Context-

The recent presentation of a "white paper" on the Indian economy by Finance Minister Nirmala Sitharaman has stirred significant discourse in Parliament and beyond. This white paper, crafted by the Ministry of Finance, undertakes a meticulous comparison between the economic governance of the Congress-led UPA governments (2004-05 to 2013-14) and the BJP-led NDA governments (2014-15 to 2023-24). As we look deeper into the contents of this document, it becomes evident that it serves as a critical evaluation of economic trajectories, policy decisions, and outcomes over a decade-long period.

Understanding the White Paper

A white paper traditionally serves as a comprehensive informational document that sheds light on a specific issue or topic. It is often utilized by governments to elucidate the nature, scope, and potential resolutions concerning various challenges or phenomena. However, the document presented in Parliament diverges slightly from the conventional definition of a white paper. Rather than focusing on a singular issue, it offers a comparative analysis of economic governance under two distinct political regimes.

Purpose and Timing of Presentation

The decision to unveil this white paper after a decade of governance is not without strategic significance. The document itself articulates the rationale behind this timing, emphasizing the government's intent to foster hope, attract investments, and garner support for reforms during its early years. By refraining from a premature unveiling, the government aimed to avoid instilling a negative narrative that could potentially undermine confidence among investors and stakeholders.

Key Highlights

• The white paper unfolds across three primary segments, each elucidating pivotal aspects of the Indian economy during the respective regimes.
•  Part 1 looks into the macroeconomic landscape during the UPA era, highlighting perceived shortcomings and policy lacunae.
• UPA severely undermined the macroeconomic foundations. For instance, it underscores high inflation, high fiscal deficit (or the money borrowed to meet expenses), and a high proportion of bad loans in the banking system that dragged down economic activity.
• Not only did UPA borrow heavily from the market, but the funds raised were applied unproductively. “Capital expenditure as a percent of total expenditure (excluding interest payments) halved from 31 percent in FY04 to 16 percent in FY14.” This ratio stands at 28% in the current year. The resulting “neglect of infrastructure creation and challenges of the logistical constraints caused industrial and economic growth to stumble.”
• Defense preparedness was hampered by policy paralysis. “By 2012, shortage of combat-ready equipment and ammunition was a chronic issue plaguing our forces,”
• Part 2 of the document scrutinizes the alleged corruption scandals that marred the UPA government's tenure.
• UPA’s decade was marked by “policy misadventures and scams such as non-transparent auction of public resources (coal and telecom spectrum), (and) the specter of retrospective taxation.
• In stark contrast, Part 3 extols the achievements of the NDA government, portraying a narrative of economic revitalization and reform. It cites data from international bodies like the International Monetary Fund to underscore improvements in headline inflation rates and the efficacy of government schemes, such as sanitation initiatives and financial inclusion drives.
• There are many genuine achievements of the NDA government during the past decade. These include reforms like the GST and IBC, the push towards increased capital expenditure, and the clean-up of the commercial bank balance sheets to name just a few. However, it is also true that there is employment-related stress.
• Yes, the unemployment rate improved progressively during the NDA government’s tenure as the White Paper notes, with the rate sliding down to 3.2 percent in 2022-23 from 6 percent in 2017-18 (as per the available Periodic Labour Force Surveys). The figure, however, understates the concern of a surge in the number of unpaid workers and a deterioration in the quality of jobs. PLFS data reveals that the share of unpaid workers in the labour force of the country has gone progressively up to 18.3 percent in 2022-23 from 13.6 per cent in 2017-18. The share of salaried workers, meanwhile, reduced to 20.9 percent in 2022-23 from 22.8 percent in 2017-18.
• For instance, Morgan Stanley did assess India as one of the “fragile five” global economies in 2013. And it is also a fact that India is currently ranked among the top five based on the size of its GDP, as the white paper notes.
• However, India wasn’t among the ‘fragile five’ right through UPA’s 10-year rule from 2004 to 2014. Indeed, despite the Global Financial Crisis, India experienced the fastest period of growth rate between 2004 and 2009.
• Furthermore, the document attributes the downturn in domestic inflation to external factors like fluctuating crude oil prices, exemplifying the intricate interplay between global dynamics and India's economic trajectory.

Analysis and Critique

• While the white paper espouses the successes of the NDA government, it has drawn scrutiny for its selective portrayal of economic realities. Critics argue that the document glosses over systemic issues such as unemployment and poverty, which persist despite purported improvements in certain indicators.
• Moreover, the absence of comprehensive data on GDP growth over two decades and the failure to acknowledge the complexities of employment dynamics undermine the document's credibility in the eyes of detractors.
• Despite laudable reforms like the Goods and Services Tax (GST) and the Insolvency and Bankruptcy Code (IBC), the white paper fails to address the nuanced challenges posed by underemployment and stagnant wages. It underscores the need for a more holistic appraisal of economic performance that transcends headline figures and embraces the multifaceted nature of India's socio-economic landscape.

Conclusion

The white paper on the Indian economy represents a pivotal contribution to the ongoing discourse surrounding economic governance and policy formulation. While it offers valuable insights into the trajectories of successive governments, it also underscores the need for a more nuanced, inclusive approach to economic policymaking.

By acknowledging the complexities of India's socioeconomic landscape and embracing a holistic perspective that transcends partisan narratives, policymakers can chart a course toward sustainable growth, equitable development, and shared prosperity. As India navigates the challenges of the 21st century, it must draw upon the lessons of the past decade to forge a future defined by resilience, innovation, and social cohesion.

Source- The Indian Express