* Nirmala Sitharaman tables White Paper

Finance Minister Nirmala Sitharman presented a copy of the ‘White Paper on the Indian economy’ in Lok Sabha. Earlier, the supplementary list of business of the House on Thursday mentioned that the minister will lay a copy of the White Paper.

The budget session started with the address by President Droupadi Murmu to the joint sitting of two Houses on January 31. This is the last session of the current Lok Sabha before the general elections expected to be held in April-May this year.

The government had announced in the union budget presented on February 1 that it will come out with ‘White Paper’ to compare the economic performance of 10 years of the Congress-led UPA government with that of 10 years of the BJP-led NDA government.

RBI pointed out excessive revenue expenditure by UPA govt

The UPA Government’s response to the 2008 Global Financial Crisis – a fiscal stimulus package to combat the spill-over effects – was much worse than the problem it sought to address. Under the UPA government, public finances were brought to a perilous state. Run-away fiscal deficits led the economy to the fiscal precipice.

If what we saw as concerning, what we could not see was more troublesome. As a result of its fiscal mismanagement, the UPA government’s fiscal deficit ended up being far higher than it had expected, and it subsequently ended up borrowing 27 per cent more from the market than what it had budgeted for in 2011-12. The fiscal deficit burden became too big to bear, for the economy.

In the pretext of responding to the impact of the global financial and economic crisis (while arguing, at the same time, that India was not affected by the crisis), the UPA government expanded its borrowing and did not relent at all. Not only did the UPA Government borrow heavily from the market, but the funds raised were applied unproductively.

The conspicuous neglect of infrastructure creation and challenges of the logistical constraints caused industrial and economic growth to stumble. The Reserve Bank’s reports also pointed towards excessive revenue expenditure by the UPA government.

Coal scam

The coal scam shook the conscience of the nation in 2014. The UPA government will always be remembered for the largest power outage in our history, in July 2012, leaving 62 crore people in darkness and putting national security at risk. The electricity shortages under the UPA government were also repeatedly pointed out by international agencies.

2G scam

India’s telecom sector lost a precious decade due to the 2G scam and policy paralysis. It was a lost decade as the UPA government failed to gasp opportunities for technology-led innovation, efficiency and growth.

Key pointers of FM Sitharaman’s speech: 

1. The UPA Government inherited a healthy economy ready for more reforms, but made it non-performing in its ten years.

2. Ironically, the UPA leadership, which seldom fails to take credit for the 1991 reforms, abandoned them after coming to power in 2004.

3. Worse, the UPA government, in its quest to maintain high economic growth by any means after the global financial crisis of 2008, severely undermined the macroeconomic foundations.

4. One such foundation that was severely weakened by the UPA government was price stability.

5. The banking crisis was one of the most important and infamous legacies of the UPA government.

6. The banking crisis in 2014 was massive, and the absolute sum at stake was too large.

7. In an era where capital flows dominate, India’s external vulnerability shot up because of over-dependence on external commercial borrowings (ECB).

8. The famous Foreign Currency Non-Resident (FCNR(B)) deposit window for NRIs was actually a call for help when there was a large depletion of the foreign exchange reserves.

9. The costly solution to the above self-created predicament reeked of a re-run of 1991 when India had to approach the IMF for assistance during a Balance of Payments crisis.

10. Poor policy planning and execution also resulted in large unspent funds for many social sector schemes during the UPA years.

Budget in Parliament

Tabling the interim budget 2024-25 in Parliament, Sitharaman said that the Modi government, which assumed office in 2014, overcame crisis of those years and the economy has been put firmly on a high sustainable growth path.

“In 2014 when our Government assumed the reins, the responsibility to mend the economy step by step and to put the governance systems in order was enormous. The need of the hour was to give hope to the people, to attract investments, and to build support for the much-needed reforms. The government did that successfully following our strong belief of ‘nation-first’,” she said.

“The crisis of those years has been overcome, and the economy has been put firmly on a high sustainable growth path with all-round development.” She announced that the government will lay a White Paper on the table of the House “to look at where we were then till 2014 and where we are now, only for the purpose of drawing lessons from the mismanagement of those years.”

.”The exemplary track record of governance, development and performance, effective delivery, and ‘Jan Kalyan’ has given the government trust, confidence, and blessings of the people to realize, whatever it takes, the goal of ‘Viksit Bharat’ with good intentions, true dedication and hard work in the coming years and decades,” she said.