Who is right?

Our most revered Finance Minister thinks that having kept the fiscal deficit within 5.2% this year ending on 31 March he has fulfilled his duty and the Reserve Bank must now reduce interest rates. Firstly, we are doubtful about his figures because they have been changed drastically in the past. Secondly, since there is no one in India to tell the truth, so we do not know whether he has merely postponed government expenses to next year and that there will not be a sudden spurt in spending to bribe the electorate to win general elections in 2014. " On the fiscal consolidation path, the government has walked the talk. RBI, of course, will take into account the overall broad economic situation and what happens between now and March 19 and take a call ( on interest rate ).... we have delivered on the fiscal consolidation path," he said. Not true at all. The NREGA scheme was started with Rs 100 per day for 100 days a year for the rural poor. That has now been  increased to Rs 214 per day to adjust for inflation. So a man may earn Rs 214 for 100 days in a year giving him Rs 21,400 and his wife can do the same giving the family a total income of Rs 42,800 in one year, for doing nothing. This works out to Rs 117.26 per day for the family which is well above the government poverty level of Rs 30 per person per day. When people can earn so much for doing nothing why will they work? The result is an explosion in the cost of agricultural labor where farmers are having to compete against government charity paid for by the taxpayer. This is behind the food inflation which is running at over 10% despite bumper crops and cannot be controlled if labor costs keep running ahead. Salaries of useless civil servants were increased by 80% in 2008. Their Dearness Allowance is paid as a percentage of the basic salary. It was 58% of the basic salary in 2011 but has now been increased to 80%, again as a hedge against inflation. As long as inflation continues uncontrolled these unproductive expenses will keep on rising. Lowering the interest rates will penalise savers, especially pensioners, who depend on returns from their savings to survive. The government will be able to borrow more cheaply to finance its spending. Thus the Finance Minister wants to sacrifice the middle class and pensioners to finance unproductive spending. He is also hoping that lower interest rates will help people borrow more to spend on buying cars and houses. This cannot happen. Inflation has killed off the purchasing power of consumers and high circle rates have brought the property market to a standstill. Perhaps he should do his job properly instead of arm-twisting the RBI.