Economic growth during NDA and UPA governments

Discussion in 'Politics & Society' started by Yusuf, Aug 16, 2011.

  1. Yusuf

    Yusuf GUARDIAN Administrator

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    Recently we saw a poll on a TV channel which gives the UPA a majority if elections are held today. (Let us not get into the media being owned by Congress thingy here).

    It may look incredible at first look as to how this government can be voted back when it has been exposed of so many scams as well as rising food prices.

    I decided to have a look at the economic growth rates during the NDA rule 1999-2004 and the current UPA 1 & 2. I kind of get the answer to my question.

    Growth rate during NDA rule year ending 2000-2004

    2000 5.5
    2001 6.0
    2002 4.3
    2003 4.3
    2004 8.3

    Average of 5.68%

    UPA-1
    2005 6.2
    2006 8.4
    2007 9.2
    2008 9.0
    2009 7.4

    2009 being a recession year the rate dropped. Still an average of 8.04%

    The forecast for 2010-11 is about 8.5% or drop to 8% because of global uncertainties as well as inflation. Still its a healthy growth.

    So the point is, people at large have benefited vastly during the rule of UPA in terms of economic growth. Personally I too have seen growth in my business. Now it can be that the UPA was in power at the right time when India was picking up, but then the one in the seat takes the claim. On the other hand, the corruption charges that have come up have not personally effected the masses at large. Rural folks probably dont know or dont care about this. Urban folks will shout from top of their voice but will surely bribe the cop when he gets caught for violating traffic rule.

    Price rise is another issue, but i think the economic growth has to a certain offset that. Anyways the high food prices is a global phenomenon and the other thing is that high food prices have helped farmers earn more so they are more than happy.

    The issues that the opposition has been targeting the government does not affect "aam aadmi" that it effects his vote. So this may be the reason why in spite of all the corruption scandals, Annas and Babas notwithstanding, UPA looks like winning and election, if it was held today.
     
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  3. nrj

    nrj Stars and Ambassadors Stars and Ambassadors

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    Yusuf,
    lets not allow the credit of economic growth entirely to UPA. Our growth as a state has always been inevitable after opening up economy. Indian business class has been more responsible for this growth due to their aggressive operations.

    This is very true. This blunder happened in 2009 & BJP is interested to repeat it even now. And I'v already started to hear Mandir wahi banayenge bas ek bar gaddi pe baithne do!
     
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  4. Yusuf

    Yusuf GUARDIAN Administrator

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    That is why i said this nrj.
     
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  5. Vyom

    Vyom Seeker Elite Member

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    Comparing growth rates against the backdrop of such massive corruption and treachery? Completely folly. The growth rate has nothing to do with the government's "science rocket" policies, India would maintain the same growth rate even if the NDA were in power. UPA is just cashing on the momentum built by the NDA government.

    Ideas and Insights from Indian Institute of Management Bangalore
     
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  6. Yusuf

    Yusuf GUARDIAN Administrator

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    Vyom, i said as much in OP and clarified with nrj in the next.
     
  7. maomao

    maomao Veteran Hunter of Maleecha Senior Member

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    What about Inflation, price rise, civil unrest, terrorism et al?

    These are GDP growth figures and nothing more than representative of level of production of goods and services in the country, these figure will fail to impress any one who has studied economics in the backdrop of highest level of back breaking inflation recorded ever which directly affects the common man not GDP!

    Whatever growth was achieved through production and services by the hardworking country has gone in the coffers of Corrupt Nehru-Gandhi family and its congress coterie.....It's a real shame that almost 55+ years of Con-gress Rule - 65% of the country is below poverty line and millions sleep hungry in this country while tons of food rots in GOI godowns.......Jai ho Sonia mata ki!
     
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  8. Daredevil

    Daredevil On Vacation! Administrator

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    Yusuf,

    Can you explain what measures did UPA-I took that helped India achieve avg. 8.5% growth rate. As far as I know, UPA has not carried out any economic reforms at all and actually brought back populist schemes like NREGA or waiving off all farm loans worth 90,000 crores. There was no divestment of PSUs or liberalization of economic policies like FDI in retail or investment in infrastructure. UPA was lucky to be in Centre during that period where India grew (so did the world) despite the government and purely based on private investment and private growth not due to super duper policies of UPA.

    Now UPA-II is failing on all fronts because of comatose policies in UPA-I. Infrastructure is congested, PSU divestment didn't happen, high inflation, petrol/diesel prices have gone up, real estate became unaffordable to common people. We are also now seeing the negative effects of NREGA policy which is causing wage inflation in rural areas and making agriculture unsustainable for small farmers. Now it is also coming into light what kind of corruption has happened during UPA-I. Actually much of the growth in GDP is offset by high inflation rates.

