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Narendra Modi government's fiscal deficit roadmap was explained by Finance Minister Arun Jaitley in the Budget 2016 but unwilling to take the explanation at face value is former FM P Chidambaram who slammed the effort as inadequate in the extreme. The Modi governemnt is expected to achieve fiscal deficit target of 3.9 per cent in the current fiscal and 3.5 per cent in 2016-17. Chidambaram trots out a number of points to backup his theory: (Image Source: PTI)
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1. P Chidambaram and Budget 2016: Former FM said the NDA government's claims to bring fiscal deficit to 3.5 per cent was built on factors like avoidance of direct borrowing and instead asking other ministries like Indians Railways to do so instead. Arguing that while small amounts could be borrowed by individual ministries and PSUs, he said "but to ask them to borrow 59,000 crore (railways) and 40,000 crore (road transport) and show it off the balance sheet and then say that our Fiscal deficit is 3.5 per cent is I am afraid is not acceptable." (Image Source: Reuters)
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2. P Chidambaram and Budget 2016: Terming it as unacceptable, P Chidambaram said "instead of the government borrowing, and showing it as part of the fiscal deficit, and giving it to Ministry of Railways and Road Transport as budgetary grant, you (Centre) are asking them to borrow." (Image Source: PTI)
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5. Under the details of immovable assets, P Chidambaram's affidavit says he has said that he bought 38.72 acres land in 1994 for Rs 25.16 lakh in Karnataka and thereafter developed it by investing another Rs 3.77 lakh into it and the current market value of this piece of property is Rs 1.93 crore, according to the affidavit. P Chidambaram's Hindu Undivided Family (HUF) movable properties are worth Rs 11.86 lakh while immovable properties have a monetary value of Rs 12.07 crore. (Image Source: PTI)
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4. P Chidambaram and Budget 2016: Therefore, he said the Centre was showing it off balance sheet off budget. He said Indians may accept such an approach. However, foreign analysts may not accept it. "I am afraid, while Indians may accept it, as far as Indians are concerned if Government of India does it (borrowing) or a Ministry (does it) what does it matter?." "For foreign analysts, (however) he is not going to miss the number, he will point out that this is nothing but off the balance sheet borrowing." (Image Source: PTI)
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5. P Chidambaram and Budget 2016: Former FM pointed out that "he (analyst) is going to add it back to fiscal deficit and say that your fiscal deficit is not 3.5 per cent as you claim it to be and it is much higher than that. I am afraid, this is not the right approach. If the government wants to borrow, it must borrow straight on the balance sheet, on the budget and give it to the ministry as GBS.," he said. (Image Source: PTI)
