Finance minister P. Chidambaram has picked up the gauntlet thrown at his government by the Bharatiya Janata Party (BJP). In an article published on his official website, the finance minister has slammed that party’s resolution on prices. He called it an exercise in self-deception, aimed at spreading disinformation.
Illustration: Jayachandran / Mint
The BJP’s public statements about how last week’s increases in fuel prices were an act of terror against citizens was needlessly hyperbolic. The finance minister’s counterattack suggests that the government has some fire still left in its belly.
The mood has been sullen of late. This newspaper had noted in a front page Quick Edit on 2 June that the government seemed so “distracted by inflation, the oil price mess and the electoral defeat in Karnataka” that it did not even try to win a few public relations points when the economy finally crossed the trillion-dollar mark. That said a lot about its state of mind.
T.N. Ninan wrote in his weekly column in the Business Standard on 7 June that both the government and the United Progressive Alliance (UPA) “seem determined to focus on failure rather than success… If ever a government and ruling coalition had a death wish, the present ones do”. Chidambaram’s attack shows the government and the ruling alliance are still ready to take the battle to the opposition.
But the facts that the finance minister has marshalled in defence of his camp do not tell the entire story. There is no doubt that economic growth was lower when the National Democratic Alliance (NDA) was in power. But it is incorrect to say that this is an achievement of the UPA government.
Much of the current growth in the Indian economy can be traced back to the tough reforms carried out by the NDA government and to the synchronized global boom fuelled by cheap money since 2003. They ensured the UPA could govern in fair weather through most of its tenure.
It failed to make the most of it. Reforms have been more or less buried. The acceleration in growth and tax collections was not used to balance the budget — and create a buffer against bad times. The government chose to use money to fund populist schemes and hike civil servants’ salaries instead. The UPA seems set to leave an economy that is overheated, with a large current account deficit and a consolidated fiscal deficit that (if calculated correctly) is as high as the one that almost wrecked the economy in 1991.
Does the finance minister’s attack on the BJP have any substance? Write to us at firstname.lastname@example.org