Since the Narendra Modi government came to power in 2014, the Indian economy has undergone structural reforms that have strengthened the macro fundamentals, propelling the economy from the "Fragile Five" to the "Top Five" in a decade, the White Paper tabled by Finance Minister Nirmala Sitharaman in Parliament says.

"The government's economic policy focus has been committed to undoing the damage of the previous decade and restoring India's growth potential by getting the financial sector back on track, facilitating economic activity by easing conditions for business, and massively augmenting physical and digital infrastructure to enhance India's connectivity and, thus, the competitiveness of its manufacturing sector," it says.

Talking about reforms, the White Paper says the business-friendly environment improved "ease of living", and strengthened the governance systems and processes. "This led to a substantial decline in policy uncertainty in India, which had peaked under the UPA Government."

These reforms, says the paper, resulted in the transition of India from the league of 'Fragile Five' to the league of 'Top Five' in just about a decade as the economy was transformed into a “far more resilient avatar” despite global challenges.

The paper says the rise of the Indian economy in the last 10 years despite "unprecedented obstacles" of external origin (e.g. pandemic, geopolitical disturbances, etc.) is manifested in the trajectory of its GDP ranking.

"From being the 10th largest in 2014, India has surpassed many giants to become the fifth largest economy in 2023 (but for the pandemic in 2020, we would have become the 5th largest at least two years earlier) and is slated to become the third largest by 2027 as per IMF projections," says the paper.

Flagging the difference between the macro fundamentals in FY13 and FY22, the paper says India's current account balance as a percentage of GDP was -4.8% in FY13, while it improved to -1.2% in FY22. The year-on-year growth in the real GDP was 5.5% in FY13 but it surged to 9.1% in FY22, as per the MoSPI data. Forex reserves as a percentage of GDP were 16% in FY12, while they surged to 20.1% in FY22. The headline inflation on a YoY basis was 9.9% in FY23, but it reduced to 5.5% in FY22, says the paper.

The economic mismanagement “choked” the growth potential and India became a "fragile" economy, the paper adds.

Notably, Morgan Stanley had placed India in the league of the 'Fragile Five' – a group comprising emerging economies with weak macroeconomic fundamentals. These included low growth, high inflation, high external deficit and impaired state of public finances. "The fact that the economy could only grow from being the 12th largest in 2004 to the 10th largest in 2014 merely exposed the short-lived, qualitatively inferior," says the paper.

Presenting the 2024 Interim Budget on February 1, 2024, Finance Minister Nirmala Sitharaman had said the government would lay a White Paper on the table of the House highlighting the mismanagement of the previous UPA rule. She had said that it was now appropriate to look at where the country was till 2014 and where it is now. "..only for the purpose of drawing lessons from the mismanagement of those years."

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