Union Finance Minister Nirmala Sitharaman speaks in the Rajya Sabha during the Budget session of Parliament, in New Delhi on Febuary 10, 2024.
| Photo Credit: PTI

The United Progressive Alliance (UPA) squandered the opportunity to implement the unfinished reforms agenda from 1991 during its decade in office, Finance Minister Nirmala Sitharaman said in the Rajya Sabha on Saturday, accusing the Manmohan Singh government of “thorough mismanagement” after the global financial crisis.

Citing a Tamil proverb “Mullu Mel Potta Thuni Mathiri” (Like a cloth placed on thorns) in response to a discussion on the White Paper on the Economy, Ms. Sitharaman said the Narendra Modi government had to carefully extricate India’s economy out of the thorns the UPA had tangled it in, without ripping its fabric.

“The economy was like a piece of cloth on that thorny bush, the thorns were all those malpractices that had torn into the economy. The whole world was using the phrase Fragile Five for all of us. What was the level of fragility? From the bottom, you were within the first five,” she said.

“After all, you [UPA] inherited a very good economy from the Atal Behari Vajpayee government. And maybe in your first five years, you tried benefiting the people with that good economy. But subsequently, and unfortunately, after the global financial crisis, it was thorough mismanagement,” the Minister said.

Stressing that the White Paper was being brought out now “after 10 years of toiling to bring the economy back on track”, Ms. Sitharaman said it would serve as a record for posterity, when the intent was not good and transparency was not there in the economy. “We need to have clean and accountable governance, not governance through extra-constitutional bodies,” she remarked.

She reminded the House that the first Cabinet decisions under Mr. Modi were the formation of a Special Investigation Team (SIT) to remove black money and the Expenditure Reforms Commission under Bimal Jalan “so that profligate expenditure of the earlier government could be rationalised”.

Referring to former PM Singh, Ms. Sitharaman said that the “promised reforms of 1991 were not complete and “when there was an opportunity again between 2004 and 2014, no reforms” were undertaken.

“It is one thing to continuously tell us what have you done… What have you done on the two-track approach, which is required for the train to go forward, one to remove the malpractices’ impact on the economy and to not only carry forward those pending reforms, which have been waiting from 1991, but also even further to take the economy forward. So, that is the track which we laid for ourselves,” she said.

Dismissing Congress MP K.C. Venugopal’s charge that the demonetisation of high-value currency notes in late 2016 had wiped out India’s Micro, Small and Medium Enterprises (MSMEs), the Minister said as many as 3.16 crore MSMEs were registered on the Udyam platform as of December 4, 2023, and urged the Opposition to do “some more homework”.

MPs in the Rajya Sabha during the Interim Budget Session of Parliament, in New Delhi on Friday.
| Photo Credit: ANI

Opposition leaders from the INDIA bloc in the Lok Sabha on February 9 said the White Paper brought out by the Narendra Modi government on the state of the economy under the Congress-led United Progressive Alliance (UPA) was a “political manifesto” that was aimed at “tarnishing” the Manmohan Singh government.

Most of the members questioned the government why it had not mentioned the November 2016 demonetisation in the White Paper, unemployment, inflation and faulty implementation of GST. Several of them recounted the BJP’s pre-poll promises like creating two crore jobs every year, putting ₹15 lakh into the accounts of every citizen after brining back black money, bringing down the prices of fuel and cooking gas and making the rupee stronger against the dollar.

Two Opposition members — RSP’s N.K. Premachandran and Trinamool Congress’s Saugato Roy — had moved a substitute resolution to highlight the failures of the Modi government and appealed to the House to disapprove the government’s White Paper even though the Opposition doesn’t have the numbers in the Lok Sabha.

Parliament Budget Session – February 9 updates

Responding to the allegations of endless scams under the UPA, Congress and DMK members asked the Modi government to spell out the concrete steps it took to put the guilty behind bars in the past 10 years.

“It is a matter of 10 years. Have you taken any action against any political leader?” asked Congress leader Manish Tewari who led the charge from the Opposition benches.

“If you wanted to bring a White Paper, you should have brought it in 2014. The intention behind this White Paper is only political. This is a political manifesto, not a White Paper,” he said.

