White Paper flags inflation, bad debt, but silent on boom growth years, safety during 2008 crisis

However, India wasn’t among the ‘fragile five’ right through UPA’s 10 year rule from 2004 to 2014. Indeed, despite the Global Financial Crisis, India experienced the fastest period of growth rate between 2004 and 2009.

Moreover, while the policy paralysis during the fag end of UPA’s tenure and the economic mismanagement is well-known, it is also true there were many contributory factors to the 2013 crisis when the rupee lost value against the US dollar and domestic inflation soared — most importantly, the US Federal Reserve’s taper tantrum (or its sudden decision to stop flushing the market with more money) and the high prices of crude oil, which led to high inflation.

Further, one of the highlights of the UPA era was the fast pace of economic growth between 2004 and 2008 — the fastest that India has grown, and that too with fairly moderate levels of inflation. However, this success of UPA is entirely discounted. The white paper instead credits it to the AB Vajpayee-led coalition: “In the years between 2004 and 2008, the economy grew fast, thanks to the lagged effects of the reforms of the NDA government and favourable global conditions.”

In the same light, the first term of UPA not only saw fast growth and low inflation but also India’s best fiscal performance. Since the FRBM Act was initiated in 2003, India has met the mandate just once — in 2007-08. In contrast, NDA has never met the FRBM target even once in the past decade. In 2018, it actually diluted the mandate itself and stopped targeting revenue deficit.

Similarly, another achievement of India’s economy was the resilience it showed during the Global Financial Crisis of 2008. The GFC 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 much greater employment-related stress.

Even when the unemployment rate falls, the new jobs are of poor quality and wages have been stagnant for long periods. Similarly, while inflation may not have reached the double-digit levels that were reached under UPA in 2013, it is also true that average inflation has stayed uncomfortably high for a long period. For instance, consumer inflation has not touched the 4 per cent mark — the level suggested under the monetary policy framework — for the past four years, and is unlikely to get there in the immediate future.