As a part of its ongoing election
campaign for Karnataka state elections, Congress party got ex- Prime Minister
Shri Manmohan Singh to criticize Modi government’s management of Indian economy
at a press conference in Bengaluru. It must be said that the critique was based
on half-truths designed to mislead than to enlighten.
In the said press conference it was
claimed that the UPA delivered an average growth rate of 7.8 percent under turbulent
global conditions whereas the NDA, has managed lesser growth rate despite favorable
international climate and low oil prices. In order to see through the
dishonesty in this statement, we will need to segregate the performance of UPA
I and UPA II. What Shri Singh has conveniently ignored is the fact that in 2004,
UPA I inherited an economy that was in pink of its health, thanks to the macroeconomic
policies of the NDA government headed by Shri Atal Bihari Vajpayee. Add to this
the fact that, the Global Economy and international trade had witnessed some of
its best years during this period. The average annual GDP growth rate of India during
this period was 8.45 per annum.
No doubt, global factors had turned
somewhat adverse during UPA II, but fiscally profligate policies of UPA I were
coming home to roost during the tenure of UPA II. High Inflation had broken the
back of the common man. When Mr Singh relinquished power in 2014 the economy was
at the edge of a precipice (India was infamously part of the ‘Global fragile
five’). It is instructive to note that the growth rate during the last two
years of Manmohan Singh’s tenure was 5.4 and 6.1 percent respectively, with
very high fiscal and current account deficits and low foreign exchange reserves.
Rising non-performing assets (NPA) of
the banking system is one of the criticisms. There has been a relentless
attempt by the Congress party to confuse the public by mentioning the loan
write-offs and farm loan waiver in the same vein. Actually the Corporate loans
are not being written off, but the banks are making provisions for the bad
loans created under the previous UPA regime, so that the banks balance sheets
are strengthened. All earlier attempts like SDR, S4A, CDR, LoC, LoU etc, to
tackle NPA were simply to restructure and ever greening bad loans. Increased
NPA is the result of the Modi Government identifying and recognizing a problem
that existed in the system. The bad loans have increased by a magnitude of three
times (from Rs 2.61 lakh crore to Rs 8.4 lakh crore by September, 2017) out of
the outstanding loans in 2014 only.
The Narendra Modi government has
enacted The Insolvency and Bankruptcy Code (IBC), which is helping in recovery
of Bad Loans from the defaulters possible for the first time. The prospect of
defaulting promoters losing control of their companies was unthinkable before
IBC. ‘The Economist’, whose antipathy towards BJP is well known, has also said
that due to IBC, “the outlines of a fresh era in Indian capitalism are taking
shape.”
Congress and Mr Singh have also tried
to create ruckus about the tax collection by the government. They say that the
Government has collected Rs. 10 lakh crore through taxes on petroleum products
without mentioning that this collected over the last four years. The taxes on
petroleum products are counter-cyclical in nature and the Government has
reduced them to a certain extent due to rising prices. It should also be noted
that the administered price mechanism (APM) followed during the UPA years had
led to hidden subsidies through the issuance of Oil Bonds, without provisioning
in the budget. So far as appropriation of this revenue is concerned, Government
has been able to bring down the fiscal deficit from 4.48 percent of GDP in
2013-14 to 3.24 in 2017-18 and keeping inflation under check. At the same time
increased government spending on infrastructure.
Infrastructure spending is one of the
focus areas of Modi Government because of its multiplier effect on other
sectors of the economy and better quality of life for the common men. From
spending Rs. 1,74,000 crore on infrastructure in the FY 15, the spending in FY
18 is expected to be Rs. 2,92,200 crore - an annual increase of 19 % per annum.
The average annual construction of highways in the three-year period of NDA
government stood at 6,200 kms against 5,000 kms in the preceding three years,
similar is the case for rural roads, irrigation coverage and low cost housing. The
increased government spending has also created demand for cement, steel and
construction equipment.
On agriculture sector Shri Singh has claimed
that in the last four years current government has reversed the successes of UPA
government of increasing MSP and rise in exports. But the fact is that the current
government has recognized that the problem in agriculture sector is not one of
production, but of income security. To address rural distress, focus of the
government has shifted from increasing production to doubling of farmer’s
income. A large number of steps like e-NAM and model APMC Act, better
agriculture risk mitigation through insurance has been taken to ensure that
farmers get better price for their produce.
Independent bodies have also attested
the current stellar performance of Indian economy. Centre for International
Development at Harvard University in its report has said that India would be
the fastest growing economy in the world in the coming decade. In 2017 Moody’s
raised India’s sovereign rating from Baa3 to Baa2 after a gap of 13 years.
UPA is too recent in our memories to
forget that Mr Singh led Congress government was not only one of the most
corrupt governments since independence but also poor economic manager. The
government is still willing to engage with Congress party because it shares
Manmohan Singh’s belief that no one person can be the repository of all wisdom
in a complex and diverse country like India. He should try to convince his
party to shed its confrontationist attitude towards the Government. Wasting
full sessions of Parliament is neither going to help the nation nor the Congress.
People of Karnataka are intelligent
enough to see through the lies, deceit and inefficiency of the Siddaramaiah
government. Whatever Congress party does, its fate is already sealed so far as
the Karnataka assembly elections are concerned.
Gopal Krishna Agarwal
National Spokesperson on Economic
affairs of BJP
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