Economies during UPA and NDA Government in India

Comparing the Indian economy during the United Progressive Alliance (UPA) government's tenure (2004-2014) to other periods requires considering various economic indicators, policy decisions, and global economic conditions. The UPA, led by the Indian National Congress, was in power through two terms: UPA-1 (2004-2009) and UPA-2 (2009-2014). It's important to note that economic outcomes are influenced by a multitude of factors, including global economic trends, domestic policies, and external shocks such as the 2008 global financial crisis.

Economic Growth

• UPA-1 (2004-2009): The Indian economy experienced robust growth during this period, with GDP growth averaging around 8.4% per annum. This was a period marked by strong industrial growth, increased foreign investment, and significant growth in the services sector. The government benefited from a global economic boom during much of its term.
• UPA-2 (2009-2014): The second term was more challenging, with average GDP growth slowing down to around 7.4%. The global financial crisis of 2008 and its aftermath significantly impacted the Indian economy, leading to reduced exports, tighter credit conditions, and lower investment. Policy paralysis, corruption scandals, and inflationary pressures also contributed to a slowdown.

Inflation

• Inflation was a significant challenge, especially during the UPA-2 period, with high food and fuel prices contributing to double-digit inflation in some years. The government faced criticism for its handling of inflationary pressures.

Fiscal Management

• The UPA government implemented several social welfare programs, including the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) and the National Food Security Act, which had substantial fiscal implications. Fiscal deficits were a concern, particularly in UPA-2, as the government increased spending in response to the global financial crisis and to support various welfare schemes.

Foreign Investment and Reforms

• The UPA government is credited with continuing economic liberalization, including allowing increased foreign direct investment (FDI) in various sectors. Notable reforms include the controversial decision to allow FDI in retail during UPA-2, which faced political opposition.

Infrastructure and Social Sector Development

• Significant investments were made in infrastructure development, including roads, airports, and power generation, under the UPA. Programs aimed at improving access to education and healthcare were also prioritized, although with varying degrees of success.

Comparison with Other Periods

When comparing the UPA's tenure to other periods, it's essential to consider the broader context, including global economic conditions and policy decisions made by subsequent governments. For instance, the Narendra Modi-led government that followed has focused on structural reforms like the Goods and Services Tax (GST), demonetization, and the Insolvency and Bankruptcy Code (IBC), each with its own set of impacts on the economy.

It's also crucial to note that economic indicators can lag behind policy initiatives, and the full impact of certain policies may only become apparent over the long term. Economic performance is multifaceted, and assessing it requires a holistic view that considers growth, inflation, fiscal health, social development, and the global economic environment.

Economy under NDA Government

Since Narendra Modi assumed office in May 2014 as the Prime Minister of India, his government has initiated several economic policies and reforms aimed at promoting growth, enhancing ease of doing business, and making India more self-reliant. These initiatives have had varied impacts on the Indian economy, reflecting in its growth rates, investment climate, and social welfare. Here's an overview of some key aspects of the Indian economy under the Narendra Modi government up to my last update in April 2023:

Economic Growth

• GDP Growth: The Indian economy has experienced fluctuations in GDP growth under Modi's leadership. Initial years saw high growth rates, peaking at over 7% annually, making India one of the fastest-growing major economies. However, growth rates have seen downturns due to various factors, including the demonetization in 2016, the implementation of the Goods and Services Tax (GST) in 2017, and the COVID-19 pandemic's impact in 2020.
• COVID-19 Pandemic: The economy contracted significantly in 2020 due to the pandemic, with a sharp decline in GDP in the first quarter of the fiscal year 2020-21. However, a gradual recovery has been underway, with various stimulus packages and economic reforms aimed at reviving growth.

Structural Reforms

• Demonetization: In November 2016, the government demonetized high-value currency notes, aiming to curb black money, reduce corruption, and promote digital transactions. The move had a short-term negative impact on cash-dependent sectors but is argued to have long-term benefits in formalizing the economy.
• Goods and Services Tax (GST): Implemented in July 2017, GST aimed to unify India's complex tax system into a single tax structure, enhancing the ease of doing business and bringing more businesses into the formal sector. While its rollout faced challenges, it is considered a significant step in tax reform.
• Insolvency and Bankruptcy Code (IBC): Introduced in 2016, the IBC aimed to streamline the insolvency and bankruptcy proceedings and has been instrumental in resolving non-performing assets (NPAs) issues in the banking sector.
• Atmanirbhar Bharat (Self-Reliant India): Launched in response to the COVID-19 pandemic, this initiative focuses on promoting domestic manufacturing, reducing reliance on imports, and enhancing supply chain resilience.

Social Welfare Schemes

• Jan Dhan Yojana: Aimed at increasing banking access, this scheme has opened millions of new bank accounts for the underprivileged.
• Swachh Bharat Mission (Clean India): This initiative focuses on improving sanitation and hygiene conditions across India.
• Pradhan Mantri Ujjwala Yojana: Aimed at providing LPG connections to BPL households to reduce health hazards associated with cooking based on fossil fuels.

Foreign Policy and Investment

• The Modi government has actively sought to attract foreign investment through initiatives like "Make in India," "Digital India," and reforms in FDI policies across various sectors. The government's focus on strengthening diplomatic and trade relations has also been a key aspect of its strategy to position India as a global manufacturing and investment hub.

Challenges

Despite these initiatives, the Modi government has faced challenges, including unemployment concerns, agricultural sector distress, and the impact of the COVID-19 pandemic on the economy. The government's handling of these issues remains a subject of debate among economists, policymakers, and the public.

Conclusion

The economic landscape under the Narendra Modi government is characterized by ambitious reforms aimed at structural changes and making India a global economic powerhouse. While some policies have shown promising outcomes, others have faced criticism for their implementation and short-term negative impacts. The long-term effects of these policies on the Indian economy will be clearer over time, requiring continuous monitoring and analysis.