CHENNAI: Former finance minister P Chidambaram on Saturday said the Congress-led UPA lost the 2014 polls owing to a stimulus package announced in 2008-09 to pep up the economy in the wake of the global recession. Pranab Mukherjee was the finance minister at that time.

The package made the government violate fiscal consolidation norms resulting in high inflation, he said.

Speaking in the Rajya Sabha in 2013, when he was finance minister, Chidambaram had said even domestic problems had contributed to the poor state of India's economy. "One of the domestic factors is that we allowed fiscal deficit to be breached and we allowed current account deficit to swell because of certain decisions we took during the period 2009 to 2011," he had said.

Later, he told the Lok Sabha: "When I took over, I knew that I was returning to a very difficult pitch. The fiscal deficit limits had been breached. In fact, the budget estimates were awry. The current account deficit had swelled."

He said that the stimulus package resulted in the government missing the targets on current account deficit, revenue deficit and fiscal deficit, and a combination of all these pushed inflation to a high of 14%. People turned against the UPA government as inflation shot up, he said, as he analysed the Union Budget presented by his successor Arun Jaitley.

He said Jaitley's budget had failed all mandatory tests such as equity and fiscal consolidation. "My government was punished in the 2014 elections after we spent more money in 2009 as part of a stimulus package. Due to this, we had to violate fiscal consolidation norms. The inflation went up to 14% and rupee lost its value. Finally, people rejected our government and we lost the elections," Chidambaram said addressing students of the Loyola Institute of Business Administration in Chennai.

In December 2008, in order to provide a stimulus via Plan expenditure, the government decided to seek approval for an additional Plan expenditure of Rs 20,000 crore. The government also infused about Rs 3 lakh crore into the system for public spending through a range of measures such as lowering tax and reduction of key rates by the Reserve Bank of India. "The stimulus led to inflation going up in the following years. Current account deficit and revenue deficit shot up and fiscal deficit went beyond 3.5%," Chidambaram said.

"Subsequently, the government set a target of bringing fiscal deficit below 3.6% and a panel headed by Vijay L Kelkar was set up for the purpose. The government accepted the committee's recommendations when they were submitted in 2012. The report said if proper measures were taken, the deficit would come down to 3% of GDP in 2016-17," he said.

"But Jaitley has pushed the deadline by another year, to 2017-18. As against a target of 3.6% fiscal deficit fixed by the UPA government for 2015-16, he has relaxed it to 3.9% of GDP," he said, adding that through this, the NDA regime was planning to borrow an additional Rs 42,500 crore. The NDA government plans to use this window to step up public spending, particularly in infrastructure. The government aims to leverage the money in the infrastructure fund to attract overseas money such as pension funds to boost the critical sector and revive the economy. "But this money is not going to be spent on Plan expenditure. The entire money will be spent on non-Plan expenditure as the Plan expenditure itself has been lowered from Rs 4.67 lakh crore (for 2014-15) to Rs 4.65 lakh crore for next year," Chidambaram said.

Speaking about the NDA government's budget, he said, "The budget has not passed the test of equity and financial stability but has some good ideas and I compliment Jaitley for that." "My government was punished in 2014 after we spent more money in 2009 as part of a stimulus package. Due to this, we had to violate fiscal consolidation norms. Inflation went up to 14% and rupee lost its value. Finally, people rejected our government and we lost," Chidambaram said.