‘Fragile five’ during UPA, ‘top five’ now: Modi govt’s White Paper on Economy

NEW DELHI: The UPA government had “inherited a healthy economy but made it non-performing in 10 years,’’ Prime Minister Narendra Modi-led government at the Centre said on Thursday in its White Paper during the ongoing Budget Session of Parliament which also happens to be the last session of the 17th Lok Sabha before the general elections are held in April-May.

Ahead of the Lok Sabha elections, the White Paper of the Modi government tore into Congress-led UPA rule from 2004 to 2014, The 59-page document, tabled in Parliament by Finance Minister Nirmala Sitharaman, gave details of how the Modi government pulled the economy from being counted among the most fragile-five in the world to being the fastest growing and becoming the most attractive investment destination.

Calling it a “lost decade’’, the White Paper said the UPA had left a train of economic mismanagement and “short-sighted handling of the public finances and undermining the macroeconomic foundations.’’

The Indian economy was on a “road to nowhere” in 2014 because of the multiple wrong turns taken during the 10 years of UPA rule, leaving the onus on the Modi government to deal with the challenges and restore dynamism and optimism in the economy, said the White Paper.

The paper said, after assuming power in 2014, Modi-led government took “tough decisions” to overcome the “hydra-headed challenges” of runaway fiscal deficit, decision stasis, banking crisis, corruption and scams.

Highlighting the achievements of the Modi government, the White Paper said the reforms undertaken by the Modi government resulted in the transition of India from the league of ‘Fragile Five’ to the league of ‘Top Five’ global economies in just about a decade and the economy has been transformed into a far more resilient avatar amidst a challenging global environment.

It regretted that 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. The banking crisis was one of the most important and infamous legacies of the UPA government.

“When our government assumed office, the economy was on a road to nowhere, exhibiting tell-tale signs of deep distress emanating from multiple ‘wrong turns’ in economic policy,” said the White Paper which is likely to be debated in the Lok Sabha on Friday and the Congress is expected to come up with a strong rebuttal. Sitharaman is expected to reply after a four-hour debate.

The finance minister, while presenting the 2024-25 interim budget last week, had said that the economy has been put firmly on a high sustainable growth path with all-round development in the past 10 years of the Modi government.

“It is now appropriate to look at where we were then till 2014 and where we are now, only for the purpose of drawing lessons from the mismanagement of those years,” Sitharaman had said.

A chunk of the White Paper was devoted to the mismanagements and scams that plagued several sectors. It listed 15 scams, including coal block allocation, 2G spectrum auction, CWG and Saradha Chit Fund, during the UPA regime. The White Paper said these corruption cases had “shaken confidence of the people” in the economy.

“Ultimately, what the UPA government bequeathed in 2014 was an unenviable legacy of a structurally weaker economy and a pervasive atmosphere of despondency,” it said.

The critical issue of defence preparedness was hampered by policy paralysis, it said, adding, “weak leadership and a consistent lack of intent and action resulted in defence underpreparedness”.

It said the steps taken by the UPA government to deal with the decline in foreign exchange reserves in 2013 was a ‘costly solution’ and ‘reeked of a re-run of 1991 balance of payment crisis ‘.

Under the UPA government in 2013, forex reserves were just enough to finance a little over 6 months of imports, down from 17 months in end-March 2004.

To deal with depleting forex reserves, the government came out with Foreign Currency Non-Resident (FCNR(B)) deposit window for NRIs to attract USD deposits at a high premium in August-September 2013.

The redemption of this high-cost dollar debt was due in 2016, which the NDA government fulfilled without disruption.

The UPA government failed miserably to facilitate economic activities. Instead the UPA government created hurdles that held back the economy, the paper said, adding that in 2014 the NDA government inherited a “deeply damaged” economy.

Armed with political and policy stability, the Modi government recognised the need to make tough decisions for the greater economic good, the Paper said.

“Our government, unlike its predecessor, invested in the foundations of the economy along with building a sturdy superstructure. Looking back at the last ten years, we can say with humility and satisfaction that we have successfully overcome the challenges left behind by the previous government,” it added.

In the past ten years, the government has revitalised the stagnant financial sector and overhauled the credit ecosystem within the economy, bringing about significant improvements.

The reform measures undertaken by the Modi government have significantly elevated the medium-term investment prospects of the economy.

“In sum, the progress achieved in the ten years of our government has overcome the malaise and paralysis of the previous ten years of the UPA government. In 2024, confidence and purpose have replaced the diffidence and drift of 2014,” the White Paper said. Ahead of the White Paper, the Congress had come up with a “Black Paper’’ hitting out at the Centre. The Congress president Mallikarjun Kharge slammed the government for always targeting the Congress. “The government will never say how many people got jobs. They are releasing MNREGA funds. They are discriminating against states,’’ he claimed.