Missing the wood for the trees

This misplaced excitement at having uncovered some non-existent fiscal jugglery is a consequence of lazy analytical thinking which governments cheerfully exploit

Several commentators and economists have expressed concerns about the arithmetic underlying the government’s fiscal deficit calculations, spurred by a recent report by the Comptroller and Auditor General (CAG).

The report points out that (1) government has not reimbursed the Food Corporation of India and fertiliser companies fully for food and fertiliser subsidies (while paying interest on loans to finance these dues). (2) NABARD funds an irrigation programme that is a central government scheme that was previously funded through the budget.

The report says that these expenditures in 2016-17 “were through off-budget financing route with fiscal implication of understating government’s expenditure in the