Are We Paying Interest for UPA Scams?

I asked Mrs. Krishna recently about how she would make a budget and her answer was she would make a list of what she wanted, phone up the provision store and ask him to get whatever she wanted. I said that is the situation when we have money, and Thank God we do. But what if we did not? She said she would review the list and strike out all that we can do without, for the moment. Common sense for sure! But a sense that eludes our esteemed ministers and other grey eminences that prepare our National Budget and spend the taxpayers’ monies.
So what exactly is this Union Budget and how is it made? To be sure it is not made the way Mrs. Krishna, not a PhD in Economics but educated with an M.A. in French Literature makes it. She has understood that with the erratic kind of earnings her husband has, she has to balance her wants and needs with a sense of the monies on hand during the month. She ensures that her work related expenses are taken care of by her earnings and the household expenses come mostly from my earnings. She has been with me through thick and thin, whether it was with the not so substantial salary at SBI or my rather more abundant earnings as an NRI consultant, or even my days of very meager earnings. Her budgeting is based entirely on the money available at her disposal for the month.
The reason for mentioning Mrs. K is that she is not unlike other homemakers in India, or even elsewhere in the World, who balance their budgets by cutting this item here or that item there and adding a little extra here or there depending on the earnings available at their disposal. Common sense it would seem, at the risk of repetition. Unlike people who earn an honest living and ensure that they spend only what they earn, the Government thinks it can get away with spending money it does not have and borrowing to make up the deficit, which incidentally, is what deficit financing is all about. Part of it is issuing currency and lowering the value of your hard earned Rupee. How does this impact you? When you see the Rupee eroding in value, it does so both within and outside India. Hence, you end up paying more for goods and services. This is one more tax on you that benefits nobody. Having given this background, let us see what are the supposed objectives of the budget are and whether they are even remotely fulfilled.
Main objectives are to: –
• Focus on domestic demand driven growth recovery
• Create conditions for rapid revival of high growth in private investment;
• Address supply bottlenecks in agriculture, energy and transport sectors, particularly in coal, power, national highways, railways and civil aviation
• Intervene decisively to address the problem of malnutrition especially in the 200 high-burden districts
• Expedite coordinated implementation of decisions being taken to improve delivery systems, governance, and transparency; and address the problem of black money and corruption in public life.

