February 13, 2024
📰 FEATURE STORY
Does the Centre’s anti-UPA White Paper hold up?
As election season gears up, the Centre has decided to ramp up the attacks against the Opposition, particularly the previous UPA government. One of the biggest tenets of the Modi government’s pitch to voters has always been, ‘Why go back to poor economic performance and corruption?’
The government is touting its economic credentials through a White Paper comparing the previous UPA government to itself. Spoiler alert – it states the current government is better for the country, and things weren’t so good under the UPA. Does this white paper, touting the NDA as the country’s saviour, hold up to scrutiny?
Context
The white paper was laid by Union Finance Minister Nirmala Sitharaman. The headline was the ten-year tenure of the UPA government from 2004 to 2014 under Prime Minister Manmohan Singh, which supposedly pushed the economy into a “crisis situation”.
The paper said the incoming BJP government was left with a big mess. They then had to clean it up step by step, which was a difficult task. It credits the current government for putting the country and economy on a recovery and growth path once things were stabilised. It’s a political document, if not anything else, meant to offer people a clear contrast between the two eras.
The paper said 2014 was akin to an inheritance of loss. It stated the economy was healthy in 2004 and became stagnant in 2014. The paper chided the UPA government for not really taking credit for the 1991 economic reforms and abandoning them when they came to power in 2004.
Inflation was one metric mentioned. Combined with high fiscal deficits between FY2009 and FY2014, the paper said the common man bore the brunt of high inflation. It stated the average annual inflation between 2004 and 2014 was 8.2%. Next up was banking. One of the first reforms the current government undertook was cleansing bank balance sheets. The paper alleged repeated government interference in the commercial lending decisions of public sector banks.
One of the issues that many countries and their governments had to deal with was the 2008 financial crisis and its fallout. The paper called the stimulus worse than the problem it was meant to address. It cited International Monetary Fund (IMF) data and real GDP to say that the misguided stimulus wasn’t necessary beyond a year due to the crisis’ relatively limited impact on India.
The paper stated several other economic performance indicators and offered comparisons. You get the general idea of the white paper and its intentions. The time has clearly come to score crucial political points. However, is the BJP-led NDA government on solid and reliable footing with this white paper?
VIEW: The paper speaks for itself
While there’s a pertinent and timely political reason to release the White Paper, the real goal was to clarify India’s economic trajectory under the UPA government and clear up any prevalent misconceptions. When the current government took office, they had the daunting task of rejuvenating the public finances. In came an overhaul of the tax and spending framework, like the introduction of GST. A streamlined tax regime was just what was needed.
When it comes to the average citizen, perhaps nothing’s more important than inflation. That’s perhaps the clear winner for the NDA. Headline retail inflation reduced drastically from 9.9% in 2013 to 5.7% in 2023. It could’ve been lower if not for unpredictable geopolitical developments. India needed to spend on plenty of things, and the Modi government has done just that. Capital expenditure (capex) has reached record highs as the government has sought to push growth through more investments. That wasn’t the case previously. The paper stated that capex halved from 31% in 2003-04 to 16% in 2013-14.
The NDA saw the need to usher the Indian economy to the future. With demonetisation and the Digital India push with things like UPI, India is at the forefront of an inclusive digital economy with increased digital transactions. Fast forward to now, the paper has merit, given where the Indian economy is at today. In 2014, India was the tenth-largest economy in the world. It’s now the fifth-largest and is projected to become the third-largest by 2027, according to the IMF.
COUNTERVIEW: It’s all misdirection
The government hopes that the White Paper will serve as a performance record for India’s population, particularly youngsters, to know about its efforts to undo supposed UPA-era damage and restore India’s glory. However, it’s safe to say that it doesn’t account for the youth’s anxieties and the unconvincing results of recent outcomes. Apart from that, the paper’s comments about the UPA not taking advantage of GST and Aadhaar forgot to mention that some BJP states, like Gujarat, were sceptical about them at the time.
While the paper outlines several economic and financial data points, real GDP and employment rates are suspiciously absent. Take growth rates, for example. Using one metric over two different time periods isn’t the right approach. Simply put, India grew at a faster rate before 2014 than it has since. Data from the statistics ministry showed the average GDP growth rate from 2014-15 to 2023-24 was 5.9%. According to the government’s own GDP back series, the economy grew by 6.7% from 2005-06 to 2013-14.
No doubt the NDA government won a resounding victory twice. However, it hasn’t fulfilled every promise as reforms on land and labour are pending. Youth unemployment and inflation aren’t exactly solved issues either. Demonetisation turned out to be a nightmare for many. It should be said that every government builds on past efforts rather than reversing course. The same is true for the current NDA. In this context, the Paper seems to be a document to temper people’s expectations from a government with a majority mandate.
Reference Links:
- ‘Corruption, inflation, bad debts, policy uncertainty’ marred India’s business climate during UPA: Govt white paper on economy – The Indian Express
- UPA inherited healthy economy, left it in crisis: Government’s white paper – India Today
- White Paper on the Indian Economy: From Fragility to Stability – News18
- Whose economic performance was better, UPA or NDA? Growth rates don’t tell the whole story – The Print
- White Paper: What the govt did and didn’t say on 5 key economic parameters – Moneycontrol
- Everything Wrong With Modi Government’s White Paper on India’s Economy – The Quint
What is your opinion on this?
(Only subscribers can participate in polls)
a) The Centre’s anti-UPA white paper does hold up.
b) The Centre’s anti-UPA white paper doesn’t hold up.
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