Image Source : PTI Union Finance Minister Nirmala Sitharaman speaks in the Rajya Sabha during the Budget session of Parliament, in New Delhi.
Union Finance Minister Nirmala Sitharaman on Thursday presented the National Democratic Alliance (NDA) white paper on the economic mismanagement of the economy during the tenure of the Congress-led United Progressive Alliance (UPA) government from 2004-2014. The Centre in its white paper said that the economy was in crisis in 2014. The NDA government armed with political and policy stability, took tough decisions for greater economic good, unlike its predecessor UPA. The Modi government in the document said that a white paper then would have set negative narrative, shaken confidence of investors.
The Centre said that after coming to power in 2014, rather than employing quick fixes, the NDA government undertook bold reforms, and built a sturdy superstructure. In last 10 years, NDA government successfully overcame challenges left behind by the previous UPA government.
UPA govt failed miserably to facilitate economic activities, instead created hurdles that held back the economy. Every challenge of the pre-2014 era was overcome through NDA government’s economic management and governance. Economic management of Modi government placed India on resolute path of sustained high growth.
The UPA government inherited a healthy economy ready for more reforms, but made it non-performing in its ten years. Ironically, the UPA leadership, which seldom fails to take credit for the 1991 reforms, abandoned them after coming to power in 2004.
Worse, the UPA government, in its quest to maintain high economic growth by any means after the global financial crisis of 2008, severely undermined the macroeconomic foundations. One such foundation that was severely weakened by the UPA government was price stability.
Banking crisis under UPA
The banking crisis was one of the most important and infamous legacies of the UPA government. The banking crisis in 2014 was massive, and the absolute sum at stake was too large.
The costly solution to the above self-created predicament reeked of a re-run of 1991 when India had to approach the IMF for assistance during a Balance of Payments crisis.
NDA question’s UPA’s response on 2008 Global Financial Crisis
The UPA Government’s response to the 2008 Global Financial Crisis – a fiscal stimulus package to combat the spill-over effects – was much worse than the problem it sought to address. The public finances were brought to a perilous state. Run-away fiscal deficits led the economy to the fiscal precipice.
As a result of its fiscal mismanagement, the UPA government’s fiscal deficit ended up being far higher than it had expected, and it subsequently ended up borrowing 27 per cent more from the market than what it had budgeted for in 2011-12.
The fiscal deficit burden became too big to bear, for the economy.
In the pretext of responding to the impact of the global financial and economic crisis (while arguing, at the same time, that India was not affected by the crisis), the UPA government expanded its borrowing and did not relent at all.
Not only did the UPA Government borrow heavily from the market, but the funds raised were applied unproductively.
UPA’s neglect to infrastructure, logistics stumbled growth
The conspicuous neglect of infrastructure creation and challenges of the logistical constraints caused industrial and economic growth to stumble. The Reserve Bank’s reports also pointed towards excessive revenue expenditure by the UPA government.
Poor policy planning and execution also resulted in large unspent funds for many social sector schemes during the UPA years.
Policy paralysis harmed defence, heatlh sectors
Health expenditure remained a pain point for Indian households under the UPA government. The government’s prioritisation of unproductive spending meant that significant funds were allocated towards consumption rather than productive investment.
Such was the lack of consideration for long-term national development that even the critical issue of defence preparedness was hampered by policy paralysis.
Ban on industrial development in coastal districts.
UPA’s scams
The UPA government’s decade of governance (or its absence) was marked by policy misadventures and scams. The coal scam shook the conscience of the nation in 2014.
UPA era saw largest power outage in history
The UPA government will always be remembered for the largest power outage in our history, in July 2012, leaving 62 crore people in darkness and putting national security at risk.
The electricity shortages under the UPA government were also repeatedly pointed out by international agencies.
India lost special decade due to 2G scam
India’s telecom sector lost a precious decade due to the 2G scam and policy paralysis. The 80:20 gold export-import scheme launched by the UPA government exemplifies how government systems and procedures were subverted to serve particular interests for obtaining illegitimate pecuniary gains.
The UPA government’s term was replete with examples of decision stasis. The UPA government capitalised on the reforms brought in by the previous government but fell short of delivering on crucial reforms promised by them.
Decision making was at standstill under UPA
In the UPA government, decision-making came to a standstill due to corruption and scandals in defence, compromising defence preparedness. A large number of development programmes and projects were implemented poorly.
The economic affairs were in dire straits, which was not lost on public commentators. Aadhar in India, a symbol of digital empowerment, too has suffered at the hands of UPA.
Policy uncertainity under UPA
While investors across the world sought ease of doing business, the UPA government provided policy uncertainty and hostility. The demotivating investment climate under the UPA government led to domestic investors moving abroad.
UPA lost decade to capitalise strong economy
The decade of the UPA government was a lost decade because it failed to capitalise on the strong foundational economy and pace of reforms left behind by the Vajpayee government.
It was a lost decade as the UPA government failed to gasp opportunities for technology-led innovation, efficiency and growth.
Time and again, there was a crisis of leadership in the UPA government.
The economic mismanagement choked the growth potential and India became a “fragile” economy.
Economy was on road to nowhere when NDA took over from UPA
When our government assumed office, the economy was on a road to nowhere. As soon as our government took over in 2014, we recognized the urgent need to revamp and overhaul systems and processes, to help India advance on the path of development while also bolstering its macroeconomic foundations.
Right from spearheading the digital revolution to elimination of open defecation, and from successfully vaccinating the entire eligible population using indigenous vaccines to substantially diversifying exports, India has achieved remarkable milestones under our new governance paradigm.
We constituted an expenditure Reform commission to rationalise and prioritise Governemnt expenditures to achive desired development outcomes and make effective use of tax payers’ money for nation building.
We continue to undertake measures to unearth black money and to discourage recourse to it. In parallel, we have also strengthened the health of the economy and the business sector.
The initiation of the reform process started yielding positive results in the early years of our government, by improving the investor climate and creating a favourable outlook for the economy.
Since the time our government assumed power in 2014, the Indian economy has undergone many structural reforms that have strengthened the macroeconomic fundamentals of the economy.
These reforms resulted in the transition of India from the league of ‘Fragile Five’ to the league of ‘Top Five’ in just about a decade as the economy was transformed into a far more resilient avatar amidst a challenging global environment.
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