UPA Shambling on Communication, not Economy: Study

Contrary to popular perception, the UPA has not badly on the economic front.

As per a new study by the economists in three universities, the UPA tenure of eight years has been characterised by faster growth, higher savings and investment, growing foreign trade and capital inflows and increased infrastructure spending. On the other hand, NDA scored better than UPA-2 only in terms of industrial growth and marginally better in fiscal deficit. In case of debt to GDP ratio of the central government, the NDA did better than UPA-1, although it was inferior to UPA-2.

As per the study, it is the communication problem with Prime Minister Manmohan Singh and the head of the Congress party Sonia Gandhi that let the opponents pettle the half-truth. “UPA’s inability to handle accelerated economic growth and report card have now become the basis on which election is being fought,” says the report.

“The global recession didn’t help even though India suffered less compared to the global average and to China. Voter fatigue, especially given higher expectations given the earlier growth is another factor,” says Ghatak, one of the researchers of the study.

Fundamentally, the decade of the UPA government failed to undertake economic, social and administrative reforms to strengthen India’s long-term development potential, despite the golden opportunity offered by the years of high growth and investment. If one takes the decade of UPA rule as a whole and looks at a few key economic indicators, it is possible to claim, at first glance, that this government’s achievements are good. This rapid growth in gross domestic product (GDP) has raised average income, as reflected by per-capita national income, this, too, is the highest decadal increase in average income in India’s history. The report also points out that top 30 BSE stocks also showed growth in UPA till 2008.

The economists admit the large increase in food procurement prices and a failing public distribution system turned the government into a massive hoarder of food-grains and ramped up food inflation (Please see table 1). People have been going slow on spending money because of high inflation. This has led to a scenario where they had to spend more money on meeting daily expenditure. Food inflation in particular has been greater than 10% over the last few years, and has only recently started to come down. Given this, people have been postponing all other expenditure and that has had an impact on economic growth. Anyone, with a basic understanding of economics knows that one man’s spending is another man’s income, at the end of the day.

In all crucial parameters, the UPA achieved stellar growth even when set against global parameters. The 2008 recession hit India too but it bounced back, the study says. On reforms, growth relative to rest of the world, the performance of the stock market, on compounded annual growth rate, on outstanding public debt, saving and investment and capital formation, the UPA has been well ahead of the NDA.

Despite, various scams, Maitreesh Ghatak, of the London School of Economics, Parikshit Ghosh of the Delhi School of Economics and Ashok Kotwal of the University of British Columbia, demolish the perception that the UPA tenure was about bad governance and that the corrupt rule the roost. Report briefs out the extremity by the economists describing the current situation that money is created due to growth, people so as political parties made money, “In Antarctica, there is no theft, because there is nothing there, the authors point out to establish the other extremity,’’Maireesh said. In fact, the notion that various people made money comes because a lot of wealth was created and “growth can unleash powerful aspirations as well as frustrations and political parties who can tap into these emotions reap the benefits”.
A surprising outcome has been how the country has fared with regards to the governance – the Corruption Perceptions Index of Transparency International (as per world bank records). The index, though low, has improved almost continuously from 2.7 in 2001 to 3.6 (out of 10) in 2012. A tempting conclusion is that what came out in the open was already known and on the aggregate things have only been improving. The same holds true when it comes to the Human Development Index that shows an improvement in score from 0.461 in 2000 to 0.547 in 2011. In both these cases, India’s rank remains very low.
The UPA has been more pro-farmer, and delivered better GDP growth and ushered in higher investment. More importantly, the country is silently moving up the ladder in terms of governance and human development, which is comforting. Many believe that this government has ruined the economy, is totally corrupt, has let inflation go out of control, has bankrupted India through subsidies and so on but the study and the figures clearly say that UPA did a good job even though recession hit everything during their tenure.
However, the UPA government’s biggest failure is its inability to communicate and connect with the people and the stake-holders.

Abhineet Panjwani, 26, is an intern with DNA.