Lok Sabha 2019 elections are around the corner. The ruling party is busy claiming its achievements and opposition parties are engaged in highlighting the shortcomings of the government.
Which camp should you believe in?
We attempted to create a score card that compared the performance of the following governments on various macroeconomic parameters:
- BJP led NDA (NDA-AB during 1999-2004)
- Congress led UPA (UPA-1 during 2004-2009)
- Congress led UPA (UPA-2 during 2009-2014)
- BJP led NDA (NDA-Modi during 2014-2019)
Who cares about Vikas?
Unfortunately, economics is a game of leads and lags. And like the investments made during various tenures, the translation of policies into progress has a gestation period too.
Political parties may be aware of these lead and lag effects but they conceal them from you to gain political mileage, as per their convenience.
That being said, let’s take a look at the hard, cold numbers…
The Fact File…
Interesting observations from the data:
- The NDA governments have been more focused on fiscal discipline and inflation control. Despite this, overall growth has lagged.
- UPA governments have been more focused on overall economic growth. Even after adjusting for higher inflation and higher deficits, India’s per capita GDP grew faster under UPA regimes.
- The Indian Rupee has depreciated against the US$ under both NDA and UPA regimes. However, the fall has been more pronounced when UPA governments were in charge.
- Creation of productive assets increased more rapidly under UPA governments, as denoted by higher gross fixed capital formation.
Some might argue that the NDA governments carried the baggage of bad policies from their previous governments and vice versa. On the flip side, the UPA governments had the advantage of inheriting building blocks in place—i.e. lower inflation, strong fiscal indicators, stronger currency and even tougher policy decision and investment programs. Nonetheless, the NDA governments too had their share of headwinds and tailwinds.
So what’s our conclusion?
The juggernaut of our economy keeps chugging on, on the back of the consumption boom, which will continue for many more years, albeit, sometimes losing momentum due to a slowdown in investment in infrastructure and government spending. The true indicator of Kiske Saath Kitna Vikas will have to be measured by how many more people had their incomes rising in the periods under consideration. As the populace moves up the class ladder (from low to mid income and so on), the governments who can fulfil their growing aspirations for a better life, dignity, clean administration and efficient execution will be the winners.
Do write in to us at email@example.com and let us know what you think…