High Inflation

The white paper said price stability was one such foundation that was weakened by the UPA government. “Inflation raged between 2009 and 2014 and the common man bore the brunt. High fiscal deficits for six years between FY09 and FY14 heaped misery on ordinary and poorer households. Over the five-year period from FY10 to FY14, the average annual inflation rate was in double digits. Between FY04 and FY14, average annual inflation in the economy was 8.2 per cent.”

Banking Crisis

Cleansing the bank balance sheets has remained one of the key endeavours of the BJP led NDA government. It was one of the first initiatives taken by the government after coming to power in 2014. The White Paper now points out, “Banking crisis was one of the most important and infamous legacies of the UPA government. When the Vajpayee-led NDA government took office, the Gross Non-Performing Assets (GNPA) ratio in Public Sector banks was 16.0 per cent, and when they left office, it was 7.8 per cent. In September 2013, this ratio, including restructured loans, had climbed to 12.3 per cent largely because of political interference by the UPA government in the commercial lending decisions of public sector banks. Worse, even that high percentage of bad debts was an underestimate.”

Misguided Stimulus

The white paper also pointed out that the fiscal stimulus that was rolled out by the then UPA government in response to the 2008 Global Financial Crisis was much worse than the problem it sought to address. “It was way beyond the capacity of the Union Government to finance and sustain. Interestingly, the stimulus did not seem to bear any correlation with the outcomes it sought to achieve because our economy was not unduly affected by the crisis. During the GFC, India’s growth slowed to 3.1 per cent in FY09 but recovered swiftly to 7.9 per cent in FY10. A cross-country analysis using IMF data on real GDP growth during and after the GFC corroborates the fact that the impact on the Indian economy was relatively limited compared to other developed and developing economies. There was no need for continuation of the misguided stimulus beyond one year,” the paper said.

Meanwhile, ahead of the general elections, the white paper on the economy has kicked off a political storm, with the Congress too coming out with a Black Paper on the Modi government today. “Congress is frustrated that in the last ten years the flailing economy it left in 2014 has become the world’s fifth largest economy and is going on to become the third largest economy,” I&B minister Anurag Singh Thakur said.

White Paper on Indian Economy

Congress-led UPA pushed Indian economy into crisis when NDA took over: White Paper