Economic Highlights
New Delhi, 21 February
Kinks In
Manmohanomics
NDA ADDS TO UPA LEGACY
By Shivaji Sarkar
An economist strangely goes political to
criticise a government that follows his Manmohanomics of liberalisaion, globalisation,
privatisation with the same devotion that the proponent, Manmohan Singh, former
Prime Minister started. One can understand the pressure of Singh trying to
score a political goal. The plunge that he took virtually exposed the kinks in
Manmohanomics. It has never been a panacea for inclusive growth or aims high in
a global situation that monetises every social effort and leads to bankisation
of products and activities that should not be.
Rising prices were a phenomenon during Singh’s
UPA regime and that continues because the nation never cared to control the
prices except during a brief period of NDA-I under late Prime Minister Atal
Behari Vajpayee. As a people’s Prime Minister having been in touch with the
common man scripted path-breaking reforms in telecom, road, power, and taxes.
Despite sanctions following Pokharan-II in 1998 and the Kargil War in 1999, the
government managed to keep economic growth above 6 per cent till 1999-2000.
Growth slowed in 2002-03, with drought, but recovered soon.
In the years after
1998, Vajpayee met this challenge well and according to
the World Bank data, the inflation rate was 4.67 in 1999, 4.009 in 2000, 3.779
in 2001, 4.297 in 2002, 3.806 in 2003 and 3.767 per cent in 2004. When Vajpayee took office in 1998, inflation
was 13 plus per cent.
Vajpayee had left a high GDP for his
successor Manmohan Singh of the Congress. During the UPA years, 2004-2014, GDP
numbers were initially high but slumped drastically towards the end of
its tenure. Shockingly, few understand the enigma of electoral
rejection of Vajpayee-led BJP in the 2004 Lok Sabha elections.
The new government under Manmohan Singh, data
shows, had GDP growth between 2004-05 and 2011-12 at 7.05 per cent, 9.48 per
cent, 9.57 per cent, 9.32 per cent, 6.72 per cent, 8.59 per cent, 8.91 per cent
and 6.69 per cent for the respective financial years (according to old series).
The growth was 6.05 in 2014 as per new series.
It was nothing hunky dory in the UPA regime. There
started the country’s problems. Vajpayee led the biggest ever coalition with
élan. The Left differed with him but most leaders in private praised but had reservation
on his disinvestment. The same Left alliance could not continue in the Manmohan
Singh’s UPA government beyond 2007 as they protested Singh’s anti-people
decision and poor leadership, though the trigger was the nuclear deal. The
check that the Left had on UPA was lost and it plunged into series of scams.
Inflation was at a high since 2007 and reached
a super high of 11.06 per cent in 2013 giving the BJP the edge to fight against
“mahngai dayan – inflation dragon”. As per data, Singh’s successor,
Prime Minister Narendra Modi inherited poor GDP numbers after coming to power
in 2014. However, the GDP numbers during the NDA started improving initially. In
2014-15, the GDP growth was recorded at 7.2 per cent. This increased to 7.6 per
cent in 2015-16.
The NDA government started faltering under
the heavy baggage leading to too many corrections. The economic woes it inherited
with a fear of “black money” tormented it. Being under pressure Modi hurriedly
decided in 2016 on a never before demonetisation of 87 per cent of currency
notes for cleaning the economy. It theoretically was a good move but
practically plunged his government and the people into unseen problems. An
economy that just started booming got a shock. It hurt the businesses and the
poor. Possibly never imagined impact was on political finances of the parties.
The note-ban slowed growth to 7.1 per cent in
2016-17. Next year, 2018-19, this and GST introduction reduced it to 4.2 per cent
and unprecedented 2020 pandemic cut it to minus 7.3 per cent.
The Modi government has got into a vortex for
inheriting a poor system as also not trying to move out of the Manmohanomics.
The bank NPAs soared during the UPA government as it opened coffers to
incentivise rich companies. Public finances, deposited by the poor, became
fodder for the fly-by-night operators. A small number of companies alone heaped
over Rs 2.24 lakh crore NPA by 2014. This could not be checked and doubled to
Rs 5.4 lakh crore in 2021. The recent ABG group problems also had started during
that regime as were the Mallyas and Geetanjali jewelers.
Decade-long messing up of economy needs heavy
correction. It could not happen as the NDA remained under the “aura” of Singh.
It forgot that all the major scams that happened during 1992 to 1998 were under
the stewardship of Singh as Finance Minister. So were the post-2007-8 bank NPAs,
he as Prime Minister.
The NDA is to be faulted for continuing with
a liberalisation that really never was except for UPA’s chosen business
friends. Its disinvestments of PSUs never helped the country. Most profitable
Navratnas were handed over on a platter to friends and many were deliberately
led to losses like the MTNL, BSNL and Air India. In fact, NDA could have
instituted an inquiry to unearth the 2005 scam that forced profit-making Indian
Airlines and Air India to merge and dumped with losses for the benefit of
private operators. Its shearing itself cost the exchequer almost a trillion
rupees.
The NDA also faltered for various compulsions
on its self-sufficient atmanirbhar Bharat. It happens sometimes in the
process of governance. Now State Bank of India has come out with the possible
solution. The country has to reduce its dependence on China. Its Ecowrap,
economic report, says leveraging production-linked-incentives can reduce
dependence on China by 20 per cent or $ 8 billion GDP gain. And it is possible
to reduce it to 50 per cent, a $20 billion bonanza. It would add to 60 lakh
jobs and production of Rs 30 lakh crore in five years in addition to what the Union
budget has announced.
The NDA has to implement its ideas. It has to
go slow also on some such as National Education Policy, bullet and metro-type
trains, review extension of roads and too much dependence on infrastructure
spending. As also it has to review the causes, including many administered
prices like high tolls, fees, freights and fares that are pushing up inflation.
The NDA has opportunities as also prospects
to ensure it frees itself from the legacy of Manmohan Singh, his Manmohanomics,
and charts out a new people-centric economy.---INFA
(Copyright, India
News & Feature Alliance)
|