Facts, No Fiction: Recent farm loan waiver prove that Congress hasn’t learnt from its past mistakes that drove fiscal deficit up

The recent trend of populist announcements in the run-up to elections by the Congress for petty political gains indicates a reluctant party that is unwilling to learn from its macroeconomic blunders. This is in contrast with the UPA era where fiscal deficit, current account deficit, inflation and interest rates were all significantly high. Thus, the increase in inflation post-2011 can be attributed to the high fiscal deficits Congress maintained from 2008 onwards and this high fiscal deficit in 2008 was largely due to the farm loan waiver that Congress had announced for direct electoral considerations in 2009. “Current Account deficit is defined as the current account consists of the balance of trade, net primary income or factor income and net cash transfers, that have taken place over a given period of time.” The reason why current account deficit widened is that the growth led to a trend of importing goods for consumption needs while our exports didn’t increase to compensate for the increase in imports. Thus, the deficit-financed growth under Rajiv Gandhi induced a major problem for India which always maintains a twin-deficit; which is a simultaneous fiscal and current account deficit.