Landmark legislation

Mr. Tewari said that under former Prime Minister Manmohan Singh and UPA chairperson Sonia Gandhi, the UPA brought landmark legislation like right to food under the National Food Security act, right to employment under the MGNREGA, right to compulsory and free education and creation of unique identity under Aadhaar. “What has been your achievements in the past 10 years,” he asked.

Congress leader in the House, Adhir Ranjan Chowdhury, said, “At the fag end of this session, this kind of White Paper only with an objective to tarnish the 10 years of UPA government does not cut much ice.”

Stating that “Rome was not built in a day,” Mr. Chowdhury asked why the BJP constantly abused the Nehru-Gandhi family and mentioned how Jawaharlal Nehru and Indira Gandhi are constantly targeted by the ruling dispensation.

His deputy, Gaurav Gogoi, accused the government of using the Enforcement Directorate to “welcome the corrupt into the BJP”. “The action rate of the raids from 2005 to 2014 was 93%, which has now been reduced to 29%. Only 23 convictions under the PMLA (Prevention of Money Laundering Act) have been secured…. Why is the conviction rate so low? Because these raids are motivated,” Mr. Gogoi alleged.

‘Baseless allegations’

Mr. Premachandran said the NDA government had devastated the economy and the White Paper didn’t talk about unemployment and high inflation. “What is the bona fide intention of this White Paper… If you are so hopeful and confident, then what is the intent of this paper,” the RSP leader said, adding that the BJP government is coming up with baseless allegations.

Trinamool leader Mr. Saugato Roy said the government and the Finance Minister should apologise for the demonetisation and putting the country into severe hardships.

Talking about the recent troubles with payment app Paytm, Sharad Pawar-led NCP leader Supriya Sule said Google Pay and Phone Pe are ticking time bombs. “Google Pay, Phone Pe are two sitting time bombs. BHIM app is hardly used while Google Pay and Phone Pe apps are used [widely]. What is the government doing on digital or cashless economy?” she said.

Union Finance Minister Nirmala Sitharaman speaks in the Lok Sabha during the Budget session of Parliament, in New Delhi, Friday, Feb. 9, 2024.
| Photo Credit: PTI

Fugitive economic offenders like Vijay Mallya, Nirav Modi, and Sanjay Bhandari will be extradited to India, Finance Minister Nirmala Sitharaman said on February 9, even as she charged the former Congress chief Sonia Gandhi of being a ‘Super Prime Minister’ in the United Progressive Alliance (UPA) years, blaming “rudderless” leadership for the “one big-ticket scam a year” decade between 2004-2014.

Speaking on the White Paper on the Economy in the Lok Sabha, the Minister said it was a serious document tabled with responsibility as it impacted the lives of people and shall serve as a record for posterity. “…Entire India’s youth should know what effort it took for a Prime Minister with a vision to restore India to its glory,” Ms. Sitharaman said, comparing the Commonwealth Games “flop show” to the “grand” success of G-20 events.

In her opening remarks, she went beyond the UPA decade to remind the House about the LIC of India being forced to invest in an ailing West Bengal firm run by Haridas Mundhra in the 1950s, which culminated in the then Finance Minister T.T. Krishnamachari’s resignation as “a sacrificial lamb”. She also talked about former State Bank of India chairman R.K. Talwar being forced out of office in 1976 when he refused to grant a particular loan to someone close to the government of the day.

She later explained these cases were critical to understand that corruption is a part of the Congress’ DNA. Stressing that national security was compromised in the UPA years, the environment had become a bottleneck for project clearances, hurting development, and the leadership of the day “failed” the country.

Terming the National Advisory Council (NAC) headed by Ms. Gandhi as an “extra-constitutional body worse than a Kitchen Cabinet”, the Minister asked why 710 government files were sent to the NAC office. On Congress MPs’ claims that Aadhaar, MGNREGA, and direct benefit transfers were UPA’s projects, Ms. Sitharaman noted that Ministries had objected to the Aadhaar project at the time.

“Andolanjeevi [a person who makes a living through protests] and BhrashtacharJeevi [a person who survives on corruption] gave birth to the ‘Jayanti Tax’. Licence Permit Raj was brought back through the Environment Tax,” she said, pointing to a rise in average time taken for green clearances from 86 days in 2011 to 316 days in 2014. This has now come down to 70 days, she added, with this government balancing development and environment needs.

