Will Congress borrow to fund the ‘Khata Khat’ schemes or will they raise taxes to fund them, asks FM Sitharaman

Union finance minister Nirmala Sitharaman

Union finance minister Nirmala Sitharaman on May 13 said Centre's fundamentals are strong and incorrect comparisons are being made to attack government's fiscal management. She said absolute numbers are being compared without considering the gross domestic product growth, on which the debt calculation is based.

Sitharaman also attacked BJP's main rival Congress for not putting a “clear picture and hiding behind lofty promises, which are disconnected from reality”.

“Has @INCIndia considered the cost of the lofty promises made in their manifesto? Have they calculated how much the 'Khata Khat' schemes will cost fiscally? Will they borrow substantially for them, or will they raise taxes to fund them?” Sitharaman asked in a post on X platform  (formerly Twitter).

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The grand old party has shaped its election campaign around ‘Nyay’, which roughly translates to justice in English. The party has promised several poll guarantees, which include legal status for minimum support prices, financial assistance of Rs 1 lakh for women from poor households, MGNREGA wage of Rs 400 per day, government jobs for the youth, among others.

During several of Rahul Gandhi's rallies, the senior Congress leader had said that women beneficiaries of the Mahalaxmi scheme will receive Rs 8,500 per month in their bank accounts in a 'Khata khat' fashion once the Congress-led government is back in power.

Also read: Congress manifesto promises can cost the exchequer Rs 15 lakh cr

Attacking Gandhi for the election promises, Sitharaman asked how will the party implement the schemes without raising taxes or borrowing heavily.

A lot has been said in recent times about the fiscal management (especially on debt) of our government under PM Modi’s leadership. Many times, absolute numbers have been compared without considering the GDP growth on which we base the debt calculation. I would like to put out a…

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— Nirmala Sitharaman (Modi Ka Parivar) (@nsitharaman) May 13, 2024

NDA government has done well on the fiscal management front compared to the UPA government despite facing the Covid-19 pandemic, which saw a significant use of resources for relief measures, the finance minister claimed.

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The finance minister claimed that between FY04 to FY14, central government’s debt, including external debt, jumped approximately 3.2 times to Rs 58.59 lakh crore in March 2014, from Rs 18.74 lakh crore in March 2004. This was higher than the 2.9 times growth from Rs 58.59 lakh crore in FY14 to Rs 172.37 lakh crore in FY24 (RE), the finance minister claimed.

“This lower increase between FY 2014 and FY 2024 occurred despite the impact of the Covid-19 pandemic, where the Centre borrowed to provide relief to those in need even as revenues fell.”

She further pointed out that the ratio of gross fiscal deficit to gross domestic product was higher in the UPA era, compared to the NDA government’s era. “UPA's legacy of fiscal short-sightedness and hidden debts contrasts sharply with our era of transparent, strategic, and transformative investments. Under PM Modi-led government, we are building a legacy of growth, transparency, and responsibility—hallmarks of governance that truly cares for the nation's future,” the finance minister added.

Also read: Congress manifesto doesn’t promise the moon

Drawing a comparison with other big economies, Sitharaman said India’s 81 percent debt-to-GDP ratio in 2022 was lower than Japan (260.1 percent), Italy (140.5 percent), US (121.3 percent), France (111.8 percent), and the UK (101.9 percent) in the same period.

India’s government external debt as percentage of GDP (2020) was just 6.7 percent compared to 24.4 percent of Mexico, 28.6 percent of Pakistan, 20.6 percent of Indonesia and 15.8 percent of Türkiye, she highlighted.