi government has severely impacted the public finances which are currently in a mess with fiscal deficit touching abnormally high levels.
Mr. Sinha in an interview with PTI said the shocking thing is nobody seems to be worried about the state of government finances, including those in the government.
"The Modi government is spending large sums of money on welfare schemes, including the free food scheme and all the rest of it. But government finances are in a mess. The fiscal deficit has touched abnormal proportions even according to the undependable figures of the government," Mr. Sinha, a senior vice-president of the Trinamool Congress, said.
The country's fiscal deficit is projected to be higher at 6.9% of the GDP this fiscal as against the earlier estimate of 6.8 per cent of the GDP.
Mr. Sinha alleged that everything in the economic policy today is based on whether it will enable the government or the ruling party to win elections or not.
"So on the one hand, we have this welfarism for the poor. And on the other hand, select corporates are making windfall gains and again that is something about which nobody in this country seems to be bothered," he alleged.
Mr. Sinha said that it is a complete mismatch between what one would call prudent financial policies, prudent economic policies and the reality today.
To a question, Mr. Sinha said the Indian economy will face the challenge of inflation, challenge of growth.
Asia's third-largest economy is projected to grow 8.9% in the fiscal year ending March 31, slower than the previously anticipated 9.2%, according to recent government data.
Mr. Sinha, a bitter critic of Prime Minister Narendra Modi’s regime, noted that the economy is in crying need of fresh investment, both from the government and from the private sector.
"And that is nowhere in sight. You know, the increase in capital expenditure in the budget is just a chimera," he said.
According to the former finance minister, while the government investment is not going to go up, private investment is slacked.
"It will become a slacker because of rising interest rates. And in the absence of investment, the Indian economy will not be able to make progress," he stated.
On the impact of the Russia-Ukraine conflict on the Indian economy, Mr. Sinha said, "Much of our economy depends on crude oil that we import and therefore there will be a cascading effect on our economy as far as inflation is concerned."
Retail inflation hit an eight-month high of 6.07% in February, remaining above the RBI's comfort level for the second month in a row, while wholesale price-based inflation soared to 13.11% on account of hardening of crude oil and non-food item prices.
Mr. Sinha, who served in the cabinet of former Prime Minister Atal Bihari Vajpayee, had quit the saffron party in 2018 after having serious differences with the party leadership.
