Black And White Economy Paper War Misses Shades Of Grey

Lok Sabha treasury benches resonated with desk thumping the moment finance minister Nirmala Sitharaman announced during her February 1 Interim Budget speech that government will table a White Paper on Indian economy for comparison between 2004-14 and 2014-24 periods. With general elections round the corner, this set the stage for decadal comparison between Manmohanomics (practiced by Manmohan Singh, Prime Minister from 2004 to 2014) and Modinomics (after Prime Minister Narendra Modi).

Days later, government tabled the White Paper in both Houses of Parliament. As political tempers soared, the Congress hit back with a ‘Black Paper’ highlighting “failures” of the NDA government. This was followed by high-pitched political cacophony both inside and outside Parliament.

The White Paper says Indian economy was in a ‘crisis’ when BJP-led NDA took over from Congress-led UPA in 2014. It lambasts Manmohan Singh government for multiple failures—price instability, bank NPA crisis, serious external vulnerability, rupee depreciation and mismanagement of finances and stimulus after the 2008 global financial crisis. The Black Paper, titled Dus Saal Anyay Kaal, criticises unemployment and price rise and lists issues like farm distress, demonetisation and collapse of private investment.

In effect, both sides merely list the issues, without delving deep into the impact of policy decisions or what needs to be done next. Both could not resist cherry-picking data and highlighting issues that suit their political agenda ahead of general elections. So, while the White Paper fails to mention decisions such as demonetisation or rising government debt, the Congress paper goes on a political overdrive by including issues such as institutional subversion and alleged use of investigative agencies against political opponents while forgetting its dark period of high inflation and policy paralysis. The White Paper, on its part, does not mention “unemployment” even once. In effect, peppering their papers with cherry-picked data, both BJP and Congress have denied every Indian his right to be part to an informed debate on the state of the economy.

Selective Data Use

Both papers skip more than what they bring to the fore—first and foremost, the pattern of economic growth during ten-year tenures of Manmohan Singh and Narendra Modi. Since 2014, India’s real GDP has grown at an average annual rate of 5.94% compared with 7.6% between 2004 and 2014, according to Ministry of Statistics And Programme Implementation. One may say the average has got skewed due to negative growth in FY21 on account of Covid lockdowns. But UPA, too, faced the unprecedented global financial crisis in 2008. One cannot miss the remarkable turnaround in years following the crisis with GDP growing 8.46% in FY10 and 10.27% in FY11. Post pandemic, even as India has earned the distinction of becoming the fastest-growing economy, GDP growth rate came down to 7.2% in FY23 after touching 9.97% in FY22.

There is another way to look at growth—the size of the economy. In real terms, the economy has grown from ₹145 lakh crore in pre-pandemic FY20 to ₹160 lakh crore in FY23. This is compound annual growth rate (CAGR) of 2.29%. One may recall that the economy was facing a slowdown in FY20. A higher base in FY20, had there been no slowdown, would have further diminished CAGR between FY20 and FY23.

That is not all. The White Paper is silent on disinvestment. The Interim Budget has, in fact, omitted the entry of ‘disinvestment’ under capital receipts. Government has even sought to change the narrative saying disinvestment should not be seen as a tool to plug fiscal deficit and, instead, focus should be on value creation in public sector. This change stems from the recent surge in valuation of PSUs. It is in stark contrast to strategic disinvestment policy of Budget FY22 that central public sector enterprises will be maintained in only four sectors and the rest will be privatised. Besides, government has missed an opportunity to explain its position on country’s rising debt, even though the Budget mentions that gross and net market borrowings through dated securities during FY25 are estimated at ₹14.13 lakh crore and ₹11.75 lakh crore, respectively, less than in FY24. The White Paper could have outlined government’s approach to central government’s debt to GDP ratio, which is 56% in FY25 Budget estimate. The benchmark set by Fiscal Responsibility and Budget Management Act is 40%. Other issues that the White Paper has left out include status of labour law reforms and privatisation of public sector banks and insurance companies.

That is not to say that the Congress did not have its share of blunders while in government. Those, expectedly, have not found mention in the Black Paper. The White Paper, for instance, rightly mentions that the Congress failed miserably in managing inflation. Food inflation went through the roof, touching 12.09% in 2013, and growth came crashing down due to policy paralysis during last years of the UPA government. To top it all, the rupee went into a tailspin in the wake of the taper tantrum of 2013 which caught Indian policy makers off-guard. There was no option but to increase Interest rates; repo rate went up to 8% in January 2014. Economic growth had to be sacrificed at the altar of economic stability.

Both BJP and Congress have had their share of contributions to nation building. But when the parties lock their horns politicising a sensitive issue, it is the electorate that loses out. Both the papers are at best a smart act of political omission and commission suiting one’s agenda before the big slugfest in people’s court.