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Massive Welfare Spending Reaches Public Finances, Says Former Finance Minister: Report


Massive welfare spending hits public finances, Former Minister Says: Report

New Delhi:

Former finance minister Yashwant Sinha on Sunday said that huge spending on welfare schemes by the Modi government has had a severe impact on public finances, which are now in turmoil with the fiscal deficit reaching unusually high levels.

Mr Sinha, in an interview with PTI, said the surprising thing was that no one seemed to be worried about the financial situation of the government, including those in the government.

“The Modi government spends huge sums of money on welfare schemes, including free food schemes and the rest. But the government’s finances are in turmoil. The fiscal deficit has touched an abnormal portion even according to unreliable government figures,” said Mr Sinha, deputy Congress senior president Trinamool, said.

The country’s fiscal deficit is projected to be higher at 6.9 per cent of this fiscal GDP compared to the initial estimate of 6.8 per cent of GDP.

Mr Sinha claimed that everything in economic policy today is based on whether it will allow the government or the ruling party to win elections or not.

“So, on the one hand, we have this welfare for the poor. And on the other hand, selected corporate companies are making unwanted profits, and again that is something that is not bothered by anyone in the country,” he claimed.

Mr Sinha said that it was a complete mismatch between what could be called prudent monetary policy, prudent economic policy and today’s realities.

Answering a question, he said the Indian economy would face the challenges of inflation and growth.

According to recent government data, Asia’s third-largest economy is projected to grow 8.9 percent in the fiscal year ended March 31, slower than the 9.2 percent previously expected.

Mr Sinha, a staunch critic of Prime Minister Narendra Modi’s regime, noted that the economy was crying out for new investment, both from the government and the private sector.

“And that’s not visible. You know, the increase in capital spending in the budget is just a chimaera,” he said.

According to the former finance minister, although government investment will not increase, private investment will slacken.

“It will be lazy because of rising interest rates. And without investment, the Indian economy will not be able to make progress,” he said.

On the impact of the Russia-Ukraine conflict on the Indian economy, Sinha said, “Most of our economy depends on the crude oil we import and therefore there will be a creeping effect on our economy as far as inflation.”

Retail inflation hit an eight -month high of 6.07 per cent in February, remaining above the RBI comfort level for the second month in a row, while wholesale price -based inflation surged to 13.11 per cent due to hardening crude oil and non -foodstuff prices.

Mr Sinha, who served in the cabinet of former Prime Minister Atal Bihari Vajpayee, left the saffron party in 2018 after having severe differences with the party leadership.

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