Dr Manmohan Singh is the real GDP King; Jaitley’s blog cannot change it

The Modi government has once again got a panic attack. The Twitter hashtag #DrSinghGDPKing caused it. The underlying reason behind the alarming palpitations is a research panel of the Ministry of Statistics and Program Implementation releasing a back-series adjusted GDP based on 2011-12 prices to make GDP comparisons dispassionate shorn of political googlies. This would enable holistic policy-making besides providing fodder for rigorous academic reasoning. The Bharatiya Janata Party’s acute nervousness was on account of two manifestations of the sub-committee’s findings: 1) As expected, UPA-1 ( 2004-09) had a record-breaking five-year average GDP growth of 8.87%, an unprecedented score in India’s history. 2) Even the much-maligned, badgered UPA-2 had a more impressive lead over the headline-grabbing hyperbolic NDA, 7.39% as against 7.2%.

Finance Minister Arun Jaitley wrote a hurried, poorly researched rhetorical blog, Niti Aayog chief put out a few dubious tweets as a diversionary tactic and some wannabe economists curried favour of the government by attacking the panel itself. I must say the Niti Aayog appears more like a right-wing policy think-tank of retired bureaucrats toeing the Supreme Commander’s commandments than an intellectual powerhouse of policy wonks frowning at economic fault-lines, what the erstwhile Planning Commission at core stood for. But anyways.

Jaitley & co made an embarrassingly phlegmatic attempt to puncture UPA-1’s triumphant performance. According to them, Dr Manmohan Singh inherited a booming 8.1% GDP growth from the Vajpayee government in 2003-04 and just rode a providential bonanza thereafter. Utter rubbish! If India was indeed engulfed with a golden hue, the BJP would not have been routed in 2004 elections for that hubris-infested India Shining campaign. Mr Jaitley forgets that one swallow does not a summer make. What he artfully dodges is that in the preceding year of 2001-02, the GDP had touched a nadir of 3.7% , even lower than the 3.9% of 2000-01. Also, how can a solitary growth figure be touted as a sustainable trend and a defined momentum? It is a preposterous claim. Truth be said, NDA-1 just about averaged 5.6%, and was easily outclassed by the formidable Dr Singh-P Chidambaram-Montek Singh Ahluwalia triumvirate.

Jaitley then caustically refers to fiscal profligacy of average 5% of GDP under UPA, while selectively ignoring that under NDA-1 fiscal deficit was higher at 5.5% . That is called cherry-picking. Under NDA-1 the average crude oil price was around $30 per barrel, while under UPA that skyrocketed to over $145 at one stage; Jaitley has a memory loss of this stupendous escalation when discussing the inflationary impact. Yet, one of the most extraordinary accomplishments in human history happened during UPA; poverty declined by over two-and-a-half times than under NDA and 140 million people were lifted out of poverty , the second largest ever after China. Naturally, Jaitley did not mention this crucial statistic in India’s celebrated growth story under Dr Singh. A pity, really.

I would like to remind Jaitley that agriculture under UPA grew at an annualised 3.6%, while it was 2.2% under NDA-1. Private consumption went up 40% faster under the UPA as did private disposable income at 20% as compared to NDA’s 8.3%. At core, both the rural farmers and urban dwellers were better off under Dr Singh. India was a happier country.

Jaitley is being mendacious with facts when he talks of alleged scams. The pink papers in 2004 were carrying the Great Bank Robbery in their mastheads when Dr Singh became PM. The tradition has continued in NDA-2 with Nirav Modi, Mehul Bhai Choksi and some other close buddies of the current dispensation. That was UPA-1’s legacy from a NDA government where the BJP President Bangaru Laxman was caught red-handed on video tape accepting bribes, telecom scams of unparalleled magnitude happened at regular intervals, Operation West End exposed the sordid defense deals and the PMO became a marketplace for corporate bargaining (please refer to the Essar tapes scandal).

Comparing UPA-1 with either NDA-1 or NDA-2 is blatantly unfair; UPA-1 is a LeBron James-like Amazonian performance, NDA is totally dwarfed by comparison. What will worry Modi and Jaitley even more is that UPA-2 (7.39) has outperformed NDA-2 (7.2%) as well by a convincing margin despite overwhelming headwinds; I list four of them.

First, UPA-2 faced the aftermath of the Great Recession of 2007/8 which literally incinerated economies worldwide. It’s ramifications were both geographically spread (the Eurozone crisis) as well as structurally penetrative. It was the world’s most testing survival period after the Great Depression of the 1930s. Secondly, oil prices reached a dizzying average of over $110 a barrel, creating a massive pressure on current account deficit and fiscal deficit, and adding to an inflationary spiral. Third, UPA had a coalition government and thus required circumspect calibration in policy-making which was done with adroit political maturity through consensus building. Fourth, it was actually parliamentary paralysis (which Jaitley famously described as legitimate political strategy) forced by a belligerent BJP that created a gridlock and prevented the GST and several legislation from becoming a reality during UPA’s tenure. Yet, UPA-2 has done better than NDA-2, who have had the tailwind of oil prices at $28 at one stage, low inflation, a majority government, growing world economy and above all, a strong inheritance of a robust recovering economy from the UPA-2 of 6.4%. Incidentally, UPA crossed double-digit growth rates twice during its 10-year period.

Bottom-line: It is unlikely that NDA-2 will reach UPA-2 numbers either, largely on account of two classic self-goals: the voodoo economics of demonetisation, and the terrible governance failure in implementing GST. Besides, of course, a myopic vision, juvenile obsession for publicity stunts ( doubling farmers’ incomes , getting black money back in 100 days, etc), absence of coherent strategic thinking, rampant crony capitalism (Rafale scam is one amongst many) , non-transparent functioning and also a government that suffers from a chronic talent-deficit.

It is not all that bad though; there is hope. 2019 is just round the corner.

(Sanjay Jha is National Spokesperson of the Indian National Congress party and President, All India Professionals Congress, Maharashtra. The views are his own. He can be followed at @JhaSanjay on Twitter. )