Nitin Gadkari on Economic Policy Resolution and Vision Document
Bharatiya Janata Party National Council Meeting, Ramlila Maidan, New Delhi, 18-19 January, 2014
Promise of the Resolution
BJP is committed to navigate the Indian economy to the new height with innovative ideas from the muddle created by the UPA. BJP states have showcased how economic development is possible even in unfavorable situations. BJP has a clear cut vision for the sound and sustainable economic development ensuring faster growth. This was visible during the NDA regime under visionary leadership of Shri Atal Bihari Vajpayee.
THE WASTED DECADE
The country has witnessed a dark decade under the UPA regime. The Congress led UPA government has failed on all economic parameters and has consequently let the country down. During the decade prices, corruption, interest rates, fiscal deficit, current account deficit, unemployment, agriculture input cost increased manifold putting the people into real hardships. On the other hand GDP, employment opportunities, infrastructure development, real wages of workers, margins of the farmers went down. It is ironical to see global growth picking up and India growth going downwards. Congress regime of ten years proved a disaster for the country.
The economic slump under the UPA was less about global meltdown and more about complete absence of leadership, dual power centers, bankruptcy of ideas, lack of vision, disastrous policies and inherent corruption. It was a wasted decade in which the country saw decline of all sectors, be it education, health, economy, politics or governance. Overall it proved a regime of rapid moral degradation.
Inflation has become one of the biggest failures of the economist Prime Minister. He conceded that on multiple occasions. Along with inflation, corruption has become another hallmark of the UPA regime.Both have crippled the Indian economy. It was degeneration all over. Index of Industrial Production constantly remained in negative zone. All sectors including manufacturing, mining, steel, power and infrastructure have suffered. Farmers and working class were worst hit by UPA’s anti-farmer and anti-labour policies. Income and regional disparities increased and so did the unemployment. Overall, the country suffered and the buck stops at the door of the Prime Minister and the Congress party.
The UPA inherited a robust economic growth at 8.4% in May 2004.There was economic consolidation. We were a current account surplus state with moderate inflation and brisk infrastructure activities thereby ensuring faster job growth. The country witnessed a low interest rates regime ensuring rapid growth in exports. It was an ideal situation for a new government to build upon. The Finance Minister Shri. P. Chidambaram had to admit in his first budget speech on July 8th, 2004 that “the economic fundamentals appear strong and the balance of payment is robust” and “Growth will be sustained by increased production and value addition in agriculture, a marked improvement in industrial production, and continued buoyancy in the performance of the services sector”.
Instead, the UPA government exhausted all these opportunities and took the country’s economy back by many decades. UPA inherited a growth rate of 8.4% and inflation rate of 4% from NDA. It converted the blooming economic environment into despair and now when it is demitting office the growth rate hovers around 4.8% and inflation has been near in double digits.
The inflation remained in double digits for most of the UPA regime. The government defended the rise in prices with many absurd arguments. First it said that globally food prices are going up but factually prices world over grew by meager 3%-5%. It was argued that the demand has grown as people have started eating more. After ridicule from all over the country they beat a hasty retreat. They blamed it on global fuel price increase. The fact is that global prices are hovering around $100 per barrel for many years now but the government deregulated fuel prices and imposed a tremendous burden on the people.
Instead of addressing the supply side issues to arrest inflation, the government continued with squeezing the demand and investment by raising the interest rates for 17 times. It mismanaged the food stocks and allowed it to rot in the open without bringing it into the market. Failure to adopt a comprehensive strategy resulted in ever rising prices. Government was clueless and even the Prime Minister pleaded helplessness when he said “money doesn’t grow on the trees” and even said that “we don’t have a magic wand”. The Government tried to pass the buck on the RBI for its own failure.
People have suffered and their living standards have been adversely affected. Real wages decreased and malnutrition increased. People just above the poverty line hunched down into the poverty trap. Ultimately inflation is a process whereby the real assets are transferred from the poor to the non-poor segments.
UNEMPLOYEMENT – A MAJOR THREAT
NDA during its six year could generate 65 million jobs successfully through its public investment in infrastructure and low interest rate regime ensuring private investment in housing, telecom, irrigation and other sectors. The export competitiveness of industries grew and therefore the jobs.
The UPA reversed the process and high interest rate became the order of the day. Sluggish infrastructure growth and indecision blocked job opportunities in other sectors as well. In its ten years UPA was able to achieve only a miniscule of what NDA achieved in its six years tenure. This has to be read with the fact that every year more than 20 million youths enter into the job market.
More worrisome is the situation that more than 20 million employed people have lost their jobs during the UPA regime. The textile, diamond, services sector and many small scale industries witnessed large scale retrenchments and layoffs. More than 25% of SMEs have either closed in last ten years or are on the verge of closure. This has resulted in large scale unemployment.
The government came out with the ambitious skill development program for 500 million youths over 20 year period but failed miserably. The Government messed up right from the conception of the program. In July 2008, they formed PM’s National Council on Skill Development. In the same month they created National Skill Development Coordination Board. For two and half years nothing moved. In 2013, GOI issued an order that a new National Skill Development Agency which will subsume earlier three offices. So far for five years nothing has been done on the ground. The focus on skilling has been diluted from PM’s council to his advisors office and further to an agency to be chaired by a Cabinet Minister. They wasted the global opportunities to take advantage of the demographic dividend by not providing the required global skills. The youths of the country will never forgive this government for not generating employment for them.
BJP has a track record of generating employment and will offer a New Deal for the youth in the form of employment.
