PC blames high inflation for UPA’s defeat in LS elections

Former finance minister P Chidambaram has said the fiscal stimulus package inducted between 2009 and 2011 was a collective decision of the government that led to breaching of fiscal and revenue deficits and high inflation for which people punished the UPA government in the Lok Sabha elections.

In a speech that analysed the first full budget of the Modi government presented by Finance Minister Arun Jaitley, he said the budget for 2015-16 has not passed the test of equity, fiscal and financial stability and the test of rising inequality while it had some good aspects.

In his speech at the Loyola Institute of Business Administration (LIBA) in Chennai yesterday, Chidambaram, at no stage, had taken the name of President Pranab Mukherjee, during whose tenure as finance minister the stimulus package was decided by the Union Government following the 2008 economic crisis. Chidambaram said he had only made a passing reference to the stimulus package that led to the Centre breaching targets on fiscal and revenue deficits, current account deficit and the resultant high inflation led to a price situation that people punished the government in the elections.

In the LIBA speech, the former finance minister said Jaitley has pushed the deadline of curbing fiscal deficit to three per cent of GDP to 2016-17 by another year to 2017-18. 

As against a target of 3.6 per cent fiscal deficit fixed by the UPA government for 2015-16, he has relaxed it to 3.9 per cent of GDP.

Through this, Chidambaram said, the NDA regime was planning to borrow an additional Rs.42,500 crore which the government was planning to spend not on plan expenditure but on non-plan expenditure.