Splurging public funds by the Governments of the day both at the Centre and in the States across the country seems to have not been bestowed the concern that is imperative for all time, especially so in the present situation of rising fiscal deficit (reflecting the amount of cash that the Government owes to its creditors, majority of whom are citizen who have deposited money in banks and other financial institutions such as Credit Co-operative Societies) as well as current account deficit (reflecting the yawning gap between earnings through exports from the country and import bill). India’s ancient economist and royal advisor Vishnugupta (371 BC – 283 BC), also known by the names Chanakya (with nickname Indian Machiavelli, the Italian strategist) and Kautilya, as the author of the treatise Arthashastra is credited with laying down the ground rules of managing public funds, a major part of the task of governing the land and its people for economic stability and social harmony to ensure prosperity of the land.
Our ancestors are often invoked by their present day cohorts, the elders in society, by referring to their principle of keeping a close vigil on spending money earned by honest means, avoiding extravagance, the behaviour of spending more money than one needs to. That principle doesn’t seem to have many takers in the matter of managing both public funds by Governments and personal earnings by people at large.
Wisdom in being frugal with family income on the part of households seems to have been thrown to winds, given the land’s people at large missing the discretion between necessities of life and luxury. On the part of Governments, there is a time for austerity in order to minimise deficit and keep the treasury jingling with ready cash to meet both contingencies and requirements of the multitude of pro-people programmes and new measures for welfare of people, not to forget the last citizen. As a seasoned analyst of the errant behaviour of Governments has rightly observed, if the reason for downturn in the economy is the runaway spending in periods of high growth, the antidote ought to be a tight curb in Government expenditure, which is what prudence is all about.
Even as the country is passing through a phase of economy slowdown, some economists have recently suggested increasing public expenditure through deficit financing, on the premise that it would enhance purchasing power of consumers bolstering growth. The suggestion of increasing public expenditure unarguably militates against prudence in the matter of managing public funds.