Economic Indicators and Various Reports On It- GDP, FD, EODB, WIR etc

7 Years of UPA Government vs 7 Years of NDA Government

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 3- Performance of the current government in the past seven years

The article compares the performance of the present government under Prime Minister Modi with the first seven years of the Manmohan Singh government on various fronts.

Context

The current government completed seven years at the Centre recently. It is time to reflect and look back at its performance on basic economic parameters over the last seven years. It may also be interesting to compare and see how it fared vis-à-vis the first seven years of UPA government (2004-05 to 2010-11) under Manmohan Singh.

Analysing the progress by studying key economic indicator

1)  GDP growth

  • One of the key economic parameters is GDP growth.
  • It is not the most perfect one, as it does not capture specifically the impact on the poor, or on inequality.
  • But higher GDP growth is considered central to economic performance as it enlarges the size of the economic pie.
  • The average annual rate of growth of GDP under the Modi government so far has been just 4.8 per cent compared to 8.4 per cent during the first seven years of the Manmohan Singh government.
  • If this continues as business as usual, the dream of a $5 trillion economy by 2024-25 is not likely to be achieved.

2) Inflation

  • The Modi government scores much better on the inflation front with CPI (rural and urban combined) rising at 4.8 per cent per annum.
  • It is well within the tolerance limits of RBI’s targeted inflation band and also much lower than 7.8 per cent during the first seven years of the Manmohan Singh government.

3) Forex reserves

  • Also, at macro level, foreign exchange reserves provide resilience to the economy against any external shocks.
  • On this score too, the Modi government fares quite well with forex reserves rising from $313 billion on May 23, 2014 to $593 billion on May 21, 2021.

4) Food and agriculture

  • It engages the largest share of the workforce in the economy and matters most to poorer segments.
  • On the agri-front, both governments recorded an annual average growth of 3.5 per cent during their respective first seven years.
  • However, on the food and fertiliser subsidy front, the Modi government broke all records in FY21, by spending Rs 6.52 lakh crore and accumulating grain stocks exceeding 100 million tonnes in May end, 2021.
  • One area in which the Modi government performed very poorly is agri-exports.
  • In 2013-14 agri-exports had crossed $43 billion while during all the seven years of the Modi government agri-exports remained below this mark of $43 billion.
  • Sluggish agri-exports with rising output put downward pressure on food prices.
  • It helped contain CPI inflation, but subdued farmers’ incomes.

5) Infrastructure development

  • The Modi government has done better in power generation by increasing it from 720 billion units per annum to 1,280 billion units per annum.
  • Similarly, road construction too has been at least 30 per cent faster under the Modi government.

6) Social sector

  • Based on an international definition of extreme poverty (2011 PPP of $ 1.9 per capita per day), the World Bank estimated India’s extreme poverty in 2015 to be about 13.4 per cent, down from 21.6 per cent in FY 2011-12.
  • Even the incidence of multidimensional poverty hovered around 28 per cent in 2015-16.
  • Three key indicators can be used to assess performance on this front:
  • One, average annual person days generated under MGNREGA in the first five years since this programme started under the UPA in 2006-07 to 2010-11, which was 200 crore, and under Modi government it improved to 230 crore.
  • Two, average annual number of houses completed under the Indira Awaas Yojana and PM Awaas Yojana-Gramin, which improved from 21 lakhs to 30 lakhs per annum.
  • Three, open defecation free (ODF) which was only 38.7 per cent on October 2, 2014 and shot up to 100 per cent by October 2, 2019, as per government records.

Conclusion

The current government has turned out to be more welfare-oriented than reformist in revving up GDP growth. How long this welfare approach is sustainable without enlarging the size of GDP pie is an open question.

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