If one were to focus on domestic driven high growth and to revive the climate of investment, what would you do? Would you not try to balance your budget by reducing taxes, especially corporate taxation, to ensure that there is more money in the hands of corporate for investment? Would you not try to put more money in the hands of people who earn it legitimately and spend it well? Would you not try to reduce the incidence of black money by making creation of the same unnecessary? It is axiomatic that the lower the rates of taxes on individuals and corporate, the higher the collections. It is a sad fact of life that the people who make the budget for the most part are curd rice eating Tam Brahms! These worthies are somehow averse to the idea of putting money in the hands of people as, Heaven forbid, they may actually spend it! But when the World Economy is turning turtle and every country is looking to find a way to create demand and make people spend money, the Indian Govt. is content with measures that are the financial equivalent of rearranging the deck chairs on the Titanic! So they do nothing on the Corporate Tax front and instead increase the threshold for taxation from Rs 1.80 lacs to Rs 2 lacs. Net effect is that the beleaguered middle class gets an extra Rs 2000 to spend. Next step is to make the slab from Rs 3 lacs to Rs 5 lacs 10% instead of 20%. So a further 20k ends up in your pocket annually. With an inflation rate of roughly 10% we have a slight compensation for it. But if a family is earning Rs 2 lacs p.a. their income is already eroded to that extent. Corporate taxation is another area where it was possible to give a little extra benefit in order to attract investment and create more jobs. The budget fails here also.
Before getting to other objectives, most of which the Govt is content with paying lip service to through similar tinkering, let us see the big picture, viz. whether it has the cloth to make the coat. I made a list of what the FM said in his budget speech and the end result, whether credit or debit. Forgive a Banker for wanting to balance books!
PSU Banks Capitalisation 15000
Highways 25360
DMIC Corridor 3700
Rural Housing Fund 4000
Interest subvention on HLs 0
Waiver of loans for Handloom 3888
Geo Textiles NE 500
Opportunity Fund 5000
Dept of Agri 20208
RKVY 9217
Green Revolution to East 1000
Mission for protein supplement 2242
Aquaculture 500
Interest subvention 13% for agri 0
Agri Credit 575000
RRB for STL 10000
Research in agri 200
Accelerated Irrigation Benefit Programme 14242
Murshidabad Flood Control 439
National Mission on Food Processing 0
Creation of Foodgrain Silos 0
Scheduled Castes Sub Plan 37113
Tribal Sub Plan 21710
National Food Security Bill 0
Integrated Child Development 15850
Mid Day Meals 11937
Rajiv Gandhi Scheme for Empowerment of Adolescent Girls, SABLA 750
Rural Drinking Water and Sanitation 14000
Backward Regions Grant Fund 12040
Rural Infra Dev Fund 20000
RTE-SSA 25000
Rashtriya Madhyamik Shiksha Abhiyan 3124
Credit Guarantee Fund for Education 0
NRHM 20822
National Rural Livelihood Mission 3915
Women’s SHG’s Development Fund 300
Bharat Livelihoods Foundation of India 0
Prime Minister’s Employment Generation Programme 1276
National Skill Development Corporation 1205
Himayat for J&K 0
National Social Assistance 8447
National Family Benefit scheme 0
Agri Universities 360
Defence 193407
CAPF Buildings 4465
Aadhar 0
Remaining Expenditure (Probably revenue expenditure) 404708

Here are the sources: –
Taxes 771071
Tax Free Bonds 60000
Non Tax Revenue Receipts 164614
Non Tax Capital Receipts 41650
Overseas Infrastructure Bonds 8000
PSU divestment 30000
Total 1075335
Market borrowings 479000
Here are a few catches. There is a big boost to be given for Aadhar and nothing has been budgeted for this. The last item of the expenditure is Remaining Expenditure and that is entirely being financed through market borrowings. So let us see what that means. All the money that is meant for day to day expenses will be borrowed from the market and we will pay interest on it. So the Congress can keep creating social contracts and we end up paying for their profligacy in perpetuity. What then of the BJP who will vote for this budget after making a few token changes. In Hindi there is a saying “Haathi nikal gayi aur poonch rah gayi!” Liberally translated it means the elephant got away but the tail remained. With these worthies in Parliament it is decorate the tail a bit and satisfy the opposition but let the elephant remain as it is!
Let us leave the expenditure and income aside and come to one great truth that has eluded most of our educated PhD economists, assorted MBAs from premier institutes and armchair intellectuals such as me! If we put together all the scams that we have suffered through with the UPA, during the current edition, the sum total would exceed 5 lac crores p.a. That is because, as per my hypothesis, like an iceberg, the scams hidden from view are greater than those that have surfaced.
I have not bothered to go into whether we are going to meet the targets of income or expenditure but I have no doubt that we will meet the borrowing targets! Hence, the Govt. is going to borrow Rs 479000 crores or almost three 2G scams worth of money from the market. Let us now see what happens when we do so. We end up paying interest on borrowings. Assuming an interest of 8% on an average, we would end up paying around 39,000 crores every year on the money borrowed by the Govt to plug the hole in its finances. So we are paying in perpetuity for the dishonesty and corruption of the UPA.
To me at least, this is good reason to ensure that the UPA is dispatched to the nether regions of the earth and never allowed to surface. For the BJP, which has had enough chances to kick the Govt. in the cojones, and has not done so; this is good enough reason to kick this Sarkar into oblivion.


19 thoughts on “Are We Paying Interest for UPA Scams?

