4 Years of modi my reflections on the nda government after completion of four years in power, writes arun jaitley – bloomberg quint electricity and water

The preceding ten years of the United Progressive Alliance rule had unquestionably witnessed the most corrupt government since Independence. Prime Minister Narendra Modi created transparent systems through legislative and institutional changes which have given this country a scam-free governance. Unlike the UPA, the Prime Minister is the natural leader of both his party and the nation. We have witnessed a journey from indecisiveness to clarity and decisiveness. India has transformed from being a part of the “fragile five” to the “bright spot” on the global economic scene. A regime of policy paralysis has been transformed into one of decisions and actions. India, which was on the verge of becoming a “basket case” has today been transformed into the fastest growing major economy in the world and is likely to hold that position in the years to come. The country’s mood from despair has transformed into hope and aspirations. Good governance and good economics have been blended with good politics. The result of this has been that the BJP is more confident, its geographical base has become much bigger, its social base has expanded and its winnability has hugely increased.

During the UPA government, India had fallen off the global radar. In its initial years when the world economy was booming, India grew on the strength of global tailwinds. When the global situation became challenging, the UPA’s decisiveness and performance collapsed. The last two years of the UPA had witnessed substantially lower growth rates. From the very first year of NDA, India is the world’s fastest growing major economy with the highest GDP growth rates. This is also the global projection for the next few years.

The Current Account Deficit saw an unprecedented 6.7 percent deficit in the year 2012-13. The NDA has consistently maintained a CAD of under 2 percent on an annualised basis. The poor economic management was visible when under the UPA fiscal deficits remained alarmingly high. The government was spending more and earning less. We witnessed fiscal deficits of 5.8 percent, 4.8 percent and 4.4 percent in the UPA’s last three years. Having inherited the mess, the NDA, year after year, has brought it down to 3.5 percent and shall, this year, try and deliver a 3.3 percent fiscal deficit. The UPA’s economic management was such that even when fiscal deficits were high, expenditure cuts of over Rs 1 lakh crore were done in order to make fiscal deficit optically look slightly better. Cut in expenditure means cut in growth. During the NDA years, Revised Estimates of expenditure were always been higher than Budget Estimates.

The UPA provided India in its last years an inflation figure up to 9 percent and at one stage even crossed into double digits. The NDA has tried to contain inflation and on most occasions has remained within the target of 3 to 4 percent. The poor economic management of the UPA resulted in the high cost of borrowing for the Centre and state governments. The bond yields had touched an incredible 9.12 percent in April, 2014. We have been, on an average, able to contain it between 6 to 7 percent with a low of 6.3 percent on one occasion and rarely in the 7 percent range only when global factors impacted either the currency or the crude prices.

From the last year of the UPA, the infrastructure expenditure to this year has increased by 134 percent during the current year. The Congress President must remember that taxes don’t go into the pocket of the government. They go back to the people for better infrastructure, better social sector expenditure and poverty reduction programmes. The social sector expenditure has seen a substantial increase by both the central and the state governments. The road sector programmes has witnessed a 189 percent increase between the last year of the UPA and the current year of the present government. Resources are transferred to the states with 42 percent devolution of taxes, Finance Commission grants and assistance through the CSS schemes. Notwithstanding the perpetual grumbling, last year of the UPA witnessed Rs 5,15,302 being transferred to the States. This year the proposed transfer is 145 percent higher and will be at Rs 12,62,935 crore. This is over and above what the states earn from GST where they have been constitutionally protected with a 14 percent annual increase. The states independently levy their own taxes.