The former secretary at India’s Ministry of Finance says that as much as ₹4 lakh crore is recorded as off-budget expenses.





This is the first time a recently-retired bureaucrat spilled the beans on India’s fiscal deficit.





India’s fiscal deficit for 2017-18 is at least 0.9% more than what was reported by the government, said Garg.

Subash Chandra Garg



India Ratings




According to the former secretary at India’s Ministry of Finance,, India’s financial health is not as bad as it seems. It is much worse. In a blog post , he said that the government has left many of its expenses hidden – and they amount to over ₹4 lakh crore ($57 billion).The fact that successive governments in India have ‘managed’ accounts to make the books look better, is known. But this is the first time a recently-retired bureaucrat spilled the beans on the magnitude of misinformation.Garg’s revelation has come six months after his unceremonious exit from the North Block, which houses India’s Finance Ministry. He had to ‘voluntarily’ retire early after a failed attempt to stall the government’s push to extract money from the Reserve Bank of India.India’s fiscal deficit for 2017-18 is at least 0.9% more than what was reported by the government, according to Garg. Fiscal deficit ⁠— the difference between the government’s debt and liabilities ⁠— should be equal to planned borrowing for the year. If it is not, that should be a red flag.“Some liabilities related transactions are recorded by deducting a corresponding debt receipt from the expenditure/ investment made. Such transactions are described popularly as Below the Line, Off Budget,” he explained in his blog.Most of the off-budget expenses went into rescuing public sector banks which are burdened by toxic loans. In 2017-18, as much as ₹80,000 crore was invested as equity into these banks as a part of its Indradhanush (rainbow) plan. Agencies like have called this infusion a money pit, from which nothing can be recovered.The very next year, it spent as much as ₹1.6 lakh crore as ‘recapitalisation bonds’ to the banks, including Exim Bank. In other words, the government is indirectly paying for the poor decisions made by banks.This money that is spent ‘off-budget’ is also raised ‘off-budget’. They have many other instruments at hand like issuing fully serviced bonds (FSBs), making National Small Savings Funds (NSSF) disburse loans etc., which do not feature in the consolidated fund of India, according to Garg.This year, the gap between its earnings and expenses is as wide as ₹7 lakh and this is what has been reported. If the real deficit is much more, then India would have to resort to the age-old rule of beg, borrow or bury. It seemed to have chosen the last two options already.