    Here are average inflation rates during NDA regime and UPA regime.

    NDA

    2000 - 4.02 %
    2001 - 3.77 %
    2002 - 4.31 %
    2003 - 3.81 %
    2004 - 3.77 %

    UPA

    2005 - 4.25 %
    2006 - 5.79 %
    2007 - 6.39 %
    2008 - 8.32 %
    2009 - 10.83 %
    2010 - 12.11 %

    http://www.inflation.eu/inflation-rates/india/historic-inflation/cpi-inflation-india.aspx
     
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  9. Vyom

    Vyom Seeker Elite Member

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    @Daredevil

    I would have supported the farm loan waiver, had it been efficiently delivered. But all in all, it predominantly remained only a populist scheme on paper for show-off, and it ought to have with the intent this government works.
     
  10. sob

    sob Moderator Moderator

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    The biggest yardstick that I look at is the pace of infrastructure growth and other big ticket reforms. If you look at the National Highways, more KMs were constructed during the NDA regime than they have been during the last 7 years.

    The disinvestment from PSUs was kicked off by the NDA regime, Maruti being one of the earliest examples and the most successful one.
    Admittedly during UPA I they were constrained by the Left but UPA II they have been constrained by the loonies in NAC.
    The last 2-3 years have been years of drift in policy and other governance parameters. Within the BRICS we have lost the momentum. Our share market has been the worst performer amongst BRICs countries. FDI inflow is seriously nose diving and coupled with high inflation it is indeed a very bleak picture of our economy.
     
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  11. thakur_ritesh

    thakur_ritesh Administrator Administrator

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    DD, has already made the reference to inflation, which pretty much nullifies the impact, and the big number growth figures lack quality.

    --------


    In 1999 indian growth was being hyped around the dot com industry in the fag end of 90s, that went bust, there was literal bloodshed. The indian economy didn’t have other pillars to pull it out as happened in ’09.

    Around 03-04, india started to witness a revolution in the telecom, and banking sector.

    From ‘04 onwards the entire world witnessed a huge economic growth, india was a major beneficiary, which is when our exports started to pick up. This was the time even sub-saharan Africa and Pakistan were also growing. The impact cane be seen in the growth numbers achieved by india from 04-08.

    '09:

    They largely recovered quickly because indian economy is over 50% consumer driven, internal consumption based, a lesson the chinese took from us.

    There was a time when the inflation was around 1% during this time, the markets were flooded with cheap money, consumerism increased and so started the recovery, the repercussions of which we are seeing today, the uncontrollable inflation.

    Yusuf,

    one should question what has the government done to address the supply side, on the capacity building?

    why is it always that RBI has to step in to control inflation and only address by culling the demand by increasing the lending rates through various means.

    you will only be able to address inflation when supply/capacity building is increased. more importantly have you ever questioned why inflation zooms each time congress forms the central government?

    ---------------

    i will agree if you say bjp has no good finance ministerial candidate, sure they dont and yashwant sinha was a roll back minister at best and we didnt see much of the other chap to pass a judgement on him (who was previously the foreing minister under NDA) and i have always said congress is full of people under whom we should be growing at around 11% with inflation at 5%, they without a doubt have that talent, but why is that not happening? or are we happy with ok growth but under performance of economy and, high inflation?
     
    Last edited: Aug 16, 2011
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  12. KS

    KS Bye bye DFI Veteran Member

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    There was a superb article titled "Where are the second generation reforms ?" by Nitin Pai for Pragati. But that site is nowhere to be seen now.

    I get this eery feeling that Big Daddy is doing his work overtime that many such sites that questioned the Congress Govt have disappeared in the recent years.
     
  13. LurkerBaba

    LurkerBaba Staff Administrator

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    Found it :p

    edit:Article is old but is spot on !

    Where are the second-generation reforms?


     
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  14. Zebra

    Zebra Senior Member Senior Member

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  15. Rahul92

    Rahul92 Senior Member Senior Member

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    Bring Manmohan singh into NDA
     
  16. Daredevil

    Daredevil On Vacation! Administrator

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    Puzzle: Did NREGA also kill 25 million jobs in the economy?


    Here’s an economic riddle that can emerge only in India.


    In the five years between 1999-00 and 2004-05, years that broadly correspond to the NDA regime, the economy grew at 6 percent on an average. In the next five years to 2009-10, broadly corresponding to the initial UPA years, the economy revved up to 8.6 percent.

