White paper: Politics gets the better of economic fidelity
The white paper brought out by the government last week is an excellent document from a campaign perspective. As an assessment of the economic performance of the Congress-led UPA government (2004-2014), however, it falls short.
The United Progressive Alliance, riven as it was by coalition pressures and constrained by weak leadership, was far from a model of good governance. But nor was it the disaster this white paper makes it out to be.
There can be no cavil at the proposition that the present BJP-led NDA government has been more decisive on policy, more effective in building physical infrastructure and also picked capable leadership for the central bank. It has not had to face credible charges of large-scale corruption of the kind that bedevilled the UPA in its last few years, paralysing vital administrative functions such as granting project clearances and innovating policy.
The UPA gave India’s political discourse the phrase ‘policy paralysis.’ It is also true that it inherited a growing economy, global conditions favoured fast growth in the lead-up to the global financial crisis of 2007-09, its enlarged fiscal spending to follow joined high global oil prices in stoking inflation, and that the UPA decade left us with a ‘twin-balance-sheet problem’—of banks being saddled with bad debt and companies finding themselves over-leveraged. That said, the UPA achieved the fastest economic growth we have seen, even if the numbers were pegged lower by a revision under the NDA.
Far from discouraging private investment, its public-private-partnership initiatives mobilized huge sums for big infrastructure projects. Gross fixed capital formation as a proportion of GDP (at current prices) jumped above 30% in 2004-05 and touched a
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