White paper: Politics gets the better of economic fidelity

The United Progressive Alliance was far from a model of good governance but nor was it the disaster this white paper makes it out to be.
The United Progressive Alliance was far from a model of good governance but nor was it the disaster this white paper makes it out to be.


  • Even as political tools, such documents perform better by aiming for broad credibility. Its archival value would’ve been notable had it taken a more even-handed look at the UPA decade.

The white paper brought out by the government last week is an excellent document from a campaign perspective. As an assessment of the economic performance of the Congress-led UPA government (2004-2014), however, it falls short. The United Progressive Alliance, riven as it was by coalition pressures and constrained by weak leadership, was far from a model of good governance. But nor was it the disaster this white paper makes it out to be. There can be no cavil at the proposition that the present BJP-led NDA government has been more decisive on policy, more effective in building physical infrastructure and also picked capable leadership for the central bank. It has not had to face credible charges of large-scale corruption of the kind that bedevilled the UPA in its last few years, paralysing vital administrative functions such as granting project clearances and innovating policy. The UPA gave India’s political discourse the phrase ‘policy paralysis.’ It is also true that it inherited a growing economy, global conditions favoured fast growth in the lead-up to the global financial crisis of 2007-09, its enlarged fiscal spending to follow joined high global oil prices in stoking inflation, and that the UPA decade left us with a ‘twin-balance-sheet problem’—of banks being saddled with bad debt and companies finding themselves over-leveraged.

That said, the UPA achieved the fastest economic growth we have seen, even if the numbers were pegged lower by a revision under the NDA. Far from discouraging private investment, its public-private-partnership initiatives mobilized huge sums for big infrastructure projects. Gross fixed capital formation as a proportion of GDP (at current prices) jumped above 30% in 2004-05 and touched a high of 35.8% in 2007-08 before slipping to 33.3% in 2013-14. Under the NDA, the ratio touched 30% in 2014-15 and then stubbornly stayed below that level. It is worth noting that rural India’s tele-density, which was below 2% in 2004, rose above 50% by 2010, before the policy of auctioning spectrum began. Urban tele-density was much higher, of course. Broadband spread, computer networks and business process outsourcing flourished, as did infotech services. Rising prosperity, along with new roads, led to a construction boom, sucking labour out of rural areas and elevating wages widely. Real rural wages went up on a trot over 2008 to 2014, reducing poverty and stimulating demand. A frame for a social safety net was put in place. Interventions in maternal care and child nutrition slashed maternal and infant mortality rates.

It was the UPA that inducted technology entrepreneur Nandan Nilekani into the government and turned Aadhaar into a basis for an array of digital services. The National Payments Corporation of India, for example, used it for a bridge to enable mobile payments for the first time. Nilekani also rolled out the India Stack, which enabled applications like Digilocker. An Indo-US nuclear deal was struck in the face of stiff political opposition that not just freed India from a tech-denial regime of the rich world, but also boosted bilateral relations and the confidence of US companies to source from and invest here. In sum, the UPA decade wasn’t a phase that history will judge poorly. Sure, the UPA was no paragon of virtue, but nor was it the bungler this white paper portrays it as. And some of the key reforms it failed at were not for lack of trying. A more even-handed look at that period could’ve had good archival value.

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