4th YEAR OF UPA

The euphoria over 'Rising India' appears to be eroding with slowing down of the economy on one hand and spiraling prices on the other. As we had remarked earlier, the fourth year of United Progressive Alliance government witnessed louder misgivings by the Left parties and increased discomfort in other parties, including Congress to UPA regime's performance.
Moreover, the Centre's inability to take quick decisions is more than evident and the reformist Dr. Manmohan Singh's government appears to be fast losing credentials. Desperate efforts to build up election vote bank is reflected in the Rs 72,000 crore record loan write-off scheme for 43 million farmers that includes prosperous farmers. The government is delaying pass-through of blazing international oil prices in petrol, diesel, cooking fuel and kerosene domestically for fear of backlash due to its effects on inflation which is already ruling at uncomfortably high level. Here, economics and reforms are sacrificed, which have played havoc with reforms in public sector oil and petroleum companies. The last budget contained significant tax reliefs for tax payers, largely to gain support from the urban middleclass.
Incidentally, the Left parties' support from outside has caused the most damage to effective governance. They won't allow nuclear agreement with USA. Also, the erosion of its own support base in panchayat elections in CPI(M)-ruled West Bengal could make them take a U-turn in reforms. Congress, too, seems to be getting disenchanted with radical reforms in labour, PSU disinvestment, FDI, etc.
However, this is not to deny plus points of UPA government that has seen four years of 9 per cent average growth driven by solid investment. Urban reforms under JNNURM and rural development under Bharat Nirman have made their presence felt in the economy. So also has SEZ that is yet to reach full potential. The 11th plan with its special focus on infrastructure build-up bears the mark of an economist Prime Minister. The private sector has found reforms very friendly, notwithstanding some reservations and has taken significant bets in longer gestation infrastructure projects. NREGP, providing guaranteed employment for 100 days to the rural poor, is another major initiative launched. The government has performed creditably in FRBM and tax/GDP ratio has shot up, thanks to buoyant economy and better compliance.
However, all this has not made significant dents in unemployment, poverty and regional disparities. Historians may still count missed opportunities for the one trillion dollar economy and over one billion population over the period.

Readers may mail their comments to editor@projectsmonitor.com