Sunday, March 15, 2009

Why Sithanen's Stimulus Package is Just A Flash in the Pan

One reason obviously has to do with its tiny size: 0.16% per year for the two-year period until December 2010 -- that's about 16 times smaller than the US package and five times less than the British one. Another is continuity: come end of next year Sithanen would have been out of office for close to a year. Which kind of gives you some perspective to his claim that he's doing more than the 2% prescribed (he's in fact doing about 7 times less) by one of the Bretton Woods sharks and if he's able to spend such a large amount it's because of the success of his reforms and not because he's been taxing us to death and not spending the billions that he's been budgeting for the past three years.

So I guess you want to know how I came up with my numbers? Simple. Of the Rs10.4 billion (3.8% of GDP) announced as additional stimulus package, we have to subtract Rs6 billion because that amount was part of last June budget (6 funds of Rs1 billion each which we've covered here). The remaining Rs4.4 billion (1.6% of GDP) have to be discounted because we know Sithanen's notorious reputation of being an intellectually dishonest bean-counter. What kind of discount should apply here?

A good estimate would be 20% because that's the proportion of the budgeted amount the Empowerment Fund spent in the first two years of its existence. So that gives me 0.32% for the two years or 0.16% per year.

1 comment:

Sanjay Jagatsingh said...

So that was just one of the distractions while an attempt was made to slowly push a plutocracy down our throats.