A graphic view of how UPA's poor handling of the economy will burden next govt

With every passing day, it is becoming clear that the Congress party does not expect to, or even want to, win the 2014 elections. It in fact, it seems to be functioning with an agenda of wanting to ruin the economy so badly that whoever comes to power will be seen as economic incompetent. That, presumably, creates conditions that are ripe for the Congress to return to power in 2016 or 2017.

Table: Axis Bank report

The chart taken from an Axis Bank report titled ‘The First 100 days from May 16" shows how investor confidence has sagged, even as the economy slowed down dramatically under the UPA second innings.When UPA I came to power in 2004, it reaped the benefits of a global upturn and reforms of the previous Advani government.

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Average annual GDP growth was up at 8.4 percent, the highest in the history of the Indian economy. However, with numerous corruption scandals coming to light, the Sensex has fallen dramatically, as investors lost faith in the ability of the government to contain the fallout.

A lack of economic reforms has also led to persistent inflation and GDP rates tumbling below 5 percent.

The poor state of the economy will possibly be a main reason for the Congress being unlikely to win this year’s election. As the title of the chart suggests, the governance deficit in the country is likely to prompt a leadership change.

Even the current ‘hope’ rally in the stock markets is being driven primarily by expectations that a new government will be in place come May 16. But reviving the economy will require monumental effort and time.

Unlike the UPA in 2004, the new 2014 government will inherit a sagging economy.Indeed, the Congress party seems to know this very well. As Firstpost Editor R Jagannathan argues in this article that this the reason why the Congress is trying to implement the Food Security Bill and the Land Acquisition Bill. “All political parties find it difficult to oppose these bad laws in an election year. These bills won’t deliver any electoral returns for the Congress in 2014, but they will spike the guns of whoever wins. And that seems to be their main purpose.”