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New Delhi: Finance minister P. Chidambaram on Monday joined political battle with former finance minister and Bharatiya Janata Party (BJP) leader Yashwant Sinha over the economic legacy of the Congress party-led United Progressive Alliance (UPA).

The vitriolic exchange between the two politicians is a signal of the increasing focus on UPA’s economic achievements or, as Sinha claimed on Sunday, the lack of any. The state of the economy, particularly the slowdown in economic growth, persistent double-digit inflation and insufficient jobs, has become part of the electoral rhetoric of the opposition parties, particularly the BJP.

Setting the tone for the debate, Sinha questioned the fiscal consolidation that Chidambaram claimed to have achieved in the vote on account presented to Parliament on 17 February, even as he stressed on the inability of UPA to create sufficient jobs.

While the UPA’s two tenures has seen an above-average rate of growth of the economy—it has lost steam in the last two years—it managed to generate only 15 million jobs in 10 years. According to the National Sample Survey Office, between 1999-2000 and 2004-05, coinciding with the BJP-led National Democratic Alliance’s (NDA’s) rule, the economy had created 58 million jobs.

On Monday, Chidambaram disputed Sinha’s claims.

A day earlier, Sinha had taunted Chidambaram: “Is it a fact that the markets have celebrated your announcement of not standing for the elections... that on 19 March 2014 when you made this announcement the BSE Sensex shot up by 125 points, that the forex market was also delighted and the rupee has strengthened considerably against the dollar since then?"

Chidambaram, addressing a press conference at the All India Congress Committee headquarters, responded in kind: “Yashwant Sinha is a distant memory for people of India and I hope he remains that way."

On the issue of employment and job creation, Chidambaram said enrolment in schools and colleges have increased significantly over the past decade even as the unemployment rate has declined.

Interestingly, both leaders, often at cross-purposes on several economic issues, have declined to contest in the upcoming Lok Sabha elections, thus almost ruling themselves out from becoming the finance minister in the next government. Coincidentally, their sons are replacing them in the contest. Chidambaram’s son Karthi Chidambaram will contest from Sivaganga, a seat which Chidambaram has represented from 1984 with the exception of 1999. Similarly, Sinha’s son Jayant Sinha will be contesting on a BJP ticket from Hazaribagh represented by his father in 1998, 1999 and 2009.

On Monday Chidambaram sought to escalate the exchange when he dubbed BJP prime ministerial candidate Narendra Modi’s economic vision as “crony capitalism". “Business is quite comfortable with Dr. Manmohan Singh and UPA finance ministers but there are sections of businesses which are extremely comfortable with Mr. Narendra Modi because his brand of capitalism is crony capitalism."

Seizing on this, Ravi Shankar Prasad, deputy leader of opposition in Rajya Sabha, said that he is happy that the election debate is finally about the economy. “This is the first time the Congress has bothered to react on economic issues raised by BJP."

Refuting Chidambaram’s claims on crony capitalism, Prasad argued that it was the exact reverse. “Chidambaram along with A. Raja gave 2G licence (to telcos in 2008) at 2001 prices; coal mine licences were given to fly-by-night operators; the Aircel-Maxis deal is being investigated."

Chidambaram dismissed the 18 questions raised by Sinha on Sunday, terming them “puerile". Refuting the claims of Sinha that the incumbent finance minister is leaving the economy worse off, Chidambaram said he has achieved most of what he targeted when he took charge as the finance minister again in 2012 in his third stint. “The economy is now more stable. No one talks about a downgrade anymore. The fundamentals have strengthened."

Chidambaram said the economy will end the year with a fiscal deficit of 4.6% of gross domestic product as planned; forex reserves have crossed $300 billion; and the current account deficit will now be much smaller than earlier anticipated, at $35 billion.

However, fiscal deficit data released by the Controller General of Accounts on Monday showed that the government overshot its fiscal deficit target for the full fiscal year by February. While during the 11 months of the year ended March 2013 (April-February) the government had exhausted 97.4% of the full-year target, in the 11 months ended 28 February 2014, it was 114.3% of the full-year target.

Chidambaram said he only sees spirited growth when a new government takes charge before 1 June “provided the next government abides by the 10-point agenda" he charted in his February budget speech. Chidambaram put forth what he called a vision for the future in his interim budget speech, talking about need for fiscal consolidation, rebuilding cities, financial sector reforms and skill development.

Chidambaram assured that he would continue to wield a firm hand on the wheels of the economy till the last day of the government.

He also hinted that the government would consider easing curbs on gold imports in consultation with the Reserve Bank of India after the monetary policy review on Tuesday. India, which used to be the largest buyer of gold before the government imposed a 10% import tax and put in place other restrictions to cut ballooning trade deficit, has recently allowed five private banks to import the metal.

Experts remain critical of UPA’s economic legacy.

Surjit S. Bhalla, chairman of Oxus Investments, an emerging market advisory firm, said that UPA had the worst finance ministers in India’s history except Indira Gandhi in the 70s. “Be it the retrospective tax amendments, large rises in procurement prices or large increases in subsidies, all happened during the UPA tenure, not during the NDA period."

Bhalla also agreed with Sinha’s view that the high growth rates registered during the UPA-1 period was mostly because of the economic reform measures initiated by the Atal Bihari Vajpayee-led NDA government. “Tell me one policy measure by the UPA-1 which could have kickstarted growth, unless you argue that farm loan waiver, corruption in spectrum auction and coal licences increased growth rate. The reason growth took off in 2003, a year and half before UPA came into power, is due to the reduction in interest rates and the infrastructure campaign started by Vajpayee."

Gyan Varma contributed to this story.

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