Jaitley, PC spar over GDP data, economic records
NDA VS UPA Jaitley, Chidambaram say their govts deserve credit
NEW DELHI: The UPA government got the benefit of the global economic boom till the meltdown began in 2008, but the Manmohan Singh government compromised on fiscal discipline and the banking system was put at risk due to reckless lending, Union minister Arun Jaitley wrote in a blog posted on Sunday. Jaitley’s blog — attacking the UPA and defending the NDA’s economic record — came on a day when former finance minister P Chidambaram argued that the recently published back-series data on GDP had shown conclusively that the UPA delivered highest decadal growth since Independence.
NEWDELHI:The United Progressive Alliance (UPA) government got the benefit of the global economic boom till the meltdown began in 2008, but the Manmohan Singh government compromised on fiscal discipline and the banking system was put at risk due to reckless lending, Union minister Arun Jaitley wrote in a blog posted on Sunday.
Jaitley’s blog -- attacking the UPA and defending the National Democratic Alliance (NDA)’s economic record -- came on a day when senior Congress leader and former finance minister P Chidambaram argued that the recently published back-series data on gross domestic product had shown conclusively that UPA delivered the highest decadal growth since Independence.
“The global tailwinds strongly supported growth. Since demand was high, exports were growing, and, therefore, for an emerging economy like India it was a great opportunity. There were no significant domestic reforms carried out during this period,” Jaitley wrote in his Facebook post, providing an explanation for the figures. He argued that while high growth during the global boom was not peculiar to India, it was during the last four years the Narendra Modi government has ensured that India is the fastest growing economy, despite a global slowdown.
“…Post 2014, when the global economy was in slowdown mode, it was India and India alone which has been the fastest growing economy in the world for the last four years and has consistently overtaken China in the growth rate,” Jaitley wrote.
According to back-series calculations by a committee appointed by the National Statistical Commission, reported last week, the Indian economy hit double-digit growth —determined by Gross Value Added at factor cost — at 10.08% in 2006-07 under the UPA regime led by prime minister Manmohan Singh. The projection also shows that GDP at market prices crossed the 10% level twice, hitting 10.23% in 2007-08 and 10.78% in 2010-11. In his statement, Chidambaram claimed that the backseries data had shown that “truth cannot be suppressed forever”.
He said that when the UPA demitted office, economic growth had recovered to 6.39% (at market prices) in 2013-14. Besides, the fiscal deficit had been reduced to 4.48% and the current account deficit had been contained at 1.7%. Hence, Chidambaram argued, the Narendra Modi government had inherited an economy that was on the upswing.
Commenting on the quality of growth, Jaitley, however, quoted data crediting RBI to show “how the Current Account Balance was positive under NDA 1, went back to negative under UPA 1 and went all-time high under UPA 2”.
To drive home his point, Jaitley also quoted data to talk about the ballooning food price inflation during the second tenure of the UPA from 2009 to 2014. He said that data on bank credit growth shows that it grew at an average of around 22% during the 10 years of UPA whereas it was around 9% during the last four years of the NDA government.
“Emerging markets were all growing at higher rates and when the challenge emerged, it compromised on all macro fundamentals. It compromised on the fiscal deficit and the Current Account Deficit, it allowed inflation to spiral out of control and more so to create an illusory growth, it compromised India’s banking system through reckless lending,” Jaitley wrote.
Chidambaram, however, accused the current government of losing the economic momentum because of “demonetisation, flawed implementation of GST and tax terrorism”.
“There will always be two ways of looking at any data. Talking about the quality of growth is a perspective. But we have to remember that high growths of 2009-10 and 2010-11 during the global meltdown, makes India look very good. But the high growth of those years is also because of the base effect. Though inflation went up, we have to remember it actually helped the farm sector. The big slump actually came post 2012, when the UPA started fixing the budget and containing the effects of fiscal expansion of the previous years,” said Pronab Sen, former chief statistician of India.