  1. Krishnaji, excellent background information, expertly researched and written and explained so clearly. I particularly liked the introduction ::)). But, what an eye-opener of a blog, Sir!! You have explicitly detailed the can of worms we are enjoying?? tagged as CONGRESS!

    That we, the taxpayer, has been washing dirty linen of Congress Party in general, the Dynasty in particular and remnants of the misgivings of the scattered political class as a whole goes beyond saying. I am not being cynical but it is a fact that the Indian diaspora is driven more on emotion than on intellect. Ironically, those who are driven by intellect fall into the clutches of a political doctrine unmindful of its merits and demerits. For those who are driven by emotion, which unfortunately form the mass, they are fundamentally inspired by ignorant passion. It is this segment of people that are manipulated, contrived, instigated and subjugated to eventually deal and compromise on the obtrusive socio-economic atrocities committed mostly by the ruling political class.

    A significant role is played by the so called Paid Media too. They unhesitatingly compromise their morality and ethics for thirty pieces of silver the incumbent government throws at them to gloat and glorify all their calumny. The common man is effectively obfuscated and misguided by the relentless media propaganda deftly conducted to boast only the virtues of a sick policy. Alas! if only the common man applied some sense of intellect?

    All we can hope and pray is that the common man deduces the semantics of the intent this Congress led UPA2 Government has sworn to do in order to diverge and digress our country both economically and demographically. Needless to say, they have achieved this to a large extent.

    What is consoling is the fact that there are intellectuals like you, Sir, whose fierce patriotism impedes and thwarts their criminal design. The *social media* has become a humongous inhibition for their nefarious intentions, especially in the recent past. There have come forward plenty talents like you who have vented their frustrations writing descriptive blogs like this one for example, as a measure to educate the common man like me to awaken and become aware of the deceptive premises we are led to live in. Permit me to firstly congratulate you and secondly thank you for this superlative effort.

    Expecting plenty more from you, Sir. ::))

    • Prashanth, first of all many thanks for taking trouble to read the post and secondly, for such a detailed comment. This post was written by me egged on by Jaymin who said that I should do so. While writing it I realised the fraud we are being subjected to and this is only the beginning. There is scope for plenty more skulduggery, and we are going to be mute spectators because the watchers are not watching!

    • The figures have been taken from the budget speech that apparently no one in the Congress or Opposition reads. Only the Finance Minister reads it because he has to!

  2. Sirji, To start with THANK YOU .. for writing this blog… The highlighting if the actual nautanki behind the numbers displayed, in what I always wanted and you provided just the same, The figures makes much more sense to understand, Sincerely hope even opposition looks at it and applies itself beyond cosmetics. For anything to say on action or intention of CONG is simply futile.

  3. Dear Sir,

    Congrats Sir for the excellent, detailed and easy to understand blog post.

    Two things are strikingly clear – one, there isn’t enough money allocated to the required schemes/initiatives promoted by Govt. Second, whatever amount is allocated to the schemes it does not reach common man and thus fails to make the desired/any impact. Shocking is the latter part. To sum it up in Late Rajiv Gandhi’s words – One rupee allocated by Centre is reduced to 10 paisa by the time it reaches the intended recipient.

    I believe that apart from promoting schemes/initiatives by Govt, need of the hour is to plug the leak within the system, which begs the question, is this UPA Govt and Congress in particular willing to do so. Recent incidents of scams by this UPA Govt which has not even spared our armed forces does not enthuse give any belief or faith that corruption and loot will be checked. So the leak and bleed will continue which will continue to hurt us indirectly.

    Coming on the second point, much of the amount allocated in budget is merely on paper and does not necessarily imply that it will be met or adhered to. Case in point is DISINVESTMENT. From time immemorial disinvestment has been like a dark sheep that is repeated again and again. But strong undercurrents like elections, regionalism, rowdy unions have effectively jeopardized disinvestment. Case in point – our national airline continues to bleed and yet Govt still wants to pump in money. After all, what is the point of flogging dead horse?

