States will suffer, says Jayalalithaa

CHENNAI: Commenting on the Union budget for 2012- 13 presented by Finance Minister Pranab Mukherjee, Chief Minister J Jayalalithaa on Friday said: “A large fiscal deficit and current account deficit would only lead to a vicious cycle of higher inflation affecting the masses,” and pointed out that when the government does nothing to contain the high level fiscal deficit by appropriate fiscal policies, it would only lead to a stringent monetary policy by the Reserve Bank of India.Bringing a number of items under the Service Tax fold and enhancing it to 12 per cent would only stoke inflation, Jayalalithaa said, and added that the increased Service Tax would also affect the progressive State governments which implement initiatives such as the Health Insurance Scheme.The CM said the budget overshot the Fiscal Responsibility and Budget Management Act, while the States have not been permitted any relaxation which squeezes the resources available to them.