When Manmohan Singh read out his maiden Budget speech as finance minister in February 1991, the economy was similar to what it is at present, marred by challenges of rising current account deficit, a high fiscal deficit, rising inflation and slowing growth.
But, in what is likely the last Budget under Prime Minister Manmohan Singh on February 17, a much more grim picture of economic growth may emerge after the Central Statistics Office’s advance estimate of national income forecast pegged economic expansion at 4.9 per cent during the current fiscal.
In all, Singh has been in charge of steering the Indian economy for nearly 15 years and has handled more than a dozen Budgets — six when he was the country’s finance minister between 1991 and 1996 and another 11 (two interim Budgets, including the Vote on Account later this month) as the Prime Minister between 2004-05 and now.
But barring the 1.4 per cent GDP growth in FY92, the economy managed to beat the Hindu rate of growth. Until FY13, the lowest economic expansion under Singh was at 5.4 per cent in FY93. In the golden years of FY06 and FY07, the economy even posted growth rates of 9.5 per cent and 9.6 per cent, making double-digit expansion seem very possible. But the picture has changed dramatically since then with two consecutive years of less than 5 per cent growth.
This is the worst performance in three decades or more precisely, since FY85 to FY88 that registered four straight year of sub-5 per cent growth. Remember, the Prime Minister’s deft handling of the economy helped India overcome the global financial crisis of FY09 and remain virtually unscathed with 8.6 per cent growth in FY10.
However, this time around, the optimism seems to be missing. Though economists predict a revival of sorts in the new fiscal, growth is unlikely to exceed 6 per cent, they warn, adding that structural challenges on low investment and savings rate will have to be addressed for returning back to the days of high growth.
Surabhi is a special correspondent based in New Delhi