Congress hid deficits via off-budget borrowings, oil bonds: Sitharaman

Listing out reforms in the Union Budget 2024 making process under the Narendra Modi regime over the last decade, which witnessed “substantial improvement in the sanctity and credibility of the union budget”, Finance Minister Nirmala Sitharaman today said Congress-led UPA’s budgets hid the deficits through off-budget borrowings and issuance of oil bonds. Taking a dig at the UPA’s budget-making practices, Sitharaman said standard fiscal practices were routinely changed to make the budget numbers look favourable.

In a long post on the social media blogging site X today, Sitharaman referred to a number of budgetary reforms initiated by the BJP-led NDA in the last decade. She mentioned the advancement of the budget cycle since 2017-18, the merger of the rail budget with the general budget, bringing about transparency in the budget numbers, doing away with the plan and non-plan classification of the expenditure, and introducing capital and revenue expenditure, increase in the corpus of contingency fund of India and a single nodal agency for implementation of the centrally sponsored schemes.

One key initiative, that the minister highlighted, is how the Centre started the practice of disclosing off-the-budget expenditures. “Our government has prioritised transparency in its budgeting practices and numbers. This starkly contrasts the @INCIndia -led UPA government’s repetitive practice of hiding the deficits through off-budget borrowings and issuance of ‘oil bonds’, which somewhat covertly shifted the fiscal burden to future generations,” Sitharaman said in the post.

“Under UPA, standard fiscal practices were routinely changed to make budget numbers look favourable. Countries with transparent budgets are often viewed more favourably by international bodies such as the IMF and World Bank. This can lead to improved global trust. In FY 2020-21, the government repaid all outstanding National Small Saving Fund (NSSF) loans provided to FCI in lieu of food subsidy by providing additional budgetary support. Despite the increase in food subsidy allocations after COVID-19, complete food subsidy is being provided transparently through the government budget,” she said.

“From FY 2021-22, off-budget funded schemes are being proactively disclosed in the budget documents. Additionally, steps have been taken to settle Extra Budgetary Resources (EBR) liabilities wherever prepayment is feasible. For instance, ₹33,000 crore provided as an NSSF loan to support the implementation of PMAY (Urban) schemes has been fully prepaid by providing additional budgetary allocation in the demand of the ministry of housing and urban affairs in FY 2021-22. Budget allocations of key infrastructure ministries such as road transport and highways and railways have been significantly enhanced from FY 2022-23 and 2023-24, respectively, thereby reducing their dependence on market borrowings," She adds in the blog post.