Back Who got India shining?
S. Sethuraman
| The BJP leaders would do well not to belittle the endeavours of nation-builders of the past who laid the foundations of a modern economy, with a strong industrial base, food self-sufficiency, a vibrant public sector in strategic areas, and spectacular advances in science and technology. |
Conceived, perhaps, to tell the people how well the BJP had governed India in five years the ethics of such a massive publicity campaign even after the decision to dissolve the 13th Lok Sabha began to be questioned.
The Election Commission itself viewed it as an aberration, though the code of conduct had then not come into effect. More than the elaborate propaganda drive, it is astounding to hear claims and assertions that cannot stand any objective scrutiny being repeated ad nauseam by leaders of the stature of the Deputy Prime Minister, Mr L. K. Advani, and the Finance Minister, Mr Jaswant Singh.
It would be legitimate for them to claim a sense of accomplishment by detailing what they had done, or sought to do, in different spheres and the results thereof but Mr Advani and the other BJP leaders would like the nation to accept, at their word, that the NDA Government headed by the Prime Minister, Mr Atal Bihari Vajpayee, had done in five years what previous governments had not done in 50.
And so Mr Jaswant Singh sees India on a roll, prosperity everywhere, and homes in the hinterland flush with hidden wealth. Mr Advani takes the credit for coining the term "feel good" factor. It was the former Finance Minister, Mr Yashwant Sinha, who first spoke of an expected "feel good" factor to flow from his more recent Budgets. It must be said to his credit that he struck out for a coherent fiscal strategy and reform though targets eluded him.
It is true, as Mr Advani says, that there has been relative political stability since the BJP came to power in 1998 at the head of a coalition with a common minimum programme but it is quite another thing for him to contend that between 1988 and 1998, there were no stable governments.
The Narasimha Rao Government (1991-96) lasted a full five-year term, though coming to power without absolute majority, and it is that government which dramatically transformed India from being an inward-looking to an outward-oriented vibrant economy, putting through structural reforms.
It is this paradigm shift that successive governments tried to build on without parallel achievements until a drought in 2002 turned the following monsoon-blessed year into a benchmark for high growth at 8 per cent.
Until 2003-04, India had languished at a lower rate of growth and the five years of BJP-led rule (1998-2003) yielded an average of 5.36 per cent growth. Savings and investments, as a proportion of GDP, never returned to the l995-96 levels of 25.1 and 26.9 per cent respectively.
The Centre's fiscal deficit was steadily lowered from 7.85 per cent in 1990-91 — the year of crisis — to 5.07 per cent of GDP in 1995-96, after which, except for 1996-97 (4.88 per cent), the deficits kept rising to over 6 per cent in 2001-02 and 5.9 per cent in 2002-03.
After the 13 per cent growth in 1995-96, industry was on a downtrend throughout, with an average of 4.5 per cent growth in the five years.
Apart from GDP growth of 7-8 per cent in the three years 1994-97, exports responded vigorously to trade policy liberalisation, registering an 18-20 per cent rise in the mid-l990s. The momentum was lost in the following years until 2001-02, when exports rose again to 19 per cent, repeated in 2002-03.
Mr Jaswant Singh has said that in the pre-l998 era, there were only 15 days worth of foreign exchange reserves (against the present $107-plus billion). How the worst economic crisis since Independence was ably tided over by the then Government, with Dr Manmohan Singh guiding the economy, is too well-known to require recapitulation.
From just $1 billion in August 1991, the trade, industrial, financial and external sector reforms, unveiled in quick succession, helped India begin to build up a safe reserve position to $25 billion in March 1995 and from then on, forex reserves have been on a steady uptrend.
From $42 billion at the end of March 2001, there has been a rapid accretion to $75 billion (March 2003) and upward of $107 billion by mid-February 2004.
The BJP leaders would do well not to belittle the endeavours of the past that laid the foundations of a modern economy, with a strong industrial base, food self-sufficiency, a vibrant public sector in strategic areas, and spectacular advances in science and technology, especially in the nuclear and space areas.
Mr Jaswant Singh has referred to India's resilience in the face of economic sanctions in the aftermath of nuclear tests of 1998, and weathering other external shocks, border stand-offs, the global downturn, and so on.
India's planned development since the l950s had encountered even greater challenges in the earlier decades, such as the India-Pakistan conflicts, China's incursions in 1962, the Bangladesh refugee crisis, and some of the worst droughts of the last century. These were withstood keeping development on track.
No doubt, the serious fiscal and current account imbalances in the l980s led to the unprecedented external payments crisis, exacerbated by the oil price surges triggered by the Gulf War, and it is here the crisis was turned into an opportunity to free the country from the shackles of a highly controlled and regulated economy with a comprehensive range of reforms.
The market-based exchange rate system facilitated larger inflows of external capital and remittances, leading to current account convertibility but, simultaneously, there was shift in emphasis from debt to non-debt creating flows of capital.
As the RBI Currency and Finance Report (2002-03), published in January, noted, "the overall approach of prudence was integrated into the process of growing openness and financial liberalisation which were basic elements of the package of structural reforms instituted in the wake of the BOP crisis of l991" while complementary reforms were introduced in other segments of the economy to strengthen the external sector and benefit from those measures.
The reforms were aimed at improving the productivity, competitiveness and efficiency of the economy to enable India to attain higher growth rates, and they paid off in the first half of the decade. The RBI report says the growth momentum in trade was lost in the latter half of the l990s and there was a decline in both the investment rate as also the share of manufacturing sector in GDP in the recent period.
It is now widely accepted that India is a rising economic power in Asia and this makes many leaders proclaim that the country is set to be a developed nation by 2020. But the current sense of euphoria overlooks the challenges ahead if we have to reach the stage when the over one billion people, rural and urban, feel assured of access to the basic necessities of life.
Even the moderate rate of growth in employment in the 1990s is not being maintained. India is largely showcased as an investment destination to meet the demands of a large middle-class of 200-300 million. The emergence of a strong core of IT professionals in recent years and specialised software skills have pushed India to the forefront and this gives the country a new sense of confidence and a "feel good" factor along with it.
(The author, a former Chief Editor of PTI, is a freelance journalist.)
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