Economy in black and white: How white is white and how black is black?

The somewhat juvenile exercise of releasing a White Paper on two past governments is meant to provide an alibi for the failure of the Modi years

Union finance minister Nirmala Sitharaman released a White Paper criticising the UPA's management of public finances (photo: @sansad_tv/X)
Union finance minister Nirmala Sitharaman released a White Paper criticising the UPA's management of public finances (photo: @sansad_tv/X)
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Prasenjit Bose

On Thursday, 8 February, Union finance minister Nirmala Sitharaman released a 'White Paper on the Indian Economy' which purportedly seeks to "generate a wider, more informed debate on the paramountcy of national interest and fiscal responsibility in matters of governance over political expediency".

The White Paper criticises the "mismanagement and short-sighted handling of the public finances during FY04-FY14", i.e. under the UPA era.

Official data, however, clearly show that when UPA-I government took charge in 2004, the gross debt of the Central government was over 67 per cent of GDP and gross debt of the Central and state governments together (general government) was almost 85 per cent of the GDP.

By the time the UPA era ended in 2014, gross Central government debt had come down to below 53 per cent of the GDP and general government debt to below 67 per cent.

In the past 10 years under the Modi government (2014-24), Central government debt has climbed up to 58 per cent of GDP in FY 24 and general government debt to an even more staggering 82 per cent of GDP.

Public debt/GDP ratio declined during the UPA era because of two reasons:

1. GDP grew at a rate much faster than the previous regime

2. Growth was driven by private investment, consumption, and exports, allowing the government to maintain moderate fiscal deficits

Public debt/GDP ratio increased under the Modi regime because of two reasons:

1. GDP growth rate fell, first due to successive shocks like demonetisation, hasty introduction of GST, and finally the Covid-19 pandemic and lockdown

2. Growth has been over-dependent upon fiscal stimulus and government's capital expenditure, with a slump in private investment and export growth

Unable to digest and acknowledge this simple fact, the Modi government has wasted the resources and time of the finance ministry to bring out election propaganda material ahead of the Lok Sabha elections, targeting the UPA government, which lost power 10 years ago. Makes sense?

Some of the criticisms made in the White Paper regarding the UPA era, such as high inflation, high current account deficit and bad debt accumulation of NPAs in public sector banks are not entirely invalid. But the White Paper conveniently fails to mention the global financial meltdown in 2008, which affected banking, trade and economy in India too.

The people, however, voted on these very issues 10 years ago in 2014 and voted out the UPA on performance and perception. What could be the Modi government’s design in raking up old issues? What certainly matters more today is the record of the Modi years between FY 14 and FY 24. What has the Modi government done in the past 10 years?

Both export and import growth have declined from the past decade, while the Indian rupee's value has fallen from Rs 60 per dollar in 2014 to Rs 83 per dollar today. Inflation has risen again in the past year, with food inflation currently touching the double-digit mark. Most disturbingly, over Rs 15 trillion of bank NPAs, mainly owed by large corporate defaulters, have been written off by banks in these 10 years.


Corporate tax rates have been cut down to historically low levels, affecting government revenue and widening the fiscal deficit. Yet, private investment has not taken off.

Unemployment levels are at historic highs. After betraying the aspirations of the youth, the Modi government now seeks to mislead them by relentlessly pursuing divisive policies in the name of religion.

What has prospered under the Modi regime is crony capitalism, with favoured corporate houses being showered with largesse to return their favour of funding the BJP through opaque channels like electoral bonds. The ongoing saga of the Adani group stands testimony.

Rather than berating past governments, the finance ministry would have done better and served the nation well if it considers a White Paper on its own failures and deficiencies. That would have served the people and the economy better.

(The writer is an economist and activist based in Kolkata)

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