A failing on all
Macro-Economic indicators
By Dr. Bharat Jariwala

The Prime Minister, at his recent press-conference said that “under UPA Government, Macro-Economic indicators are Robust.” However the fact is that this Government has failed on all macro-economic indicators, as per their own goals or 10th plan or as past performance of NDA Government. Here are a few data-based factual examples.

1. GDP Growth Rate

The UPA set 8 per cent GDP growth rate in their CMP as per 10th Plan document. But they could achieve only 6.9 per cent growth rate in 2004-5, which is much lower than 8.4 per cent achieved by NDA in 2003-4. The current year 2005-6 is no different as per RBI’s predictions.

In Service Sector and Agriculture, UPA’s growth rates were lower in 2004-5 than previous year and in current year they are falling in many sectors like Power Generation, Mining etc. Can we call this Robust performance?

2. Inflation (Price-Rise)

During NDA’s 5-year period, the average inflation was 3.9 per cent. However, during the 21 months of UPA Government, the average inflation is around 6 per cent, highest being 8.7 per cent on August 28, 2004. Even today, it is 4.5 per cent. This is because UPA is not in a position to check price-rise, e.g. Government itself increased petrol and diesel prices six-times, cement prices have soared from Rs. 110 per 50 kg bag in April 2004 to Rs. 185 today, prices of steel, aluminum, bricks, cooking gas, gold, silver, coal etc. have increased phenomenally; resulting in increased cost of transport and housing. Even Government recently increased prices of PDS food -grains supplied to Above-Poverty-Line (APL) families. Who cares for the common-man in this Government?

3. Agricultural Economy

Time and again, Government talked about giving thrust to Agricultural Economy. But in first year of UPA, Agricultural growth rate collapsed to 1.1 per cent, against NDA’s 9.6 per cent in the previous year. NDA achieved full self-sufficiency in food-grain productions and India could export food grains of $ 6 billion every year consecutively for three years from 2001-2 to 2003-4, for the first time in the history.

Ironically, the situation has deteriorated under UPA and they had to import 5 lakh tonnes of wheat this year, thereby falling prey to foreign dependence again. How will they achieve 4 per cent growth of 10th plan ?

NDA increased food-subsidy from Rs. 9,600 crores in 1999-2000 to Rs. 26,000 crores in 2003-4, to provide adequate food-grains to poor. However, UPA has now decided to reduce the food-subsidy by Rs. 4,524 crores and also cut the monthly quota of food-grains to Below-Poverty-Line (BPL) and APL families.

Thirdly, as per NSS latest data , 49 per cent of Indian farmers are heavily in debt e.g. Andhra – 82 per cent, Tamil Nadu – 75 per cent, Punjab and Kerala- 65 per cent, Karnataka- 61 per cent etc. Due to indebtedness, over 4,000 farmers committed suicide in UPA’s first year of 2004-5, despite their announcements of providing higher allocation of bank-credit.

By any standard, can the above three Agricultural Indicators be called robust?

4. Trade Deficit

The Trade Deficit i.e. gap between export and import, in 2003-4 under NDA, was $15 billion. This doubled to $29 billion under UPA in 2004-5 and is likely to treble to $45 billion this year. The tremendous increase in import is not due to oil imports as talked about by Government, but due to non-oil imports. In first 9 months, oil import is $31 billion, but non-oil import is $65 billion. This conveys that Government has failed to increase exports and contain imports, which has a serious repercussion on Rupee Value.

5. Balance of Payment

India’s current account deficit now is as high as 3 per cent of GDP, which can seriously damage our economy. Current Account deficit depends on Merchandise Account and inflow and outflow on invisibles. In NDA’s time, it was positive at 2.3 per cent of GDP, which has now nose-dived by 5-3 per cent to –3 per cent. But for NRI remittances, this would have been much higher.

In 1997, the South-East Asian countries had large Current Account deficits and they faced serious Balance of Payment crisis then, with sudden outflow of large money, resulting in devaluation of their currencies. It is necessary to strengthen rupee abroad.

6. Revenue Deficit

The Common Minimum Programme of UPA vowed to bring down revenue deficit to zero in 3 years by 2007 and fiscal deficit to zero by 2009. However revenue deficit has remained at the same level of 2.7 per cent of GDP for last 2 years. Same is the case with fiscal deficit. This means that Government will have to resort to more market-borrowings. Thus, Government has failed on fiscal consolidation – another important macro-indicator.

7. Disinvestments

UPA is completely helpless to go ahead with disinvestment process due to dictates of Communists. NDA had Rs. 15,500 crores of disinvestment in 2003-4, but UPA had only Rs. 2,765 crores in 2004-5. Current year is no different.

Airport privatisation or modernisation blockade by communist trade unions is a recent example. Can these be called Reforms?

Economy Robust – Far from the truth

There are many areas like employment, water, power-sector, rural infrastructure, resource-crunch etc, where the Government has failed to keep their promises to the people.

(The writer is a renowned economist and member, BJP Central Economic Cell)