Retributions | The Simplest Question

Where is the money coming from?

Much is likely to be said about the Indian economic reforms as we approach the the 20th anniversary of the path breaking 1991 budget. With the ruling UPA in full socialist bloom—and the Lotus not too far behind—hardly anyone makes the political or intellectual case for economic reforms anymore. The naysayers primary argument amounts to this: The reforms have benefited only 20% of the population (And that’s dismissing about 250 million people!) while they speak for the other 80% which has been left behind. According to the dominant left-liberal view, the economic reforms have only led to further deprivation of the poor who must be helped by gargantuan government schemes. Well, no one seems to asking how is the government paying for its populist schemes.

For instance from 1991 budget presented by Dr. Manmohan Singh,

The budget provision for total expenditure in 1991-92 is Rs.113422 crores,of which Rs.79697 crores is non-plan expenditure and Rs.33725 crores is plan expenditure. [link]
And from the 2011 version,
Total expenditure proposed at 12,57,729 crore. [link]

So in merely 20 years the budget size has increased by nearly 10 times. Indeed, the 2011-12 plan allocation for social sector spending at 160,000 crores is nearly 150% of total Indian budget of 1991.

So someone should ask those who disparage the success of Indian economic reforms—limited as they have been—who’s paying for the social schemes they are so fond of? And if the poor are still not benefiting, who’s to blame?


DISCLAIMER: This is an archived post from the Indian National Interest blogroll. Views expressed are those of the blogger's and do not represent The Takshashila Institution’s view.