Spending cuts: 'Populist' Jairam Ramesh vs 'pragmatic' PC?

After it emerged that the P Chidambaram-led Finance Ministry had proposed a mammoth cut in the government's spending on its flagship schemes such as the National Rural Employment Guarantee Scheme (NREGS), the move appears to not have gone down well with Rural Development Minister Jairam Ramesh.

Ramesh is said to have told the PM that such cuts would be "completely unreasonable, savage and demoralizing".

In early October, news outlets reported the Finance Ministry intended to initiate a spending cut of about Rs 20,000 crore in key government programs.

Many such spending programs were widely believed to be the brainchild of the leader of the centrist United Progressive Alliance government, Sonia Gandhi. These were viewed by many to have helped the ruling party gain a strong foothold with rural voting masses and helped it ride back to power during the 2009 central elections.

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However, even as the spending programs appeared to have put more money into the hands of people, it came with a cost: the government's spending far outstripped its revenues as the economy tanked in the aftermath of the global financial crisis.

Last year, the government revealed it had run up the country's largest-ever recorded fiscal deficit, which led to economists worrying and credit rating agencies breathing down the government's neck, asking it to cut back or face a ratings downgrade.

Now, as the Ministry of Finance appears to have bit the bullet and decided practicality was the only way out of the fiscal mess, its move to propose a spending cut, say reports, led to the Rural Development Minister writing the protest letter to Prime Minister Manmohan Singh.

The letters were written to the Dr Manmohan Singh in November, it is learnt. There is no information yet about the Prime Minister's view on the issue.