UPAII : A Lesson In Destroying A Booming Economy

A few years back a joke used to do rounds during cricket matches that India played. Joke was about how “India snatched defeat from the jaws of victory”. Time and again India would squander away significant advantage and concede a game. Over a period of time, our cricket team apparently has learnt its lesson, three world championships may bear testimony to that. In the process, however, our governing political formation, read congress lead UPA, have caught the disease of snatching defeat from the jaws of victory.
When UPA came in power, economy was growing, inflation was down, people had aspiration and dreams. During good time, UPA did not undertake reforms. May be it can be argued that left parties, on his support government was surviving, did not let government undertake reforms. However, at the same time 2G spectrum scam was being hatched by UPA governments ally. At the same time, government did what it wanted to do, at the cost of ditching left parties. That is signing Indo-US civil nuclear agreement. Government also promulgated MGNREGA, an employment guarantee scheme for rural poor. The gesture costed government around 70, 000 crore rupees per year. Many believed, UPA came back to power riding on MGNREGA.
Second term of UPA was minus left. Many thought, reforms will take off. Instead, government was caught in the quagmire of corruption and socialist policies.  Scams after scams- 2G spectrum scam, CWG scam, coal block allocation scam, land allocation scam hit headlines at regular intervals. Instead of acting on errant ministers promptly, government went on to shield them until and unless the highest court prodded them to act. This gave an impression government is party to corruption. Many genuine purchasers of 2G spectrum had to forfeit their purchase because of government’s inaction and inability to act in time to protect investors wealth.
Infrastructure projects like road, power plants etc did not take of because of lack of environmental clearance. Land allocation for infrastructure projects, like road, airport, industrial houses became a very contentious issue. Again government could not create an amicable middle ground for industrialists to invest and operate. Prolonged impasse in land acquisition made POSCO, one of the largest investor in India, to withdraw. The same happened with Sterlite Industries. Rupee started losing value against dollar somewhere in the middle of 2013. On top of infrastructural roadblocks, government decided to impose retroactive taxation law, further dampening investor confidence. Gradually and slowly, Indian investors started investing not in India but abroad.
On top of corruption and indecision, government decided to bring Food Security Bill. Cost of the bill was estimated to be upwards of 100, 000 crore to public exchequer. Market reacted very sharply and rupee touched 68 to 1 dollar. Today Indian economy is in tatters. Our currency is losing value, our foreign currency reserve is reducing, we are importing more and more goods to support national need, nearly three times more that what we were doing six years before. Our short term debt is increasing, because country is borrowing heavily. There is doubt, if India will be able to fulfill her debt commitments. Many investors are taking their money out of Indian stock market. As a result stock market is crashing.

India today with grappling issues between collective economic growth and individual right. Can a government take away land from an individual in the name of growth? Can a country grow yet a bulk of people live in utter poverty? These are complex issues. However, it is clear to me that by giving subsidised food to people, parties can win election but nation cannot come out of poverty. Government must serve needy as the same time must create environment to stimulate growth. Only a strong nation can serve her people. India has been traditionally poor as long as I can remember. Yet all along we have been following pro-poor economic policies. How come, bulk of India still remain poor after 67 years of independence? Some one must answer.
To be fair to UPA government, it can be argued that government faced one of the most gruesome terrorist attack. Anna Hazare’s civil disobedience movement started during this government’s tenure. Parliament did not function because of chief opposition party’s boycotting and filibuster tactics. But responsibility for this mess fell squarely on government because of its inability to run parliament by taking opposition into confidence and following a strategy of give and take.


In a televised discussion conducted by NDTV, Dr Prannoy Roy, with Ruchir Sharma and Arun Shourie, explained the problem India is facing (please see the link above). Recovering US economy is sucking up resources from emerging markets..  However, it is important to note that countries like Mexico that had done necessary reforms, have contracted least by resurgent US economy. Countries like India, that have not done her homework when needed, have seen near melt down of their economy. So much said about our economist Prime Minister and his dream team. It can be aptly said now that India has snatched defeat from jaws of defeat.

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