Whatever may be the claim by India's Finance Minister, real fiscal consolidation is surely not in his mind. The Cabinet Committee on Economic Affairs (CCEA) recently approved the proposed hike in MSPs for Khariff crops. A closer look at the MSP data clearly reveals that the UPA govenrment is approaching the forthcoming (2014) general election with real gusto - which can only mean one thing - more social secor spending without any clue whatsoever as to the potential source of revenue (to finance it), let alone inflationary impact of such measures. As per the data, the minimum increase in MSP for Khariff crops is 18.2%, close to the highest increase in the previous year (19.1%). The highest increase this year was 53.1%. With already record buffer stock of foodgrains, inadequate storage capacity and change in consumer preference away from foodgrains - this is one more example of populism continuing to have its day under the sun, although it gnaws deep into the heart of India's financial position, thereby weakening it further.
I have been an avid blogger. However, regulatory requirements, post my new assignment, has resulted in me taking a break. Wait till I am back.