Three Phases of Indian Economy Since 1998: Development – Disaster – Development(PART 2)

I would rather refer it as economy Development under Vajpayee, Growth following serious all round disaster under Manmohan. The development and economy agenda now looks very promising as we aim to be fifth largest economy by 2019 end.

In continuation of previous post,Below ( marked in bold ) is the comparison of the above three phases on various parameters, such as:

It seem we have a very short memory, is it a boon or bane? May be boon for our indulgent self, but surely bane for your children and country for they would suffer, with fear ofcfuture I continue to address the remanent.

  1. Fiscal Deficit (FD)
  2. Current Account Deficit (CAD)
  3. GDP Growth Rate
  4. Retail Inflation
  5. Food Inflation
  6. Industrial Production
  7. Manufacturing Growth
  8. Petrol Price Rise
  9. Currency Depreciation

Retail Inflation

Retail Inflation, what we refer as CPI or even in simple lay man language as Inflation (one should know how deflation and inflation are and how they can harm if exess OR less).
Under both NDA governments of Atal Bihari Vajpayee and Narendra Modi, retail inflation has remained low ranging between 2-3%.
Ideally, an economy is considered to be doing good if it maintains inflation around 3% with a GDP growth rate of about 7-8%. NDA governments have been able to bring Indian economy into that ‘sweet spot’.
However, UPA governments have not been able to control the inflation during their terms. Higher inflation with lower GDP growth rate as explained above signifies the bad economics

Petrol Price Rise

This globally effect the inflation which we discussed above. This becomes more so important and true for India which is fuel dependent.

As shown in the graph below, if one compares the retail prices of petrol in Delhi at different time periods, then the highest growth in petrol prices happened during UPA governments. Petrol prices rose by 114% between 2003 and 2014.
Under the Modi government, Petrol Prices have in fact declined by 3% as shown in the graph below.

Food Inflation

In a country like India where monsoon affects crop production in different ways, controlling food inflation becomes a challenging job for the government.
However, food inflation in 2003-04 during Vajpayee government was in check. But this went out of control and reached an alarming level of 9.5% in 2013-14 during the UPA government.
This has been rapidly brought down by Modi Government through various policies like checking hoarding, Price Stabilisation Fund for pulses among others. On the back of those policies, food inflation in India has even turned negative.

Industrial Production

During UPA government, especially UPA II, country’s industrial production growth almost came to a halt.
The current government has revived India’s industrial production growth as shown in the graph below. There has been notable growth in the industrial production during NDA governments.

Manufacturing Growth

The story of manufacturing growth under UPA government is much worse than overall industrial production as manufacturing growth not only reached zero but entered into negative zone in 2013-14.
On the contrary, NDA governments have registered high manufacturing growth rates during their respective tenures.

Inclusive Growth

click link/image to learn.

The acknowledgment by Finance Minister that 50 per cent of the GDP comes through the sweat and toil of 42 crore workers in unorganised sector recognises the human element in improving the GDP

Currency Depreciationi

It is under the Congress-led UPA governments that Rupee depreciated the most as can be seen from the graph.

On the basis of the above parameters, Indian economy can be seen to have gone through three phases of development-disaster-development. The growth momentum that was generated by the Atal Bihari Vajpayee government could not be sustained over the next 10 years under UPA governments. In fact, the tenure of UPA has been ridden with policy paralysis and corruption cases. The country was run on higher subsidies. There was a higher fiscal deficit with lower GDP growth rate. This ruined the economy. However, with the change in government in 2014, India is resurging on its path to development and this time with the more positive outlook. Most of the economic indicators in current times are reflecting the healthy status of the economy as seen above. This growth momentum needs to be sustained even in the future and this time India can not afford to lose another 10 years.


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