“UPA government excelled in policy misadventures and scams”: Nirmala Sitharaman Highlights India’s Fiscal Management Under PM Modi
Finance Minister Nirmala Sitharaman recently tweeted an extensive overview of the country’s fiscal management under Prime Minister Narendra Modi’s leadership and compared it with the UPA government. She questioned how Congress aims to fulfil their manifesto promise of ‘Khata Khat’ schemes and its fiscal impact.
Tagging Congress leader Rahul Gandhi, she asked if he would “explain how their gigantic schemes of fiscal splurge would work without increasing taxes or borrowing heavily and running down the economy.”
Comparing the UPA government and the PM Modi-led government’s debt numbers, the finance minister observed that during the former’s rule from FY 2004 to FY 2014, central government debt witnessed a substantial 3.2 times growth, reaching Rs 58.59 lakh crore in March 2014. Meanwhile, under the Modi government”s tenure, she stated that the growth from Rs 58.59 lakh crore in FY 2014 to Rs 172.37 lakh crore in FY 2024 (Revised Estimates) was 2.9 times, despite challenges like the COVID-19 pandemic.
She further added that the central government’s debt, which was 52.2% of GDP at the end of FY 2013-14, was reduced to 48.9% in FY 2018-19.
“Post-pandemic, our government pursued a balanced approach to fiscal consolidation while sustaining economic growth. This strategy reduced the fiscal deficit from 9.2% of GDP in FY 2020-21 to 5.8% in the Revised Estimates for FY 2023-24,” she stated.
Sitharaman criticised the “poor fiscal management” of the UPA government, especially regarding its ratio of Gross Fiscal Deficit (GFD) to GDP over the years, despite having no pandemic-like crisis to face.
“During COVID-19, ‘borrow, spend & even print money’ to reboot the economy was the predominant advice given by the so-called “luminaries” of the opposition parties led by Congress. Ironically, the same people are complaining about high debt levels,” she slammed Congress.
A lot has been said in recent times about the fiscal management (especially on debt) of our government under PM Modi’s leadership. Many times, absolute numbers have been compared without considering the GDP growth on which we base the debt calculation. I would like to put out a…
— Nirmala Sitharaman (Modi Ka Parivar) (@nsitharaman) May 13, 2024
Accusing the grand old party of “window dressing” to hide its high fiscal deficit, Sitharaman said that the UPA government issued special bonds in lieu of cash subsidies to oil marketing, fertiliser, and FCI companies to “keep the official deficit numbers lower.” She accused the UPA government of keeping over Rs 1.9 lakh crores off the books from FY 2006 to FY 2010, which otherwise would have increased the fiscal and revenue deficit numbers.
She further stated that the UPA government issued oil bonds worth Rs 1.48 lakh crore to control oil prices until 2014, “effectively shifting the burden to future generations” and leading to the Modi government inheriting a debt of Rs 1.34 lakh crore.
Praising the current Modi government for prioritising transparency and accountability in its budgeting practices, Sitharaman said that measures such as the introduction of Statement 27 on Extra Budgetary Resources (EBR) and the incorporation of EBR-funded schemes into the government budget, repaying NSSF loans to FCI for food subsidies, and settling EBR liabilities helped achieve the same.
Under the Congress-led UPA government, the underlying deficit was much higher than the budgeted deficit.
UPA Govt did ‘window dressing’ to hide its high fiscal deficit without maintaining the integrity of the fiscal numbers. Fiscal Deficit for 2008-09 would have been 7.9%…— Nirmala Sitharaman (Modi Ka Parivar) (@nsitharaman) May 13, 2024
While highlighting the achievements of the current government”s fiscal policies, the finance minister accused Congress of being “interested in spending on short-term populist measures, & there has never been a focus on long-term development.” She further accused the grand old party of scams such as CWG, Antrix-Devas, Coal and Telecom spectrum allocation, which led to “unproductive government borrowings, ill-targeted subsidies and govt schemes… marred with corruption & leakages.”
The question isn’t just about borrowing; it”s also about applying thought on expenditure. Congress is interested in spending on short-term populist measures & there has never been a focus on long-term development.
Even Defence & National Security was hampered by policy…
— Nirmala Sitharaman (Modi Ka Parivar) (@nsitharaman) May 13, 2024
The tweet also compared India”s debt scenario with other countries like Japan, the USA, Italy, France, and the UK and highlighted India”s external debt scenario among Low and Middle-Income Countries (LMICs). With a debt-to-GDP ratio of 81% in 2022, significantly lower than many developed economies, she emphasised India”s fiscal resilience and ability to handle external debt under the Modi government.
A cross-country comparison reveals that India has fared relatively well and maintains a general government debt ratio below that of FY2003.
India had a debt-to-GDP ratio of 81% in 2022. This is significantly lower than economies like Japan (260.1%), Italy (140.5%), the USA… pic.twitter.com/74YF8ppfNb
— Nirmala Sitharaman (Modi Ka Parivar) (@nsitharaman) May 13, 2024
