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Journalism of Courage
Finance Minister Nirmala Sitharaman presented a “white paper” on the Indian economy in Parliament on Thursday (February 8). The document, which has been prepared by the Ministry of Finance, essentially compares the 10-year record of economic governance under the Congress-led UPA governments (between 2004-05 and 2013-14) with the 10-year record of the BJP-led NDA governments (between 2014-15 and 2023-24).
A white paper typically provides information about a specific issue. A government may present a white paper — say, on black money — to make people aware of the nature and scope of the problem and the possible ways to resolve it.
In that sense, what was presented in Parliament is not exactly a white paper, because it is a comparison between the record of two governments on a variety of economic parameters. A comprehensive review of the state of the Indian economy as things stood in 2014, when the incumbent government first took charge, would have been a white paper on the economy.
The document explains why the white paper is being presented at the end of 10 years instead of at the start. “Our government refrained from bringing out a white paper on the poor state of affairs then. That would have given a negative narrative and shaken the confidence of all, including investors. The need of the hour was to give hope to the people, to attract investments, both domestic and global and to build support for the much-needed reforms.”
There are four stated objectives.
One, it seeks to inform everyone “of the nature and extent of governance, economic and fiscal crises that were bequeathed” to the NDA government when it assumed office in 2014.
Two, it informs about “the policies and measures that (NDA) government took to restore the health of the economy” since 2014.
Three, it “hopes to generate a wider, more informed debate on the paramountcy of national interest and fiscal responsibility in matters of governance over political expediency.”
Four, and it quotes Prime Minister Narendra Modi’s speech on last year’s Independence Day, “to commit ourselves to national development, with new inspirations, new consciousness, new resolutions, as the country opens up immense possibilities and opportunities.”
The 58-page white paper has three main parts. Part 1 discusses the macroeconomic situation during the 10 years of UPA rule. Part 2 provides the “current status of the various corruption scams of the UPA government”. Part 3 shows how the NDA “turned the economy around”.
Here are some of the most important claims in the white paper.
*The UPA Government inherited a healthy economy ready for more reforms, but made it non-performing in 10 years.
*UPA abandoned economic reforms.
*In a quest to maintain high economic growth by any means after the Global Financial Crisis of 2008, UPA severely undermined the macroeconomic foundations. For instance, it underscores high inflation, high fiscal deficit (or the money borrowed to meet expenses), and high proportion of bad loans in the banking system that dragged down economic activity.
*Not only did UPA borrow heavily from the market, but the funds raised were applied unproductively. “Capital expenditure as a per cent of total expenditure (excluding interest payments) halved from 31 per cent in FY04 to 16 per cent in FY14.” This ratio stands at 28% in the current year. The resulting “neglect of infrastructure creation and challenges of the logistical constraints caused industrial and economic growth to stumble.”
*Health expenditure of Indian households showed very little improvement.
*Defence preparedness was hampered by policy paralysis. “By 2012, shortage of combat-ready equipment and ammunition was a chronic issue plaguing our forces,” quotes the document from another of PM Modi’s speeches in 2018.
*UPA’s decade was marked by “policy misadventures and scams such as non-transparent auction of public resources (coal and telecom spectrum), (and) the spectre of retrospective taxation…”
A substantive part of the documents goes on to claim how things have improved under the NDA. It uses data from the International Monetary Fund to show how “average headline Inflation has been lower in the NDA decade”. Or how many of the schemes — such as construction of toilets or opening of bank accounts — achieved higher results during the NDA decade.
Analysing the performance of any economy over two decades, even when they are aligned back to back, is a daunting task. This is so because a variety of factors affect not just the economy but also how we measure it.
For instance, a very big reason why domestic inflation was very high during the last couple of UPA years and immediately subsided during the first two of NDA is the cost of crude oil, which ranged between $111 and $105 a barrel between FY12 and FY14, and then fell to $84 in FY15 and to $46 in FY16.
Indeed, on aggregate, data shows that India registered better GDP growth as well as lower fiscal deficits during the UPA time.
The NDA government has several genuine achievements to its credit — such as the GST and IBC — but the white paper ignores all that is amiss with the economy. For instance, it does not even contain the word “unemployment”. This was when the government’s own Periodic Labour Force Survey showed that unemployment had reached a 45-year high in 2017-18.
Similarly, it makes no mention of the fact that there has been no formal measure of poverty since 2011. Or that this government has failed to conduct the decadal Census — the first such miss since 1881. Also, a white paper on the Indian economy over two decades does not have a single chart on GDP growth over this period.
