Recently, Finance Minister Arun Jaitley, on the sidelines of the Make in India meet, praised Manmohan Singh’s record as a Finance Minister but criticised his record as a Prime Minister. Jaitley had said, “To be fair to him (Singh), he did a great job as a Finance Minister in initiating reforms. That process stalled when he became the Prime Minister.”
Jaitley is not alone in this assessment of Manmohan Singh. Soon, after the 2014 election results were out, TV channels and newspaper op-eds were all about how Manmmohan Singh’s reformist zeal had run out of steam during his stint as Prime Minister.
This idea, that the NDA stands for faster growth and reforms whereas the UPA stood for more welfare populist policies, has gained ground over the last few years. There was such a compelling narrative constructed around the UPA’s ‘policy paralysis’ that even the UPA started believing it during the run-up to the 2014 elections!
The comparison
Jaitley’s remark led me to revisit a paper published in April 2014 in the Economic and Political Weekly . The paper, titled Growth in the time of UPA — Myths and Reality written by academics Maithreesh Ghatak, Parikshit Ghosh and Ashok Kotwal, makes a detailed comparison between the UPA (2004-14) and the erstwhile NDA’s performance (1998-2004). Of course, this paper was published just before the 2014 general elections; UPA’s defeat was, by then, a foregone conclusion, though no one quite predicted the NDA’s landslide win.
Though the UPA sailed through its first term by riding on the high-growth phase and the success of rural job scheme MGNREGA, the second term, especially towards the end, was nothing short of a disaster. The ‘dual leadership’ system, where Manmohan Singh took care of the administration and Sonia Gandhi tackled the political front, started unravelling during this period, which was also marked by huge corruption scandals, especially in spectrum and coal allocation.
The Right accused the UPA of being too ‘welfarist’ and not pushing reforms fast enough, whereas the Left accused it of succumbing to the pressures of global finance capital and corporate interests, ignoring the common man. To quote the authors of the paper, “It is a unique misfortune for any party to be charged with both crony capitalism and unbridled welfarism” (EPW, April 19, 2014).
Is it real?
However, the reality points to a different direction. The authors’ painstaking analysis of data reveals that on every indicator — growth, infrastructure spending, public finances, foreign direct investment, Sensex movement, exports — the UPA consistently scores over the NDA. The only area where the UPA comes up short is inflation, especially food inflation, which was consistently higher during the UPA rule.
Even in reforms, the UPA was willing to open up more sectors to foreign investors, especially multi-brand retail and insurance, whereas the NDA’s stand on these issues has been ambiguous. The authors bust the myth that the BJP is a more reform-oriented, business-friendly party, and the Congress a more welfarist, Left-of-Centre party.
But one should not jump to the conclusion that this paper is being too soft on the UPA. In fact, the authors are highly critical of the UPA’s inability to manage the growing expectations and aspirations unleashed by high growth. It was unable, or reluctant, to put in place institutional mechanisms to deal with issues such as land acquisition and corruption which, ironically, were the result of opening up sectors such as coal and spectrum to private investment.
It is the UPA’s utter failure to put in place a proper regulatory mechanism that spawned the humungous corruption in its final years.
In the final analysis, when it comes to the economic agenda, there is very little to choose between the Congress and the BJP. The differences between these two parties lie more in the cultural realm and their competing versions of the ‘Idea of India.’