White & Black Papers
By Dhurjati Mukherjee
The White and Black Papers released recently by the ruling party and the Congress respectively have tried to find fault with the other. Though such analysis may be useful in understanding the way each government has functioned, one of these studies has shown how they plan to tackle future economic problems. These papers come close on the heels of three important southern States, led by Karnataka, protesting denial of adequate funds only because of their better performance in various sectors compared to northern States.
The 59-page NDA Paper accused the UPA rule of bringing public finances to a ‘perilous state’ with high levels of fiscal deficit, which a panel headed by noted economist Vijay Kelkar had pointed out. As a result of fiscal mismanagement, the deficit ended up much higher than it was expected, and subsequently ended up borrowing 27% more from the market than what it had budgeted for in 2011-12.
Regarding the banking crisis, the report said that in September 2013, the ratio of gross NPAs to advances, including restructured loans, climbed to 12.3% largely because of political interference on commercial lending decisions. These observations have been rightly pointed out, specially the improvement of the health of the banks during the NDA regime, though it can’t be denied that interference in bank management continued. This is corroborated in the case of Mehul Choksi and lately Gautam Adani, both of whom are said to be close to the Prime Minister.
The paper highlighted Modi government’s successes, saying it cleared loans of over Rs 1.9 lakh crore taken during the UPA regime to fund food, fertilizer and oil subsidies with over Rs 1 lakh crore to be paid in the coming years as principal and interest. It pointed to revival of the Indian economy from a state of crisis. “When the NDA government took over the reins in 2014, the economy was in bad shape, nay, crisis. We faced the hydra-headed challenge of fixing an economy mismanaged for a decade, and restoring its fundamentals to sound health,” stated the white paper. Besides, it highlighted how the economy emerged stronger in the past decade under the BJP-led NDA government and is today counted amongst the top five economies of the world.
The Paper referred to the mismanagement of the economy during the UPA regime and apart from the various scams, it found that over Rs 94,000 crore or 6.4% of the budgeted expenditure for 14 major schemes and rural sector ministries remained unspent over 10 years. Besides, it showed that funds not deployed properly as capital expenditure fell from 31% during 2003-04 to 16% in 2013-14, resulting in a “supply constrained economy”. Additionally, a large part of resources was used for unproductive purposes, involving an estimated outgo of Rs 26,000 crore in 2008-09 and Rs 52,000 crore farm loan waivers as cases in point.
The overall improvement of the economy has been well highlighted but what has not been said is whether this uptrend has benefitted the poor, the marginalised and the economically weaker sections. Various experts and studies have pointed out that the main beneficiaries of the government’s policies have been the rich and one segment of the middle class or perhaps the entire middle class. As per the World Bank’s Commission on Global Poverty using the leaked data of the NSS revealed that 320 million rural Indians lived in acute poverty in 2017-18, 50 million over six years earlier.
It would be appropriate to mention the Oxfam report, released last month, which revealed that the wealthiest 1% of the population possess 40% of the nation’s wealth, while the remaining 50% hold just 3%. Furthermore, the number of billionaires in India has seen a notable rise. The UNDP report indicated that the top 10% of the population commanded 65% of the country’s wealth. Over the past decade the real wages of 35% of the population have experienced a decline. Real wages denote the purchasing power of wages concerning goods and services. India was ranked 139th on the Global hunger Index. In per capita incomes, India is at the bottom of all the G-20 countries. Parliamentarians questioned whether the real Amrit Kaal would start only when all people get equal healthcare, education and opportunities to grow?
Thus, the overall scenario is quite grim though India may be the fifth largest economy. This has been revealed in Congress’ Black Paper, which pointed out that “the Modi government’s 10 years in power devastated the country’s economy, aggravated unemployment, destroyed the country’s agricultural sector, abetted crimes against women and committed grave injustices against minorities in the country”. The 54-page Paper said the highest rate of unemployment in 45 years, going from 1 crore in 2012 and 4 crore in 2022, 10 lakh sanctioned central government post still unfilled, despite high unemployment, 33% unemployed amongst graduates and post-graduates and 2 employed persons dying by suicide every year. On inflation, the Congress stated that there has been a steep increase in the prices of essential commodities from 2014 to 2024 – 120% in increase in the cost of LPG, 37% for petrol and 64% for diesel, 59% for mustard oil and 59% for wheat flour and 71% for milk.
The above findings can’t be denied as social and economic development was mainly geared towards the urban sector and the privileged sections got the maximum benefit. Also, the middle-income sections got their due share but the marginalised and backward sections didn’t notice any perceptible change in their incomes and standard of living. However, in recent years, the Modi government has turned its attention to the rural sector, but real backward areas have yet to be brought into mainstream development.
It was expected that the paper of the ruling dispensation while criticising the previous UPA regime would have outlined future priorities, specially with regard to the farming community, small traders, those working in unorganized sector, all of whom are a major segment of the population. Though governance may have improved during the Modi government, there is an absolute need for ensuring that welfare measures reach these sections and development is geared in the right direction.
It goes without saying that more resources are needed for which the wealthy must be imposed a wealth tax, but the government is hesitant. The logic that such tax will not boost investment can’t be accepted as private sector investment in recent years has been quite low despite various government incentives.
Finally, the development matrix must change, and the present government should be realistic and judicious in allotment of funds to sectors that need them and those that cater to the welfare of the major section of the population. Development must come from below and its spread effect must be uniform, reaching all corners of the country. — INFA