Winnerâ€™s curse: GDP, fiscal data reveal scale of mess left behind by UPA By R Jagannathan The Modi wave may have swept the UPA out of power, but a large part of the reason is the economyâ€™s poor economic performance over the last couple of years. The government today (30 May) released provisional GDP figures for 2013-14 and the numbers show that the UPA managed to drag down growth to a miserable 4.7 percent in its last year in office. This is the first time since 1991 when India has reported two consecutive years of sub-5 percent growth. In fact, if last year (2013-14) had not been a year of very good monsoons, we would have probably hit the lowest growth figure in recent memory. Agriculture, the only bright spot, grew 4.7 percent â€“ more than thrice as fast as the year before (1.4 percent). (See the detailed figures here) As for manufacturing, it fell 0.7 percent, and mining declined 1.4 percent, which means in 2013-14 India Inc produced less stuff in real terms than in the year before. Little wonder most of them were rooting for a new government. But it wasnâ€™t only India Inc that was miffed over poor or negative growth. The aam aadmi is sure to have been even more pissed due to inflation. The numbers show that per capita GDP at grew 10.1 percent to Rs 84,938 at current prices, but when you state the increase in constant prices (2004-05) the growth rate falls to 3.4 percent. But even this is at the level of averages, which hide more than they reveal. A 3.4 percent real growth in per capita GDP means that substantial sections of India would have actually seen zero or negative growth, given high inequality. This could be another reason why India voted out the UPA. If the aam aadmi expressed his displeasure by pressing the EVM button, India Inc pressed its foot down on the brakes and refused to invest. In 2013-14, gross fixed capital formation (the gross investment rate) fell from 33.9 percent to 32.3 percent â€“ a drop of 1.6 percent. But if we estimate gross fixed capital formation at market prices â€“ which includes the net effect of indirect taxation and subsidies â€“ the drop is far more serious. The investment rate falls from 30.4 percent in 2012-13 to 28.3 percent in 2013-14, which is a fall of 2.1 percent. Clearly, businessmen have been on strike and had lost confidence in the India story. Another interesting number is the difference between the GDP at factor cost and at market prices. In 2013-14, Indiaâ€™s GDP at market prices was put at Rs 11,355,073 crore against Rs 10,472,807 crore for GDP at factor cost. This is a difference of Rs 8,82,266 crore â€“ which is really the net effect of taxes and subsidies. The government has stopped telling us how much the GDP at market price goes up due to indirect taxes and how much it comes down due to subsidies. The reason for not disclosing this break-up is obvious: the UPA simply let subsidies rip through the economy, and feels ashamed of telling us how much it is losing on subsidies, and how much it is gaining on taxes. The new government must rectify the anomaly and give us the break-up so that we know how solvent the government really is. It is time to end the UPAâ€™s efforts to hide the real state of government finances by making its revenues and subsidies clearer to the naked eye. The only figure the UPA can crow about is the fiscal deficit figure â€“ which has come in at 4.5 percent of GDP, but this is clearly a piece of fiction, for it excludes the subsidy bills left unpaid from the year and rolled over to 2014-15. Arun Jaitley will have to pay P Chidambaramâ€™s uncleared bills. Even if we accept this as â€œnormalâ€ accounting practice, the fiscal deficit excludes Rs 70,000 crore of fuel subsidies shifted from the governmentâ€™s books to the oil companies (ONGC, Gail and Oil India). If we add this figure to the fiscal deficit of Rs 5,08,000 crore, we get a figure of Rs 5,78,000 crore. This would work out to 5.1 percent of GDP â€“ which means Chidambaram missed his 4.6 percent target by a mile, or managed to hide his misses by accounting jugglery. And we are not even talking of the expenditures rolled over to Jaitleyâ€™s budget this July. However, the real scary numbers are these: against net tax receipts of Rs 8,16,000, the governmentâ€™s expenses have bloated to Rs 15,60,000 crore. This means for every Re 1 that the government spends, it is earning only 52 paise from taxes. It is living on borrowings and extraordinary one-time income. The UPA has, as we already know, truly left a gigantic economic mess. The only difference: we now know how big a mess it is.