Friday, September 20, 2013

Understanding Our Recent Budget Deficit Numbers

Did you notice that the bean-counters are crying on every roof that our budget deficit is under control at 1.8%? Presenting it as a proof that the so-called reforms have worked. It's quite easy to disagree with that.

Remember that the silliest idea of the reforms was to slash tax rates by half promising that we will grow faster. We know our economy didn't clip the required higher growth rates. In fact the reforms have ushered in a string of persistently low growth rates. So the small deficit numbers didn't come from better growth rates. We know it did not come from reducing wastage either: we just need to read the audit reports to strike this one out. So where did these low deficit numbers come from?

Well that's easy. By not spending budgeted funds and other essential monies that prevent the country from going to the dogs. And by doing other stupid things like keeping oil pump prices at unreal levels so as to pocket billions more in VAT and making us pay for a strange multi-billion-rupee hedging loss at the STC that seemed to get bigger as the toxic bean-counters got craftier.

Think of it this way: for many years hyenas have been trying to make an easy-going tiger run faster but instead of cutting the fat they been taking out the muscles of Panthera Tigris. For personal consumption. And unsurprisingly this has badly crippled the big cat.

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