THE UPA government has gifted away Rs 9003 crore ($ two billion) of the tax payers’ money to foot the bills of the European countries. The money is being given to New Arrangement to Borrow (NAB) fund of the International Monetary Fund, set up in March this year to bailout the European Union economies which are in the grip of a huge cash crunch. Years of reckless spending, poor domestic saving and living on credit have brought about this situation for many EU countries, which are otherwise considered developed. NAB has a corpus of $500 billion for this purpose. The corpus was increased 10-fold since setting up to meet the worsening debt situation in Europe. In order to rope in more donors, especially the growing economies like India and China, the membership to the ‘prestigious’ NAB was expanded, to include 13 emerging economies. Originally, the NAB was controlled by the G-7.
The government needed the Parliament’s consent to make this generous gift. And it adopted a mean device. It included this amount as one of the items in the table of the supplementary demands of the general budget. The move was introduced on August 2 and was probably cleared the same day. No case study, no debate, no explanation. Not one party or MP, including the leftists, raised any question, though the report appeared in a small section of the media. At least the enormity of the amount involved should have made them wary.
The donation of such a huge amount without batting an eyelid shows the arrogance of the UPA government. At a time when the fiscal deficit is burgeoning, when the money available for infrastructure and development programme is dwindling, this grand gesture appears haughty. According to government’s own admission, 70 per cent of India’s population is in need of food security, which means that millions in the country are starving, finding it difficult to make two ends meet.
Is it the conspiracy of silence or a ridiculously low level of economic understanding that has made our political parties indifferent to this big give-away. In no other country such huge donation to another country would have gone unnoticed and undebated in parliament. Even the US President cannot gift away the US aid without justifying it in the House and the Congress. Surprisingly, even the left parties which celebrate the collapse of capitalism in the West did not raise any question about India supporting the lavish lifestyles of the European countries. Remember, the IMF was supposed to have been set up to aid the developing nations in their effort to eradicate poverty.
The money was given without any pre-conditions. Whenever the IMF or the World Bank had given loans to the developing countries, severe restrictions and conditions that squeezed the borrowing countries dry were imposed. Even today, India is repaying in millions of dollars every year, the loan it took from these international financial institutions.
What galls one the most is the fact that the bankrupt countries, whose economy donors like India and China are trying to help, are refusing to learn a lesson from their crisis. In several of these countries people have rioted against the government, demanding continuation of privileges and entitlements, which the bankrupt governments were in no position to give. Greek is one such nation. Already a recipient of $300 billion, this Mediterranean nation is demanding more. The added problem for Europe is that since the formation of the ambitious European Union (it has 19 members), their economies have been inter-linked and inter-dependent. A classic case of Italy catching cold if Portugal sneezes or France shivering in chill if it snowed in Germany.
In the credit ratings of international agencies, India has a status of BBB– along with Portugal and Iceland, whereas most European countries even in their pauper situation enjoy better rankings. It makes no logic for UPA to rob our piggy bank savings to give money to the richer nations. Either India’s credit ratings have to go up or theirs should come down for a transaction like this.
It may be recalled that the US was in a financial crisis in July, unable to pay bills without extending the debt ceiling. Which the US Congress allowed after much trouble, keeping the government in suspense. The US House and Senate allowed this only after the government committed to reduce spending by $900 billion over a decade. This extension only means that the Americans can continue to spend and borrow and live on potential future income until the collective debt of the nation reaches an estimated $20.1 trillion (which is 85 per cent of its GDP) by the year 2020.
Under Manmohan Singh, the Indian government has been at its profligate best, handing out cash to other countries. Afghanistan has been the biggest recipient of UPA charity. In May this year the Prime Minister promised $500 million taking to $ two billion Indian aid to Afghanistan since Karzai came to power. It even thrust money into the coffers of an unwilling Pakistan after an earthquake. The money was given through an international aid agency as our western neighbour refused to accept India’s magnanimity directly.
While helping the neighbours and smaller nations is part of international diplomacy, India has never leveraged on them. Internationally donors look at aid, donations and even lending as a means of increasing clout and influence. Indian regime, with flimsy political mandate is distributing money without any visible return leverage.
Some of the tax havens where black money from India has been stashed away are in Europe. India could well use this occasion to bargain for the return of the booty. Instead the government is busy explaining to the Supreme Court that its direction on tracing and bringing back the loot is not possible to implement.
The politicians who are today tirelessly singing the chorus ‘Parliament is supreme’ must demand an answer from the government on its munificence. It is after all the treasure of the hard working and law-abiding Indian tax payers.