White Paper red-flags NPAs, scams and policy freeze, skips growth years credit

From bad loans to high inflation, a slew of corruption cases to policy paralysis, the paper’s political imperative is clear: to draw the battle-lines in the run-up to the campaign for 2024. Its tone echoes Prime Minister Narendra Modi’s sharp attack on the Congress in his Parliament speeches earlier this week.

It’s not a surprise, therefore, that the paper skips references to what the UPA has often prided itself on: GDP growth in its first term at over 8.8 per cent during 2004-05 to 2008-09 as per compound annual growth rate (CAGR) based on the old 2004-05 base year.

In fact, the White Paper credits the growth years during 2004-2008 to the lagged effects of the previous NDA government’s reforms, and favourable global conditions.

The Ministry has cherry picked data to tell the truth of UPA’s failures and the NDA government’s successes without touching upon UPA’s successes or its own failures.

For instance, Morgan Stanley did assess India as one of the “fragile five” global economies in 2013. And it is also a fact India is currently ranked among the top five based on the size of its GDP, as the White Paper notes. But the economy was not among the ‘fragile five’ right through UPA’s 10 years from 2004 to 2014.

Moreover, while the policy paralysis during the fag end of UPA’s tenure and the economic mismanagement is well-documented, it is also true that the reason for high inflation was the US Federal Reserve’s taper tantrum or sudden decision to stop flushing the market with more money and the high prices of crude oil.

From meeting the mandate of the Fiscal Responsibility and Budget Management Act in 2007-08 — the only time so far — to the resilience during the global financial crisis of 2008, the UPA government’s economic management kept India safe.

The 2008 crisis was a key turning point for most big economies during the first decade of the new millennium, and barring the US, none seem to have fully recovered from that shock even now. India, on the other hand, barely lost a step in terms of GDP growth rate.

However, the white paper quotes from then Finance Minister Pranab Mukherjee’s 2011 speech — where he said, “India, unlike most other economies, was not seriously affected by the financial turmoil of 2008 in the developed world” — to downplay the effect of the GFC. But in that very speech, Mukherjee also stated: “(India was) not completely immune from the crisis and the post-crisis developments in the real economy. The timely fiscal stimulus measures implemented by the Government helped in moderating the impact on economic growth and facilitated a rapid recovery.”

The very next year, India’s GDP grew by 8.5 per cent.

Lastly, there are many genuine achievements of the NDA government during the past decade. These include reforms like the GST and IBC, the push towards increased capital expenditure, and the clean-up of the commercial bank balance sheets to name just a few. However, it is also true that there is employment-related stress too.

The White Paper talks about the government setting into fast motion a virtuous cycle of investment, growth, employment and entrepreneurship. And the unemployment rate has indeed dropped to 3.2 per cent in 2022-23 from 6 per cent in 2017-18 (as per the available Periodic Labour Force Surveys).

This figure, however, understates the concern of a surge in the number of unpaid workers and a deterioration in the quality of jobs. PLFS data reveals that the share of unpaid workers in the labour force of the country has gone progressively up to 18.3 per cent in 2022-23 from 13.6 per cent in 2017-18. The share of salaried workers, meanwhile, reduced to 20.9 per cent in 2022-23 from 22.8 per cent in 2017-18.