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Countering pappuon ka economist/congressi stand up comedians/idiots on stage, speaking about economy:
1) To all of us growing up in 90s the BOP crisis that India faced in 1990 was a time of great tumult. Over the years our fiscal profligacy..1/n
1) To all of us growing up in 90s the BOP crisis that India faced in 1990 was a time of great tumult. Over the years our fiscal profligacy..1/n
had resulted in a Current Account Deficit and Balance of Payment Crisis: We had only 3 weeks worth of reserves left to meet foreign payments.
GoI then, hypothecated our Gold to get a bailout package. Our currency was allowed to devalue and our economy was opened.. 2/n
GoI then, hypothecated our Gold to get a bailout package. Our currency was allowed to devalue and our economy was opened.. 2/n
Naturally post such an event the emphasis was on reigning the Fiscal Deficit. Successive governments grappled with it and gradually tried to reduce it until the great UPA regime of 2008-2009...3/n
(source:commerceforias.com/economic-surve…)
(source:commerceforias.com/economic-surve…)
In the most basic terms a Fiscal Deficit is when a government lives beyond its means.
The UPA years were marked by overspending. The government spent more than it earned (through borrowings). If In 1990s our Fiscal Deficit was 8%+, in 2009 it was 6.6%..4/n
The UPA years were marked by overspending. The government spent more than it earned (through borrowings). If In 1990s our Fiscal Deficit was 8%+, in 2009 it was 6.6%..4/n
Ofc it was worrying. Even more so, coz Fiscal Deficit doesn't exist in isolation: An overspend on part of Govt is almost akin to borrowing from the future. So in that context 2008-09 years Fiscal Deficit borrowed from the future too..5/n
wsj.com/articles/SB125…
wsj.com/articles/SB125…
As Fisc Def Ballooned, our Current Acc Defi ballooned too.
Our foreign reserves were agin too low to meet our import bills.
Causing investors to pull out money from India, which again caused our currency to fall..6/n
in.reuters.com/article/market…
Our foreign reserves were agin too low to meet our import bills.
Causing investors to pull out money from India, which again caused our currency to fall..6/n
in.reuters.com/article/market…
The other fallout of high fisc def was the high inflation that we faced during UPA 2 years: The average inflation during UPA2 years was at 10.4% ( approximately speaking a 100 rupees in ur pocket would be worth only 90 bucks after an year)..7/n
timesofindia.indiatimes.com/india/inflatio…
timesofindia.indiatimes.com/india/inflatio…
rediff.com/money/slide-sh…
Modi came into office to reign in a Fiscal Monster. Modi 1 had no room financially to spend coz UPA2 had spent from the future...8/n
Modi came into office to reign in a Fiscal Monster. Modi 1 had no room financially to spend coz UPA2 had spent from the future...8/n
From 2014 o 2018, Modi govt with indomitable late Arun Jaitley ji at the helm, year-on-year, a strategy of fiscal prudence and inflation targeting was followed!It was so easy to spend form 2015 onwards like UPA but they persisted..9/n
thehindu.com/business/budge…
thehindu.com/business/budge…
If anything, some of us feel that they could have relented on the inflation targeting a couple of years earlier.
Nevertheless, make no mistake that today if @nsitharaman ma'am is able to offer lower corporate taxes, it is coz of the years of relentless Fiscal Prudence. 10/n
Nevertheless, make no mistake that today if @nsitharaman ma'am is able to offer lower corporate taxes, it is coz of the years of relentless Fiscal Prudence. 10/n
@nsitharaman In addition, this govt is looking to permanently fix our high, oil-heavy Import Bill. We are constantly paying others to meet our energy needs. 70 years and only now the govt is working to change it permanently. My earlier thread tackles that! 11/n
