FM Sitharaman's 'White Paper' blames UPA for economic woes: Bad loans, double-digit inflation & dwindling investor confidence

Union Finance Minister Nirmala Sitharaman presented a comprehensive 'White Paper' on the state of the Indian Economy in the Lok Sabha on Thursday, February 8. It pointed fingers at the previous United Progressive Alliance (UPA) government for what it called a "crisis" marked by bad loans, inflation, and a dent in investor confidence. The document shed light on alleged economic mismanagement during the UPA's tenure, led by the Congress from 2004 to 2014.

The 'White Paper' delves into the economic challenges faced by India, citing a period of rampant inflation between 2009 and 2014, where the average annual inflation rate hovered in double digits, reaching 8.2% between FY04 and FY14.

The incumbent government accused the UPA of hindering economic activities, leading to a surge in bad loans, a high fiscal deficit, and India's inclusion in the 'Fragile Five' club in 2013, as coined by Morgan Stanley.

The term 'Fragile Five' was issued to India, along with Turkey, Brazil, South Africa, and Indonesia, by investment bank Morgan Stanley for allegedly being too reliant on foreign investment to fuel their growth ambition.

"Inflation raged between 2009 and 2014, and the common man bore the brunt. High fiscal deficits for six years between FY09 and FY14 heaped misery on ordinary and poorer households. Over the five years from FY10 to FY14, the average annual inflation rate was in double digits. Between FY04 and FY14, the average annual inflation in the economy was 8.2%," said the document.

The document further claims that the UPA government failed to build upon the economic foundation laid by the previous NDA government, ultimately making the economy non-performing over its ten-year term.

According to the white paper, the UPA government abandoned the 1991 reforms and, instead of facilitating economic activities, created obstacles that impeded growth.

"Ironically, the UPA leadership, which seldom fails to take credit for the 1991 reforms, abandoned them after coming to power in 2004," the white paper stated.

"The UPA government failed miserably to facilitate economic activities. Instead, the UPA Government created hurdles that held back the economy. It basked in the afterglow of the lagged effects of the reforms of the Vajpayee-led NDA government and benign global conditions and proceeded to exploit the resultant fast economic growth for narrow political purposes," it stated.

The accusations extend to the UPA's impact on investor confidence, with the white paper alleging that the coalition government drove investors away from India. The paper contends that the UPA not only failed to infuse dynamism into the economy but actively robbed it, pushing industrialists to express a preference for "investing abroad rather than in India."

"To drive investors away is easy, but to win them back is hard. The UPA government also demonstrated that it is easier to hurt the economy than it is to help it. They inherited a healthy economy and bequeathed an enfeebled one to us. We have restored its vitality," it added.

The BJP, presenting the white paper just weeks before a general election, frames the economic challenges faced by the Modi government as a "hydra-headed challenge" inherited from the UPA. Despite this, the document asserts that the current administration has successfully restored the vitality of the economy, becoming a major contributor to global growth.

"Then, the world lost confidence in India's economic potential and dynamism. Now, with our economic stability and growth prospects, we inspire hope in others. Then, we had a scam-riddled 12-day Commonwealth Games. Now, we successfully hosted a far-bigger and year-long G20 Presidency in 2023, showcasing India at its best... (and) providing acceptable solutions to global problems."

The white paper highlighted a series of scandals and corruption instances that characterised the UPA government's decade-long tenure. These included infamous cases such as the 2G and Coalgate scandals, alongside grappling with a foreign exchange crisis and a detrimental "policy paralysis" that adversely impacted investment in the country.

"Then, we had the 2G scam. Now, we have extensive coverage of the population under 4G, with the lowest rates and the world's fastest rollout of 5G in 2023. Then, we had the Coalgate scam. Now, we have built systems for transparent and objective auctions to harness natural resources..."

In an interview to CNBC-TV18, Rajiv Kumar, Former VC of NITI Aayog stated, “The white paper is a very professionally done piece of work because it brings out a whole host of achievements of the BJP government. I think the BJP has restored the macroeconomic stability for the economy. When they took over the economy was one of the fragile five and now it is considered to be one of the bright spots in the global economy due the fiscal and monetary policy that the BJP government followed. Also the build-up of the physical infrastructure has been unprecedented and that helps everybody including the poor. There is also a huge improvement in last mile delivery of public benefits to the people. So these are some of the highlights over the last decade of the BJP government.”

Responding to the white paper, the Congress, led by Mallikarjun Kharge, countered with its own version, humorously titled a 'black paper.' The Congress document emphasises concerns such as increasing unemployment, a drop in the average GDP growth rate, and the presence of vacant government positions during the Modi administration.