Decoding the Modi government's white paper on Indian economy

The Narendra Modi government released a white paper, claiming their strategic policies, commitment to reforms, and strong leadership led to India's economic transformation over the past decade on Friday.

Shifting gears

The document contrasts the current regime with the previous United Progressive Alliance (UPA) era, blaming "policy paralysis, fiscal irresponsibility, and corruption" for India's earlier struggles.

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It credits the BJP-led government with propelling the nation from the "Fragile Five" to the world's fifth-largest economy through sound economic management.

UPA's legacy

The white paper criticises the UPA government for jeopardising macroeconomic stability, citing high inflation and irresponsible fiscal deficits.

The 2014 banking crisis, attributed to undisclosed bad loans, is labelled as a significant UPA legacy.

A Credit Suisse report highlighting "significant undisclosed liabilities" is used to emphasise the crisis's severity.

Modi's reform agenda

The document claims the Modi government tackled the banking crisis head-on, increased capital spending, and achieved fiscal consolidation upon taking office.

These measures, it argues, not only improved India's international standing but also paved the way for sustained high growth.

Investing in the future

The government claims to have addressed challenges inherited from the UPA era while investing in both the foundation and superstructure of the economy.

The white paper underlines that fiscal consolidation and improved government spending quality were achieved without compromising on welfare programs, citing statistics and observations from multilateral institutions as support.

Discipline amid crisis

Acknowledging that some improvements were influenced by external factors, the document criticises the UPA's "reckless lending" and ensuing bad loans crisis.

It commends the Modi government's ability to maintain fiscal discipline even during the pandemic and achieve faster-than-expected fiscal consolidation, attributing this to their "political capital."

Centralised approach

The white paper subtly attributes the success to a centralised approach under the current government, highlighting improved implementation of welfare and infrastructure programs.

It cites a shift from sporadic coverage to "saturation coverage," ensuring basic necessities reach beneficiaries through targeted support.

The share of capital expenditure in total spending has also increased, with efficiency in utilisation boosted by a "Whole of Government" approach leveraging Gati Shakti and Pragati initiatives.