PC’s plea did not impress
P. Chidambaram’s Vote on Account will prove to be the last nail in UPA’s coffin.
Finance Minister P. Chidamabram called it the most significant statement of his speech, where he compared the economic growth rate delivered by UPA 1 and UPA 2 in comparison to the average growth rate of the last 33 years and in comparison to that delivered by the NDA between 1999 and 2004. In many ways, it was. It was a last, desperate, plea on behalf of his party to voters to give it a third term in office.
According to Chidambaram, India’s trend rate of growth since 1980 has been 6.2% per annum. UPA 1 (2004-09) delivered an average rate of growth of 8.4% per annum and UPA 2 (courtesy a good first two years) delivered an average if 6.6% per annum. The NDA, in contrast, delivered an average growth of just 5.9% over its six-year period (1998-2004) in office. There was a reason Chidambaram chose a 33-year period for his lesson in comparative economic statistics. He wanted to show that the BJP-led NDA had done worse in delivering economic growth than any government is recent memory and that the UPA, even in its disastrous second term had done better than average. Chidambaram knows how to make statistics dance to his tune. He has cleverly rolled over certain subsidies to the next financial year to meet his fiscal deficit target. He may even have succeeded in impressing nervous foreign investors and edgy rating agencies with those figures. But he is unlikely to persuade the people of India with his comparisons on growth.
The fact is that the voters of India were not impressed with NDA’s record in office and that includes the economic record. That is why Vajpayee did not win another term in office as Prime Minister in 2004. The fact also is that voters were very impressed by UPA 1’s performance and gave it a second term with an enhanced majority in 2009. But neither has any great relevance to how voters will vote in 2014. There is no denying that UPA 2 has done significantly worse than UPA 1 on economic growth. In its last two years, it has also done much worse than the NDA. It is the short run that will determine voter behaviour, not a long 33-year period of performances. In any case, the NDA of 2014 is very different from the NDA of 2004. Among other things, its leader Narendra Modi was not a member of Vajpayee’s government. And he has positioned himself as a candidate of change.
There are other reasons voters won’t buy Chidambaram’s comparative statistics. For one, there are statistics other than economic growth that matter to voters. And the one which matters most is inflation. On this, the UPA 2 has a terrible record, with near double digit inflation through its term in office, significantly higher than inflation in the NDA period and probably the longest continuous spell of double digit inflation (powered by food items) in India.
No wonder that Chidambaram did not offer any comparisons on inflation, which in terms of influencing voter decisions is more significant than growth.
The incumbent UPA has another problem. Never in India’s recent economic history as growth collapsed from a level as high as 9% to under-5% in such rapid time. Voters saw the huge benefits of sustained 8-9% growth. The hardship of sub-5% growth becomes much starker in comparison. UPA 2 is badly let down by comparison to its predecessor version, UPA 1. No amount of statistical jugglery can change that perception.
In politics, perception often matters more than reality. Chidambaram’s interim budget was never going to change the negative perception of the UPA in the mind of voters, which has blundered not just on growth and inflation but also corruption and decisive leadership, emotive political issues. Chidambaram has played the UPA’s final card. Unfortunately for him, he was saddled with a losing hand. Dhiraj Nayyar is Director, Think India Foundation and Editor-atlarge, Firstpost. This coloumn first AppEArED on Firstpost.Com and was printed with permission.