    To sum it up, this is a case of credit card – where the expenditure is more than the permissible limit and rate of interest is simply high and absurd. The budget has almost become a farce to the common man since there has been no decline in prices of commodities essential for household. Yet every effort is made by pseudo libtards in TV studious by painting a rosy picture while the economy continues to slip.

    Though we may not able to force this Govt to wake up, but surely it is high time to send UPA to the nearest grave as soon as possible. Also this is a nice way of letting Tweeps and net savvy people to read the mis-deeds and misconception about budget.

    Once again, a great write-up from you and we look forward to many more brilliant posts from you. Thanks for sharing Sir.


  4. My mistake in that I had written 500 lac crores as scams p.a. It is 5 lac crores. Have corrected it now.

  5. Respected Sirji,
    The title of your article attracted my attention while I was tweeting and at the same time listening to the spicy election debate of yesterday between F. Hollande and N. Sarcozy for the French Prezi elections. While debating on issues relating to European Union, Zone Euro and Euro banking related issues, Hollande proposed that if he will be elected, coming Sunday, as Prezi of France, he will first impose the establishment of an EU budget to have a better management of Euro spending! Sarko countered how difficult it is to find common parameters involving 27 different countries etc.., etc.., to which one young voter intervened and gave a similar example like what you have given! You had taken your wife as the prescriber while he referred to his grand-mother who practiced the budgeting method and which he practices too etc! Brief! The interesting thing was my ears hearing a French voter advocating similar things which my eyes were reading through your article! I was intrigued and even pinched myself to see for sure if I was not dreaming! Strange indeed! Nevertheless, I accepted it only to see the content of the experience rather than searching why the experience itself did happen! This is reason 1 for my commenting.
    The reason 2 is the subtle details you give therein in a subtler way that even those who may not read them in the newspaper the day after the presentation of the budget will unwittingly read the various chapters and the figures of income and expenditure not to miss the fil conducteur of the entire article.
    In my humble opinion, the problem with the UPA being that its ministers are not bold enough to assume and decide in the only interest of the progress of the nation; the behavior of its front line leaders, the Gandhi family, have created a sense of fait accompli that in every move they ensure an income for themselves; the civil service fears to question the methods; the ministers lie; just an example: Pranabda rightly announced to implement the capital gains tax on investment through participatory notes only to retract a week after! Needless to underline the Drivedi boldness unscrupulously erased by the Mukhul’s idiocy! The advisory bapus are afraid of! What scam will burst when is the fear of the day be! From the PM though the MP’s to the FM, everyone knows what needs to be done! Reforms! No one wants to really attempt at. They call it coalition dharma! No! It is coalition of fear! Safe-guarding the chair has become the priority than serving the cause!
    The outbursts of scams have added fear to fear! Ministries did not even spend the money allotted in the last exercise till the last day! On the last day crores had been spent for fear of return of funds as unused! The fear factor has become a permanent trauma! Every decision is seen as a pain!
    The honest solution, in my humble opinion is, new elections are called for! That we, the people, vote for honest people! Honesty means being patriotic! Honesty means to act.
    My I commend your writing and quote the words of Francois Mitterrand, the former French President who said…’’power knows no fear; if fear creeks in crush it out; fear in politics is a must while no fear must be the spirit while making policies! People in power, the time has come, days pass by, neither the time nor the days passed by will ever come again; sow and pluck the roses of your duty. If not make way for others to come in and act!’’
    With Regards
    Rangesh RAM
    Paris – France

    • Ram Sir, In my view UPA, mainly the Congress party is made up of crooks and extremely venal people. These creatures have decided that India is a not a milch cow but a cow as a source of blood and they are poking needles into every part that yields blood. But only a European whose favorite dish is congealed cow’s blood can do that in a merciless way.

      Unfortunately, we have an opposition that snatches defeat from the jaws of victory. So all we can do is pray to the three crore forms of God and hope that they will do something.

  6. Pingback: India: Budget & Corruption · Global Voices

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