Narendra Modi led National Democratic Alliance (NDA) government has scored over the United Progressive Alliance (UPA) government led by Manmohan Singh in terms of handling of the macroeconomic stability in the time of a crisis.
According to the Economic Survey tabled in the Lok Sabha by finance minister Nirmala Sitharaman today, the NDA government has exhibited a better show on a number of macroeconomic stability yardsticks in the wake of the pandemic compared with UPA’s handling of the economic impact of sub-prime crisis in 2008 and taper tantrum in 2013.
The survey has done a comparison of ten macro stability yardsticks and how they fared during the global economic crisis and taper tantrum of 2008, when the UPA was in power, and the NDAs handling of the economic disruptions caused by the Covid-19 pandemic. The Modi-ruled NDA has emerged as a distinct winner in the comparison, outweighing the UPA on a majority of indicators.
Take for example Consumer Price Inflation (CPI). The survey points out that while CPI inflation has been at 5.2% in the April-December of the current financial year, it was over 9% in the wake the global economic crisis of 2008, when the Congress-led UPA, opted for demand-led economic stimulus which stoked inflation, particularly food inflation in the economy, and 2013 when the rupee nosedived against the dollar owing to the tapering of the quantitative easing by the US Fed Reserve. CPI in 2008-09 was 9.1 while it was at 9.4 in 2012-13, the survey points out.
On the gross fiscal deficit front, however, UPA beats NDA. In both the crisis before the pandemic, when UPA was at the helm, India’s gross fiscal deficit as a percentage of GDP was lower than now. Fiscal deficit in budget estimate of the current financial year has been pegged at 10.2% of the GDP. It was 8.3% and 6.9% in FY09 and FY13, respectively.
While on all other major macro stability indicators, like the current account, external debt forex reserves, govt bond yields (10-year) and total FDI inflows, the NDA has beaten the UPA in the crisis years.