Last Thursday in Parliament the Union finance minister shared the compulsions that he faced. He was reported to have said: ?What am I left with? So, like all my predecessors, I have had to borrow and we can?t just keep going on this path?. In today?s column we try and observe this path and the extent to which it has varied from avowed intentions.

Ever since the reforms of 1991, economic policy has mercifully deferred to the altar of fiscal prudence. But as in so many things, the human condition is frail. We often do not mean what we say, nor do what we mean. The less clarity there is in purpose, the greater the desire to avoid unpleasantness, inevitably more powerful becomes the unintended outcome. We see this with painful clarity in the mounting of government debt.

In the accompanying chart we represent the combined debt liabilities of the Centre and state governments as a proportion of gross domestic product (GDP). At the bottom is the position in 1980-81 when the proportion was 46.4 per cent. The next bar represents 1985-86, while the bar above that is for 1990-91 when debt had climbed to 61.7 per cent. Not till the roaring 80s, full 30 years after the First Plan, did government bid adieu to fiscal prudence. Fiscal malfeasance is a comparatively new disease, born not in the sterile windowless rooms of autarchic planning, but in the incoherence that succeeded: One where market-oriented liberalisation was placed on the pedestal alongside socialism and State control.

The reforms after 1991 tried to tackle the runaway fisc. Consequently, the debt ratio fell from 61.7 per cent in 1990-91 to 58 per cent in 1995-96. Since virtue often begets its reward with a lag, the debt ratio fell further to 56.5 per cent in 1996-97, the year in which a new government took office. In the years to follow, the debt ratio mounted without respite. In March 1998 it was 58.6 per cent when the NDA alliance took over. By March 2000 the debt ratio had broken the 1991 record and stood at 62.2 per cent. Another three years, ie March 2003, and it is 76.5 per cent. Next March it will be close to 79 per cent. An increase of 22 percentage points of GDP in eight years; beats what the roaring ?80s did (15 percentage points of GDP) over ten years.

Over the last three years alone (2000-01 to 2002-03) the debt ratio has climbed 14 percentage points of GDP.

It took six years to bring debt down from 61.7 in 1991 to 56.5 per cent in 1997. By that reckoning it will take 24 years to undo the backsliding since the mid-90s; of which 17 years to undo the last three years alone.

It does not really matter if the talk of fiscal prudence these past years were sincere, not insincere. The outcome was the same. Such is the price of the absence of coherence and resolve. We shall see in a later column that the revenue story was actually good. The failure was on the other side.

The author is economic advisor to ICRA (Investment Information and Credit Rating Agency)