'Budget will create huge inflationary pressure'

Former finance minister Yashwant Sinha said on Friday that the Union Budget 2010-11 would create huge inflationary pressures on the economy.

"The Budget will create huge inflationary pressures on the economy," Sinha said, adding food inflation had already crossed double digit.

Food inflation was the worst form of taxation on the poor, he said. The finance minister could have spared the rise in diesel prices and increased petrol prices more, the senior Bharatiya Janata Party leader said.

"Government is saying it is supply side problem. But the government had mismanaged the food and sugar economy," he said at an interaction organised by Bharat Chamber of Commerce in Kolkata.

Sinha said that wheat was being traded in the futures market and sugar was being exported when the commodity is in short supply.

Sinha said that the finance minister had taken a great deal of credit by targeting a fiscal deficit of 5.5 per cent.

"Fiscal deficit is not worrisome. What is a cause for concern is the revenue deficit.

The finance minister is silent on revenue deficit," he said.

The former finance minister also expressed apprehension about the disinvestment target which had been set by the government.

Similarly, the government had not taken any firm step to attack wasteful expenditure, he said, adding the BJP had recommended for a strict Fiscal Responsibility and Budget Management Act.

Sinha said that the United Progressive Alliance government had diluted the provisions of the said bill.

He also alleged that government borrowings had gone up in the last two years as a result of which interest burden would go up vertically.

Image: Yashwant Sinha