Budget failed to show any fiscal prudence: experts

BS Reporter / Mumbai/ Ahmedabad July 08, 2009, 19:31 IST

Economists and experts today said the Union Budget  presented by Finance Minister Pranab Mukherjee on Monday has not shown any fiscal prudence. They were speaking at a post budget analysis session organised by the Confederation of Indian Industry (CII) here in Ahmedabad.

Ravindra Dholakia, professor in economics, Indian Institute of Management, Ahmedabad (IIM-A), said, “After a long time, we have a proper politician as FM. We could have done much better in the Budget.”

Referring to revenue account deficit, Dholakia said, “This has happened for the first time that we are running a deficit on revenue account. This means that the government is actually borrowing. The Budget has not shown any fiscal prudence and we are moving towards a debt trap.”

“Interest payment to GDP ratio is rising year-on-year, which is not a good sign. We require a fiscal correction,” he added.

According to Hitesh Gajaria, executive director, KPMG India Pvt Ltd, around 36 per cent of our revenues goes in paying interests on loans.

 “The fiscal deficit is 6.8 per cent. The expenditure has increased and the government is borrowing to fund various initiatives. The Budget puts us on the path of fiscal ruin.”

“The Budget is good from the business point of view but not from the point of view of economy,” added another panelist Parind Mehta, partner, BRS and Company.

Dholakia said the finance minister should have targeted a 7 per cent growth rate for the fiscal 2009-10. The real GDP growth rate in 2008-09 stood at 6.7 per cent while the Budget has set the target of 6.51 per cent for this fiscal.