Everyone is talking about the declining GDP growth rate and the ever-high inflation rate. The UPA-led union government is being continuously blamed for the economic chaos, and guess what, the finance minister is counting his achievements. The most prominent of all are the highest decline of Indian currency against the U.S. dollar and the GDP growth at below 5 percent. I will talk in real terms and figures to compare the performance of the economy during the NDA and the UPA reign.
Let me begin with the most vital factor that determines the health of an economy- Gross Domestic Product. The UPA inherited the GDP growth rate of above 8 percent from the NDA, which has now fallen at 4.96 percent. Considerable to note, the UPA began its voyage of administration when the global and domestic markets were at boom. The other comparable figures are the industry growth rate, agricultural growth rate, and the services growth rate that stand at 7.32, 9.05, and 8.06 percent respectively during the NDA rule and at 3.12, 1.79, and 6.59 percent respectively in the UPA rule. The drastic downfall in the industrial and agricultural growth rate will be the bottlenecks for the new government; while moderate decline in the services growth rate can be linked with thrilling outsourcing to the IT sector wherein the government hasn’t played any role.
Inflation, that has restricted the households to just the necessities, mounted to 7.8 percent (WPI) in the FY 2013 while the same stood at 5.5 percent in the FY 2004. Another notable achievement of the NDA reign was the 61 percent increase in the GDP during the FY 2003 in comparison to the FY 1998. Let me now share a few vital economic ratios to enlighten the works of Chidambaram. The ratio of net market borrowing/budget expenditure has touched 38 percent in the UPA reign, which stood at 18.8 percent in the FY 2004. The environment, when the UPA took over the governance from NDA, was highly appreciative and the same ratio during the FY 2005 dropped under 10 percent. However, the subsequent years witnessed inefficient spending by the central government and hence no improvements could be achieved.
The debt/GDP ratio of the union government was above 60 percent during the NDA ruling and this can be linked with the implementation of the much-needed Fifth Pay Commission which almost doubled the wages. Vital to note, the NDA lowered the rate of interest on small savings and the resulting savings in the interest accompanied with global growth flowed to the UPA government, however the aimless policies of the government were unable to fetch any positive benefits. The substantial market borrowing of the UPA government together with the funds extended by the Reserve Bank will add to the worries of the new government. A figure not at all to be proud of is the 63 percent increase in the households’ cost of living from the end of 2008 to the end of 2013.
It is evident that after having inherited a robust economy from the NDA, the UPA ruined it to such an extent that the upcoming government will have to leave no stone unturned to get this fixed. Plus, tough and visionary measures will be the need of the hour.