Stating that the Enforcement Directorate (ED) was told to “keep quiet to facilitate money laundering” during the UPA years and kept like a “caged bird”, she noted that just 102 prosecutions took place then, compared to 1,200 since 2014. Zero persons were convicted in their tenure, while the number is 58 in our watch, she said, attributing it to the ED being given the “independence to stop money laundering”.

“We have got extradition orders passed in four cases [of fugitive economic offenders] and are extraditing them,” she said, noting that 12 people have been labelled fugitive economic offenders under their watch, while the number of such extraditions was zero during the UPA years.

On why the paper was tabled now, the Minister cited Prime Minister Narendra Modi’s remarks in 2015-16 about refraining from presenting such a white paper at that time in national interest, emphasising that not a single investor would have come to the country and citizens would have lost faith in the system.

“Now, with 10 years of sincere effort to clear up the economy, governance, and making sure that we are not going to stagnate because of the legacy that was left behind… We have 10 years which can therefore be periodically compared with those 10 years… Responsibly, we took the challenge of sorting things out, and now we have put it out there,” she said on the timing of the white paper.

\Former Finance Minister and Congress leader P Chidambaram.
| Photo Credit: ANI

The White Paper by the Narendra Modi government on the state of the economy under the Congress-led United Progressive Alliance (UPA) is a “hatchet job” and “a white lie paper,” former Finance Minister P. Chidambaram asserted on February 9.

“It is a white lie paper. Even the authors will not claim that it is an academic, well-researched or scholarly paper. It is a political exercise intended to damn the previous government and hide the present government’s broken promises, monumental failures and betrayal of the poor,” Mr. Chidambaram said.

Parliament Budget Session – February 9 updates

The former Finance Minister said no other government had made so many “wild promises” as the Modi government and then broken them “without an expression of regret”.

Mr. Chidambaram pointed out that the Modi government had promised two crore jobs every year, bring back black money parked abroad in 100 days, put ₹15 lakh in every citizen’s bank account, bring down prices of petrol, diesel at ₹35 a litre, build 100 smart cities by 2022, double farmers’ income, house to every family by 2022 and achieve a $5 trillion economy by 2023-24.

“In fact, the government laughed them away as election jumlas,” he said, adding, “The paper released today is not a white paper; it is a paper that is intended to whitewash the many sins and commissions of the NDA government in the last 10 years”.

Also Read | Congress ‘black paper’ on ‘Modi government’s failures’ focuses on unemployment and neglect of non-BJP States

Fiscal deficit

Giving a comparative analysis, the former Finance Minister said fiscal deficit was 4.5% in the last year of the UPA regime and 5.8% in the last year of the NDA; household saving as percentage of GDP was 23% under the UPA and 19% under the NDA; national debt under the UPA was ₹58.6 lakh crore while it is ₹173.3 lakh crore under the NDA.

“The Indian economy recorded the ‘golden period of growth’ in the three years between 2005-06 and 2007-08 when the GDP grew at 9% or more at an average of 9.5%,” he added.

Finance Minister Nirmala Sitharaman tables white paper in the Lok Sabha on February 8, 2024. Photo: Sansad TV via ANI

As promised in her Interim Budget, Finance Minister Nirmala Sitharaman laid a White Paper on the economy in the Lok Sabha on Thursday, outlining that the UPA’s 10 years in office created “an inheritance of loss” for the country and the Narendra Modi-led NDA government “rescued the economy from a state of crisis, despair and paralysis”.

Coming two days before the Seventeenth Lok Sabha is adjourned for the last time, the 47-page paper with a few pages of data annexures, sought to make a case that the present government had rejuvenated the economy from the UPA’s policy stasis and misgovernance to infuse it with “dynamism and growth, and hope in the people”.

The paper attributed the few UPA years of high growth to reforms undertaken by the Atal Bihari Vajpayee-led NDA government, and blamed the Manmohan Singh regime not only for being fiscally profligate and opting for “quick fixes” like farm loan waivers, but also for failing to deliver on reforms such as Aadhaar and the Goods and Services Tax (GST).