    Any reasonable person would thus conclude that the UPA performed better on the economic front than the NDA. Any reasonable person would also presume that all this growth would have brought more jobs and higher incomes for Indians.

    Not quite. An analysis by Crisil Research of the National Sample Survey Office’s (NSSO’s) latest jobs data found that the second half of the decade created all of 2.2 million additional jobs while the first half — during the NDA regime — created as many as 92.7 million new jobs.


    How did slower growth create more jobs? And why did faster growth do the opposite? What’s going wrong?


    The Crisil study, looking at the numbers more closely, says both five-year periods created around 27 million new jobs – 27.2 million between 1999-00 and 2004-2005, and 27.7 million in the five years after that.


    But here’s what happened. The NDA period saw a huge expansion of entrepreneurship with 65.5 million people joining the category of self-employed persons. (A caveat: this is less grand than it sounds, for it merely underscores that more people had to create their own means of livelihood).


    On the other hand, the UPA period actually saw a shrinkage in entrepreneurship, with the category of self-employed falling by a dramatic 25.5 million.


    That’s how the jobs growth of 27.7 million during 2004-05 to 2009-10 got scaled down to a measly 2.2 million after the decline in self-employment by 25.5 million. When economists first saw the numbers, they couldn’t believe the numbers and said maybe, the numbers were all wrong (Read this).


    Sure, something doesn’t ring true. The UPA could not have come back to power if its policies were delivering higher growth and fewer jobs, even while destroying self-employment entrepreneurship.


    What was so different between the 1999-00 and 2004-05 period and the five years after that?


    The main divergences were in growth, and it can be no one’s case that growth destroyed self-employment.


    The key difference was the UPA’s huge social spends in rural areas, especially the Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA, or just NREGA), which is creating around 25 million jobs in NREGA-based projects annually. In 2010-11, NREGA provided 257 crore person-days of employment. At a maximum of 100 person days of work per head, it means 2.57 crore (or 25.7 million ) people got to work under NREGA.


    This 25.7 million is uncannily close to the 25.5 million people who stopped being self-employed during the UPA years.
    Put two and two together, and it appears as if NREGA has something to do with the shift of people from self-employment to the sarkari social security net.


    The Crisil study also makes this connection obliquely. It says “The fall in self-employment between 2005 and 2010 can majorly be attributed to a fall in self-employment in agriculture. Some of those who were self-employed in agriculture could avail (themselves) of the limited employment opportunities in other sectors (mainly in construction)… Some of the people who have moved from agriculture to construction could have secured employment through social schemes like NREGA…”.


    The Crisil report points to another factor — the huge growth in construction jobs — to make the NREGA link again. “Construction was the only sector in which net addition to employment was higher in the second (half) of the decade (18.2 million) as compared to the first half (10.2 million). The construction sector, which accounted for 8 percent of India’s GDP in 2009-10, therefore raised its share in employment to 9.6 percent in 2010 from 5.5 percent in 2005. It appears that in rural areas social sector schemes such as NREGA and rural road programmes have substantially increased construction jobs.”


    The drop in the employment generating potential of the rest of the sectors, says Crisil, has been reduced because labour laws are simply too rigid to allow for job expansion. The report says for growth to be really inclusive, “the employment intensity of production will have to increase. Employment intensity — the number of employed persons per lakh of real GDP — declined to 1.05 in 2010 from 1.71 in 2005.”


    Three conclusions emerge:
    One, while NREGA improved wages and incomes in rural areas, it appears to have prompted more people to drop out of self-employment and increased dependency on the state dole.


    Two, the lack of labour market reforms — both under NDA and UPA — suggests that the seeds for long-term jobs growth are not being sown at all.


    Three, a separate study is required to understand the full consequences of NREGA and its economic impact — both good and bad.
    The next few years may see more jobless growth if existing policies are not assessed correctly.

    The Crisil Report

    Scribd
     
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  17. brain_dead

    brain_dead Regular Member

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    Last edited by a moderator: May 10, 2015
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  18. KS

    KS Bye bye DFI Veteran Member

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    There was a superb article by Nitish Pai titled "Where are the second generation reforms" that literally busted the economic progress myth of the UPA govt.

    But curiously (or not so) that blog is no more. Internet censorship ?

    p.s: I have already posted it in another forum long back and I will try to retrieve it.
     
  19. LurkerBaba

    LurkerBaba Staff Administrator

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    :doh:
    Check out the previous page
     
  20. Zoravar

    Zoravar Regular Member

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    Misinformation,the increase in the MSP for wheat and rice was even less then the increase in costs and the biggest beneficary of the food prices is the retailer who increases prices by 60% when there is even a 10% shortfall and not the farmer.
     
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