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Manmohan warns against deficit financing
Former Finance Minister Manmohan Singh warned the BJP led government against resorting to deficit financing, rolling back duty cuts and launching another amnesty scheme as it would be counter productive. Singh said printing money to meet costs would affect the balance of payment or the price level, also an increase in borrowings could adversely affect inflation, interest rates and investment levels. He said the challenge was to increase government expenditure while containing the fiscal deficit at an acceptable level. A strong exports sector was a way of maintaining a steady balance of payments, he said. The former minister suggested broadening the tax base, increasing tax income ratio, exercising tighter control on non-development expenditure and stepping up the divestment programme as measures to check the deficit. He pointed out there was a 15 per cent short fall in infrastructure investment in the core sector in 1997-98 which left the central public sector with 85 per cent of funds.