Parliament Budget Session | Follow LIVE updates on February 08, 2024

“When the NDA government took over the reins in 2014, the economy was in bad shape, nay, crisis. We faced the hydra-headed challenge of fixing an economy mismanaged for a decade, and restoring its fundamentals to sound health,” the paper noted, listing out improvements in various macro-economic and infrastructure indicators such as inflation, forex reserves and highway building pace.

“Our government refrained from bringing out a White Paper on the poor state of affairs then. That would have given a negative narrative and shaken the confidence of all, including investors,” the paper said. One of the objectives of bringing out this paper now, the Ministry said, was to “generate a wider, more informed debate on the paramountcy of national interest and fiscal responsibility in matters of governance over political expediency”.

“Then, we were among the ‘fragile five’ economies; now, we are among the ‘top five’ economies, making the third highest contribution to global growth every year,” the paper said, stressing that the economic policy focus has been to undo “the damage of the previous decade”.

“Now that we have stabilised the economy and set it on a recovery and growth path, it is necessary to place in the public domain the seemingly insurmountable challenges — left behind as a legacy by the UPA government,” the paper stated.

Foreign exchange crunch

Alleging that the UPA created a foreign exchange crunch that “reeked of a re-run of 1991 when India had to approach the IMF for assistance during a Balance of Payments crisis”, the paper said by the end of September 2013, forex reserves were just enough to finance little over 6 months of imports, down from 17 months at the end of March 2004. As of January 2024, reserves were sufficient for 10.6 months of imports, it said.

While the paper listed out some of the structural reforms undertaken by what it refers to as “our government”, such as the Insolvency and Bankruptcy Code, liberalisation of foreign direct investment (FDI) norms and GST, it makes no mention of the demonetisation of high-value currency notes in 2016 that was aimed at denting corruption and weeding out black money. However, it does state that “We continue to undertake measures to unearth black money and to discourage recourse to it”.

Alleging “pervasive corruption” under UPA’s watch that had “shaken people’s confidence”, the paper shares the “current status” of 15 “high-profile” “scams”, including the ones pertaining to coal block allocation, 2G spectrum, Commonwealth Games, and deals like Aircel-Maxi, Antrix-Devas and INX Media.

Also Read | Union Budget | Indian economy witnessed profound positive transformation in last 10 years, says FM Nirmala Sitharaman

While some of those cases are still “under investigation” such as the “Land for Jobs” case in the Railways and the purchase of Hawk Aircraft, the paper is silent on the current status in the procurement corruption allegations pertaining to Augusta Westland Helicopter and Pilatus Basic Trainer Aircraft.

“When our government assumed office, the economy was on a road to nowhere, exhibiting tell-tale signs of deep distress emanating from multiple ‘wrong turns’ in economic policy,” the Ministry emphasised.

The “disconnect between India’s policy planners and priorities for the country was so stark” that the people gave an “overwhelming mandate” in the 2014 Lok Sabha polls to the NDA to “take charge of the reins, reverse the staggering economic and fiscal muddle that the country was mired in and restore its dynamism and optimism.”

“Our government, unlike its predecessor, invested in the foundations of the economy along with building a sturdy superstructure. Looking back at the last 10 years, we can say with humility and satisfaction that we have successfully overcome the challenges left behind by the previous government. That said, we are not resting on our laurels. There are miles to go and mountains to scale before we sleep,” the paper concluded.

T. V. Somanathan, Finance Secretary. File
| Photo Credit: The Hindu

Almost no country seems to adhere to fixed fiscal goals anymore, Finance Secretary T.V. Somanathan said in an interview to The Hindu, emphasising that the country’s high growth trajectory should enable a gradual decline in its debt to GDP ratio. He also noted that inflationary risks haven’t disappeared so the central bank, which is reviewing the monetary policy this week, has to strike a delicate balance between growth and price rise concerns. The White Paper on the economy’s mismanagement prior to 2014 and the transition since then, promised by Finance Minister Nirmala Sitharaman in the interim Budget, is expected to be tabled in this session of Parliament, Mr. Somanathan, who heads the panel reviewing the National Pension System for government employees, said. Deliberations are on and they had already consulted States and Central government staff associations, he said. Edited excerpts: