A UPA story gone wrong!
United Progressive Alliance-II’s performance, somewhat negative overall, had not matched the promises it had made in 2009 though the electoral arithmetic then worked in its favour, significantly boosting the Congress, which characteristically lost itself in complacency in due course. No doubt, the Congress-led UPA had immediately to contend with a global downturn in the wake of the worst financial crisis in 2008 since the Great Depression, and stimulate the economy, as other emerging markets did as well,
inevitably generating medium-term budgetary imbalances.
For the best part of its second term, UPA leadership with the Congress in control of key economic ministries failed to deliver effective governance leading to a gradual slowdown of the economy with growth declining to as low as five per cent in 2012-2013. The prime minister and other government leaders have tended to blame everything on the global slowdown, especially in the advanced economies, playing down the lack of policy initiatives called for in domestic economic management.
The domestic factors were grudgingly acknowledged only at a later stage in the face of staggering outcomes in the core industrial and other sectors. Projects in key infrastructure could not take off, despite approvals, admittedly because of delays in regulatory and environment clearances, as if these were something external beyond the control of this government. These were tellingly brought out in all global economic assessment reports.
Nor the galloping inflation hitting double-digit was of serious concern to government throughout and it waited for over three years to see a declining trend – in relation to the previous 12-months – and then claim credit for having ‘lowered’ inflation. But has this celebration any impact on market prices? Prices of almost all commodities, especially cereals, continue to rule excessively high even today, unaffordable for hundreds of millions of people who are outside the charmed circle of organised sector including the pampered bureaucracy.
While the headline inflation (WPI) may have come down from 8 to 9 per cent of the last three years to just below five per cent in April, creating room for a certain degree of monetary policy easing, the consumer price index is still in double-digit. For a government priding itself on continuous rise in minimum support to farmers and record foodgrain harvests year after year, it hardly matters that cereal prices are not lowering though it is protein-rich foods that have had a larger impact on the food price index.
Again, supply side deficiencies, both in regard to essential consumption articles and key industrial inputs like coal, had not been tackled for long such as to produce visible results. Even the current move through a Cabinet Committee on Investment for fast-tracking clearances would take time to earn credibility because the proof of the pudding is in the eating.
A series of scandals had burst on the scene during the UPA-II regime which could not entirely disassociate itself with any them, and the lack of vigil and accountability – universally noted as a ‘policy paralysis’ – has been brought out in the reports of constitutional organs like the CAG and in directives from the Supreme Court in cases heard where the shenanigans stand exposed. It is true that UPA-II began catching up with the ugly realities in the latter half of 2012, and besides the inquiries already initiated into some of the major corrupt deals, it unveiled a major growth-oriented reform agenda in mid-September 2012.
That the reforms announced, especially liberalising foreign investments, along with a road-map of fiscal consolidation to bring down deficit to three per cent of GDP by 2016, and some credibility imparted to deficit control in the Budget 2013-2014 have not impressed investors yet is something to be accounted for.
Not only foreign investors – apart from the aviation sector – even those pampered for investments in multi-brand retail and other segments, but also corporates at home are yet to respond to much-trumpeted business-friendly reform policies initiated by the Finance Minister Chidambaram.
UPA is laying undue emphasis on GDP growth rates – and this is not something which would impress the ordinary voter. UPA clings to the ‘trickle-down’ approach and with higher growth and higher revenues, so goes the line, higher social allocations make for ‘inclusive growth’. The outcomes have been seen to have far less impact than the allocations, the basis for boastful claims.
Apart from the seasonal rural man hours created mostly on unproductive works so far under MNREGP – no doubt in the process raising the general level of rural wages – it has been a record of jobless growth in GDP.
The Centre may have conspicuously failed in bringing about a durable political consensus-building so basic for a lame-duck government with lofty ambitions of lasting full term and pushing tough reforms but the principal opposition party, BJP, has also not covered itself with glory.
Throughout its role has been totally negative and even disruptive in Parliament. The logjam is unlikely to lift in the monsoon session with the BJP out to deny any electoral advantage through legislation to the ruling dispensation.