Economictimes reported yesterday that PM Mr. Modi wants avoid wastage of money as shown below.
The finance ministry issued a circular today instructing government departments to cut discretionary spending by 10 per cent. As part of these measures, it banned first class travel by government officials, meetings in five-star hotels, purchase of cars and froze new appointments.
It was for the following reasons as they are expecting more money infusion needed in broken state banks.
Government is looking at an additional capital infusion of upto Rs 11,000 crore into state-run banks, this could be undertaken with an eye on additional spending needs, it said. "Overall, these measures reaffirm the government's commitment to fiscal consolidation and its ability to meet the budgeted target of 4.1 percent of GDP in FY15," it said.
The Japanese Financial Company Nomura however thinks its bad. Bad because if govt spends less then it is bad for our economic growth.
It is not that our govt has any budget surplus that it is not spending. Our govt is already spending more than it earns and is in deficit. But Nomura thinks if govt borrows more and spends, it is better for economy. Of course no one cares what happens to the debt afterward.
The crux is that if govts and to a great extent everyone including you and me spend the money we don't have, by borrowing then it is good for the economy. It doesn't matter, as per Nomura, if the money is spent in a productive activity like building a factory whose goods are in demand and which will earn an income for the investor or babus flying first class in flights and doing meetings in five star hotels or you and me buy a flat screen TV with borrowed money.
It is a twisted world now. We always thought savings when used for capital investment helps growth in economy. Now 'spending' is the new 'saving'.
Reminds me of George Orwell who said in 1984: "WAR IS PEACE, FREEDOM IS SLAVERY, and IGNORANCE IS STRENGTH".
Here original economictimes report.
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