Growth vs growth: battle lines are drawn

The growth debate is back. An expert panel headed by noted economist Sudipto Mudle has pegged GDP growth during 2016-17 well past the magical 10 per cent mark.

The Congress has already claimed victory, saying that India’s best years were during the UPA regime. Speaking exclusively to ET NOW, former finance minister P Chidambaram said the data makes it clear that growth under UPA I & II was much higher than during the NDA rule. He also says that the Modi government’s claims of an 8.08 per cent growth in 2003-04 is highly exaggerated due to the low-base effect.


The Modi government has however rejected Congress’ claims, with Union minister Arun Jaitley saying that the UPA government benefitted from the tailwinds of the Vajpayee-era reforms. Jaitley also blames the Manmohan Singh government for compromising on fiscal discipline and putting the banking system at risk, thanks to reckless lending by financial institutions.

Niti Aayog, the Modi government’s think tank, says the 10-year UPA rule was marked by high inflation and ballooning deficits. BJP has gone one step ahead, saying the Mundle panel numbers are not official, although the committee itself was appointed by the finance ministry under Arun Jaitley.

Looks like everyone is a winner in the growth debate, although the Congress has a clear edge.

On ET NOW’s India Development Debate, Niti Aayog vice-chairman Rajiv Kumar and noted economist Surjit Bhalla discussed the revised GDP numbers in the light of Chidambaram’s claims of UPA’s high-growth track record. Here are some notable quotes:

P CHIDAMBARAM

FORMER FINANCE MINISTER

UPA-1did not inherit a resurgent economy, 8.08 per cent growth in FY04 was on a very low base of 3.73per cent GDP growth in FY03. During the global financial crisis, fiscal stimulus was required. Pranab Mukherjee did the right thing by boosting expenditure. But with the benefit of hindsight if I were the finance minister in 2009 I would have given the first stimulus package, held on to the second and not done the third.


MONTEK SINGH AHLUWALIA

FORMER DEPUTY CHAIRMAN, PLANNING COMMISSION

There was a dream fiscal correction during the high growth years of UPA which gave the elbow room to expand the fisc during the crisis. One can’t rein in fiscal deficit while at the cusp of global recession. Not hiking petrol prices when oil prices firmed up was a big mistake. Boom years always result in higher credit lending, excess capacity gets created, which gets addressed during a slowdown.


DR RAJIV KUMAR

VICE CHAIRPERSON, NITI AAYOG

Averages don’t tell you whether growth rate is on a trajectory which is going higher or which is going lower because average averages things out. The fact remains that in NDA I 8.01per cent was reached on a growing trajectory... that is the momentum or tailwind that Jaitley was talking about. In UPA II, whatever be the averages they have, the fact is that in the last three years of that period growth actually crashed and was on a declining trajectory. The fact is did you (UPA II) produce those numbers with macro-economic stabilities?


DR SURJIT BHALLA

MEMBER, PMEAC

Four of the five years NDA I was in power one of the worst sequences of rainfall happened. The GDP back series that has been constructed is really very questionable. There are serious conceptual flaws in the numbers. In terms of corrective action on NPAs you have to give credit where it is due that the government spent a fair amount of time in order to bring in the Bankruptcy law. And in more than one sense it provides a base for resolving the NPA crisis.