New Delhi: In contrast to UPA’s performance, the govt white paper released on Thursday argued that Modi regime has taken a series of steps to fix the economy and initiated procedural and behavioural changes to make India the fastest growing major economy and the fifth largest in the world.
The finance ministry document accused UPA of bringing public finances to a “perilous state” with very high levels of fiscal deficit, which a committee headed by former finance secretary Vijay Kelkar pointed out was higher than what was shown.
Based on an analysis of budget documents, the paper estimated fiscal deficit being understated by up to 1.8 percentage points due to special bonds being issued by Manmohan govt, which were not clearly shown in the books.
As a result of its “fiscal mismanagement”, UPA govt’s fiscal deficit ended up being far higher than it had expected, and it subsequently ended up borrowing 27% more from the market than what it had budgeted for in 2011-12, it said. “While investors across the world sought ease of doing business, UPA govt provided policy uncertainty and hostility,” it said, adding that this forced domestic investors to move overseas.
The paper blamed a crisis of leadership in the regime and argued that UPA floundered the opportunity created by Vajpayee govt and the leadership abandoned the 1991 reforms, for which it seldom fails to take credit.
The over 50-page document said UPA left a banking crisis as its legacy by failing to recognise the problem of bad debt. In Sept 2013, the ratio of gross NPA to advances, including restructured loans, climbed to 12.3%, largely because of political interference in commercial lending decisions, said the paper elaborating on PM Modi’s “phone banking” dig at UPA for allegedly pressuring the public sector banks to lend to their favourites among the entrepreneurs.
The paper also seeks to salve the hurt in BJP circles over its decision not to put in public domain the full extent of “mismanagement” of economy under UPA. While the restraint was influenced by the consideration that a full disclosure would deter investments, the party ranks regretted it saying that it allowed Congress to that pretend it had done a good job.
The paper highlighted Modi govt’s successes, saying it cleared loans of over Rs 1.9 lakh crore taken during UPA regime to fund food, fertiliser and oil subsidies, with more than Rs 1 lakh crore to be paid in the coming years as principal and interest. Showing the drift during UPA, it said overRs 94,000 crore, or 6.4% of the budgeted expenditure, for 14 major schemes and rural sector ministries remained unspent over 10 years. During the last 10 years, the number was Rs 37,000 crore or under 1% of the budget estimate.
Besides, funds were not deployed properly, as capital expenditure fell from 31% during 2003-04 to 16% in 2013-14, resulting in a “supply constrained economy”, it said. While arguing that a large part of the money was used for unproductive purposes, it pointed to the award of the Sixth Pay Commission, involving an estimated outgo of Rs 26,000 crore, in 2008-09, and the Rs 52,000 crore farm loan waiver as cases in point.
Citing a World Bank report, the paper argued that after getting reimbursed by govt, banks reallocated credit to districts with lower default rates. It said that policy paralysis plagued govt resulting in no allocation of telecom spectrum post 2010, a series of held up projects and illegitimate gains to beneficiaries of the “80:20 gold export scheme”. “Aadhaar in India, a symbol of digital empowerment, too has suffered at the hands of UPA,” it said.
On the external front, the paper suggested mismanagement resulting in a crisis of sorts that prompted UPA to resort to NRI deposits.
Govt sources said a discussion on the white paper will take place in Lok Sabha for four hours on Friday after the question hour and FM Nirmala Sitharaman will reply to the debate. Soon after her reply, the discussion will commence in Rajya Sabha.
Discussion on white paper will take place under Rule 342 in which voting, if demanded, can take place.