Sometimes there is a method in the madness. A government presenting its last Budget on the eve of general elections would present an Interim budget accompanied by a Vote on Account for the period April to July of the next year. The speech of the finance minister would be an important occasion to look back on the record of the government and lay down a path for the future. Ms Sitharaman did a bit of both. However, her Budget was spoilt by the Black paper released by the Congress and the White paper released by the government on February 8, 2024.
One would have expected that a White paper at the end of BJP’s 10-year rule would be on its tenure but, surprisingly, it was on the UPA’s tenure between 2004 and 2014. The White paper’s purpose was to paint those 10 years in a single colour — black — but it brought into the discussion the achievements of the UPA as well. Inevitably, there was a comparison of the UPA and NDA. In any such comparison, the UPA was bound to fare better than the NDA on some metrics. That is why I said it was madness, but clever spin doctors cannot be under estimated.
The big difference
The one number that came into focus was the average GDP growth rate in constant prices. The UPA scored big on this metric. As per the old base year 2004-05, the average GDP growth rate over 10 years was 7.5 per cent. In 2015, the BJP government changed the base year to 2011-12 in order to dim the UPA’s numbers; yet the average growth rate was 6.7 per cent. By comparison, the NDA’s average growth rate over 10 years was 5.9 per cent. The difference is not insignificant. A difference of 1.6 percentage (or 0.8 percentage) per year over a period of 10 years makes a huge difference to the size of the GDP, the per capita income, the volume of goods and services, the volume/value of exports, the fiscal and revenue deficits, and a host of other metrics. One thing led to another and the comparison game began. Please see the Table.
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Engaging the Indian-Australian diaspora On many metrics, the NDA came out worse. In my view, the most damaging data that exposed the wrong policies and the mismanagement of the economy by the NDA were the Total National Debt; the decline in household savings; the jump in bank loans written off; the expenditure on health and education; and the fall in the number of central government employees. There are, of course, some metrics on which the performance of the NDA was better.
White lies
The government’s White paper was too white. It blacked out the many achievements of the UPA government and white-washed the monumental failures of the NDA government (including demonetisation and the destruction of the micro and small sector). The White paper earned the moniker white-lie paper. Notably, the White paper failed to acknowledge that the idea and the origin of Jan Dhan (earlier the ‘no frills account’), the Aadhaar and the Mobile revolution can be traced back to the UPA.
The period of alleged mismanagement by the UPA (as seen from the tables and graphs in the White paper) was mainly 2008-2012. In mid-September 2008, the international financial markets collapsed causing a financial tsunami that devastated every country. Inflation soared because of the huge borrowing and spending as part of the policy of “quantitative easing” that was followed by all large economies. Pranab Mukherjee was the finance minister during January 2009 to July 2012 — the peak period of inflation and fiscal deficit. In Mukherjee’s defence, I would say that he followed the prevailing wisdom and supported growth and jobs but paid the price in fiscal deficit and inflation.
Polemics is politics
The Black paper by the Congress was one-sided too. Naturally, it included sections on the acute distress in the agricultural sector, persisting high inflation, unprecedented rate of unemployment, and cronyism. Other sections were on the weaponisation of investigative agencies, the subversion of institutions, the Chinese intrusion into Indian territory, and the Manipur tragedy. It was true to its title, a black paper on the NDA.
The object of the two papers was more political than economic, though the economic truth was quite clear. The issues raised in the two papers should have been discussed in the two Houses of Parliament over the last 10 years, but they were not because the government would not allow a debate on substantive issues. The two papers have set the stage for a debate in the election arena. Only time will tell whether there will be such a debate or whether money, religion, hate speech and the misuse of power will determine the outcome of the elections.
Sometimes there is a method in the madness. A government presenting its last Budget on the eve of general elections would present an Interim budget accompanied by a Vote on Account for the period April to July of the next year. The speech of the finance minister would be an important occasion to look back on the record of the government and lay down a path for the future. Ms Sitharaman did a bit of both. However, her Budget was spoilt by the Black paper released by the Congress and the White paper released by the government on February 8, 2024.
One would have expected that a White paper at the end of BJP’s 10-year rule would be on its tenure but, surprisingly, it was on the UPA’s tenure between 2004 and 2014. The White paper’s purpose was to paint those 10 years in a single colour — black — but it brought into the discussion the achievements of the UPA as well. Inevitably, there was a comparison of the UPA and NDA. In any such comparison, the UPA was bound to fare better than the NDA on some metrics. That is why I said it was madness, but clever spin doctors cannot be under estimated.
The one number that came into focus was the average GDP growth rate in constant prices. The UPA scored big on this metric. As per the old base year 2004-05, the average GDP growth rate over 10 years was 7.5 per cent. In 2015, the BJP government changed the base year to 2011-12 in order to dim the UPA’s numbers; yet the average growth rate was 6.7 per cent. By comparison, the NDA’s average growth rate over 10 years was 5.9 per cent. The difference is not insignificant. A difference of 1.6 percentage (or 0.8 percentage) per year over a period of 10 years makes a huge difference to the size of the GDP, the per capita income, the volume of goods and services, the volume/value of exports, the fiscal and revenue deficits, and a host of other metrics. One thing led to another and the comparison game began. Please see the Table.
On many metrics, the NDA came out worse. In my view, the most damaging data that exposed the wrong policies and the mismanagement of the economy by the NDA were the Total National Debt; the decline in household savings; the jump in bank loans written off; the expenditure on health and education; and the fall in the number of central government employees. There are, of course, some metrics on which the performance of the NDA was better.
The government’s White paper was too white. It blacked out the many achievements of the UPA government and white-washed the monumental failures of the NDA government (including demonetisation and the destruction of the micro and small sector). The White paper earned the moniker white-lie paper. Notably, the White paper failed to acknowledge that the idea and the origin of Jan Dhan (earlier the ‘no frills account’), the Aadhaar and the Mobile revolution can be traced back to the UPA.
The period of alleged mismanagement by the UPA (as seen from the tables and graphs in the White paper) was mainly 2008-2012. In mid-September 2008, the international financial markets collapsed causing a financial tsunami that devastated every country. Inflation soared because of the huge borrowing and spending as part of the policy of “quantitative easing” that was followed by all large economies. Pranab Mukherjee was the finance minister during January 2009 to July 2012 — the peak period of inflation and fiscal deficit. In Mukherjee’s defence, I would say that he followed the prevailing wisdom and supported growth and jobs but paid the price in fiscal deficit and inflation.
The Black paper by the Congress was one-sided too. Naturally, it included sections on the acute distress in the agricultural sector, persisting high inflation, unprecedented rate of unemployment, and cronyism. Other sections were on the weaponisation of investigative agencies, the subversion of institutions, the Chinese intrusion into Indian territory, and the Manipur tragedy. It was true to its title, a black paper on the NDA.
The object of the two papers was more political than economic, though the economic truth was quite clear. The issues raised in the two papers should have been discussed in the two Houses of Parliament over the last 10 years, but they were not because the government would not allow a debate on substantive issues. The two papers have set the stage for a debate in the election arena. Only time will tell whether there will be such a debate or whether money, religion, hate speech and the misuse of power will determine the outcome of the elections.
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