I like the way Shyam put it in his response to my budget blog yesterday…..”Poverty Alleviation in an election year Impoverishes the Nation “
Alright so we had a record 230 million tonnes of grain production !
Alright so the agriculture growth rate is a record over 4% !
But think !…when grain production is at such record highs,should not the price of Rice and Wheat be at lows !…we have a situation where we are seeing record highs in grain prices on high global price trend impact
Also at what cost have we acheived this ?……look at our Fertliser Subsidies…They have ballooned !…and the scary fact is that the high estimates indicate that they will continue to hiss at us even in FY 10
The Weak Rupee and The Record Oil Price has affected our Fertliser subsidy.As on January 2009,the subsidy had reached a record Rs 102000 crs,up from Rs 36000 crs last year…It is expected to close in March at Rs 114000 crs…In 2007/8 The Urea Import was 4.718 Million Metric Tonnes…In Ten Months this Fiscal 2008/9 it has already reached 5.713 Million Metric Tonnes and by March will be nearer 6.5 Million Metric Tonnes…that’s More Imported at Significantly Higher Costs
And how have we financed this Non Plan Expenditure of Increasing Fertliser Subsidies ? We have taken Market Loans and Short term Borrowings…check yesterdays blog for the scary quantum
If We don’t have…we don’t spend…that should have been the guiding philosophy…we would have even been saved from Oil Purchases at High US $ 100 +/barrel prices….To Borrow such high quantum to spend is inviting BIG TROUBLE…Our Debt Servicing in FY 09 is over Rs 500000 crs,that includes over Rs 300000 crs in Debt Repayment…so what has actually happened is that you have shown similar amounts paid off for earlier loans and created fresh similar quantum loans…Borrowings have shot up from earlier estimates of 17% of Total Receipts to revised estimates of over 36% in FY 09 !
BIG TROUBLE is indicated as it looks like we shall continue to resort to Borrowings for Capital Formation ,as in the current challenging economic scenario,the other Ways of Reducing Expenditure,Raising Revenues,Inviting Investments and selling Public Assets (PSU IPO’s) do not look like achieving any significant success.
It is more prudent to make Short term sacrifices for Long Term Benefits…In this sense we could have sacrificed some more of our GDP Growth targeted now at 7.1%…even if we grew at 5% in such a challenging year it would have been commendable…..atleast we would not be in such danger of confronting such high hissing subsidies as we are unable to pass on the entire rise to consumers