New Delhi: NITI Aayog on Saturday attributed the high growth achieved during the UPA government to untenable fiscal deficit and reckless expansion of bank credit that led to dramatic economic collapse.
NITI Aayog Vice-Chairman Rajiv Kumar said that the over 10 percent growth rate during the Rajiv Gandhi government was debt-funded, leading to disastrous collapse of growth in 1990-1992, forcing India to physically transfer gold reserves abroad to avoid a debt service default.
Kumar was reacting to news reports about the National Statistical Commission (NSC) sub-committee's estimates of GDP growth series with 2011-12 as the base.
As per the back series data on GDP, Indian economy clocked a 10.08 percent growth rate in 2006-2007 under the then Prime Minister Manmohan Singh, the highest since liberalisation of the economy in 1991.
The NITI Aayog vice-chairman said in a series of tweets that growth rate under four years of the Narendra Modi government is still higher than the last four years of UPA. He said the NSC sub-committee's estimates of GDP growth series with 2011-2012 base are still unofficial.
"However, the following facts are clear. Higher growth rate in 2009-2011 and in previous years was funded by untenable fiscal deficit and reckless expansion of commercial bank credit which was surely unsustainable. This led to a dramatic economic collapse and growth floundered spectacularly in last 3 years of UPA II," he said.
This, Kumar added, is reflected in the Sudipto Mundle committee's estimates on the back series as well — 7.05 percent in 2011-2012, 5.42 percent in 2012-2013, and 6.05 percent in 2013-2014.
"India was branded as part of the Fragile 5. The rupee's exchange rate went into a free fall during May-August 2013, declining almost 25 percent in four months," Kumar said in another tweet.
Growth rate in the four years of the Modi government is still higher than the growth rate of last four years of UPA. This is being managed despite the pernicious legacy of massive NPAs, de-leveraging of commercial bank credit and an uncertain global trade environment, he added.
Moreover, strong foundations have been laid out during the past four years for sustained high and inclusionary growth in the future, Kumar said.
The NSC had set up the committee to recommend suitable measures to strengthen systems and processes for collection, collation and dissemination of these statistics with possibility for improving timeliness.
Meanwhile, Sanjeev Sanyal, Principal Economic Adviser to the finance ministry, said the suggested back series shows that growth had already accelerated to over 8 percent in 2003-2004, after a series of important reforms under the then prime minister, Atal Bihari Vajpayee.
"Thus, the strong performance of subsequent years had a lot to do with momentum that had already been built up," he said in a tweet.
Member of the Economic Advisory Council to the Prime Minister (EAC-PM), Surjit Bhalla, said that new GDP data does not change the reality that "macro-economic instability" was highest under the previous UPA government. In a tweet on the new GDP series, Shamika Ravi, another member of the EAC-PM, said: "1) Glad that sceptics finally accept its credibility. 2) UPA-1 inherited and steered a structurally sound, accelerating economy, but UPA-2's irresponsible, unsustainable policies lead to high inflation and growth slowdown. 3) Quality of growth matters!"
Updated Date: Aug 19, 2018 22:48 PM