What do you do when you dont have money? Well, you just Print them if you are the Government of India. With economic slow down, tax collection has been hit badly. Added to this, the populist schemes announced in the last budget and the implentation of the pay commission report has proved to be a big burden for the Government. But why worry? As long as you can print notes recklessly! The Printing press has been working overtime and is on the point of a breakdown. Till recently, the government had already "monetised" -- an euphemism for printing -- worth Rs 66,946 crore (that is 66946 followed by Eight Zeros) to make both ends meet.
Damn if it results in a higher inflation, as more money chasing same goods (or less goods as the economy has slowed down) will result in inflation. But the trick is that there will be a lag of 4-6 months before this happens. By then elections would have been over and hell with the consequences. It is somebody else's headache. The inflation is about 5% plus now. This will start climbing again by May 2009.
The subsidies, the loan waiver, refusal to rise the petroleum prices earlier, pay commission report implementation and unrestrained non plan expenditure has led to the revenue-expenditure gap as of the first 9 months of the fiscal year to a whopping Rs 2,19,000 crores approximately(official figure) , though in reality the actual figure is at least 50% more. The beauty is that the Budgetary provision of deficit for the whole year was Rs 1,33,000 crores. Since no one questions the performance of the budgetary projections with the actual figures, the Finance Ministry mandarins get away with murder. There is absolutely no accountability. Though everyone claims that the Narasimha Rao, Manmohan Singh duo did great things to liberalize the economy, what went unnoticed was that the fiscal indiscipline was noticeable when they laid down the office. History is repeating. But then it is not surprising in the least as no one cares about cost cutting, financial discipline.
The philosophy is simple: Spend recklessly, Print money, and the consequences be damned