CORRUPTION - THE REAL KILLER
The corruption indulged into by the UPA government had drastic effects on the core sectors of the country. 2G, CWG, Coalgate, VVIP Chopper Scam and other scams have crippled a variety of sectors of the economy besides the loot and plunder involved in it. The corruption affected in two ways. One is a huge loss to the state exchequer and the second is huge increase in the NPAs of the banks.
The Telecom sector was growing at a breakneck speed and it required more and more spectrum. If the government would have gone ahead with a transparent auction process the sector would have progressed seamlessly and the country would have benefited with the auction money but the Congress converted the spectrum sale into a worst kind of corruption. Rs. 1.76 lakh crore scam restricted the sector’s growth and resulted in a situation where the buyers for the spectrum look to auction with suspicion and uncertainty as the industry has lost hope in the government processes.
The mining sector is completely destroyed and as a result not only production has taken a hit but industry has come to a grinding halt.
The coal which would have been ideally exported is now being imported in large quantities due to the scam in coal block allocation and its aftermath. If the government would have followed a transparent process, the industry would not have been destroyed.
The VVIP Chopper Scam and other defense scams have not only sullied our image but have also adversely affected our defense preparedness. Italy, the country which was to benefit from this deal, has gone ahead with the entrapment and prosecution of the middlemen and bribe givers. But India, which is the losing country due to loss of money in this bungling, chose to look the other way. The main middleman Christian Mitchel is not being probed. The other middleman Haschke N Gerosa has put in his diary the abbreviations ‘AP’ and ‘FAM’ as the political recipients of the bribe. The Italian Court and the prosecutor have asked the middlemen about the identity of ‘AP’ and ‘FAM’ but CBI did not think it fit to ask these genuine questions.
FINANCIAL SECTOR IN TURMOIL
The financial sector is presenting some serious concerns. The banking system is in serious trouble with rising NPAs to the tune of Rs. 1.5 lakh crores. The stagnant loans and the demand for CDRs are on a rise. The stagnancy in telecom sector is in the region of 2 lakh crores and that of power sector is around 2.5 lakh crore. Besides, the mining, textile, aviation and infrastructure sectors are also witnessing huge outstanding loans. This has gravely impacted the balance sheets of banks and has a cascading effect on the financial sector.
TAX REFORMS AND BLACK MONEY
The needed tax reform could not materialise due to inept handling by the UPA government and its failure to address concerns of the states. BJP is committed to the rationalization and simplification of the tax regime.
Black money continues to haunt Indian economy. The UPA government even di not completed the formalities after ratification of UN Convention against Corruption. BJP has launched a nationwide campaign against black money through its yatra against led by Shri. L K Advani and it made black money one of the main issue in the 2009 elections. We reiterate our stand against the black money and our resolve to bring it back through necessary legal and other decisions.
The UPA government was ridden by perpetual indecision and policy paralysis. Numerous projects worth lakhs of crores are stuck in the pipeline awaiting clearances. Hundreds of proposals got stuck for environment clearance due to extraneous considerations. Many other projects got stuck in the PMO for variety of other reasons mainly, interference from NAC and real power centers. The result was disastrous. The Prime Minister setup EGOM for faster clearance but nothing moved on the ground. Policy paralysis became synonymous with the Congress rule.
FREE FALL OF RUPEE
When the economic situation deteriorated due to the ineptitude and inept handling the result was large fiscal deficit. The imports grew phenomenally and the exports growth did not match resulting in huge current account deficit. This situation led to the freefall of rupee vis-à-vis dollar and other currencies. When NDA demitted office the rupee was trading at Rs. 45 per US dollar and now it is traded at Rs. 62-65 per US dollar. The Rupee depreciated by 40% in the UPA regime.
Government tried to convey that all the currencies have taken the hit after the announcement of US Fed on quantitative easing. But the fact was otherwise; no other emerging economy saw as much volatility as witnessed in our country.
The country experienced many disastrous consequences due to the freefall of rupee. Imports became costly thereby taking inflation to a new height and foreign education became more expensive. Nobody knows when the real stability will return as today it is the RBI which is propping up the rupee by directly releasing forex for the oil imports and by drastically increasing the customs duty on gold which threatens to bring back the hawala days.
RAW DEAL TO FARMERS AND LABOURERS
The government has given a raw deal to the farmers and the labourers. It denied farmers the real remunerative prices and consistently refused to accept the Swaminathan Formula for calculating the remunerative prices. UPA boasted that it increased MSP more than the NDA but what it did not tell was that actually input cost grew faster than the increase in MSP in its reign.The fertilizer, pesticide, seeds, diesel and all input material costs grew in leaps and bound.
The latest statistics prove the injustice meted out to the farmers as their margins have shrunk year after year during the UPA.
2010-11 2011-12 2012-13
Cost of Production 742 888 1152
MSP 1000 1080 1250
Margin of Profit 34.77 % 21.62 % 8.5 %
Wheat 2010-11 2011-12 2012-13
Cost of Production 826 927 1128
MSP 1100 1120 1285
Margin of Profit 33.17 % 20.81 % 13.91 %
Figures: Commission for Agricultural Costs and Prices
The whole agriculture sector is now in a distress and needs immediate correction. Growing number of farmers suicides, rising indebtedness, migration away from agriculture are all symptoms of this decay. The public investment in irrigation was lower than the need. Thus the UPA regime proved not only anti-farmer and anti-labour by its actions and policies but against the interest of scheduled caste, scheduled tribes and deprived segments of the society. There is urgent need to protect SMEs, tiny industries and artisans.
SURRENDER AT BALI
The Government of India has compromised with the economic interest of the country by agreeing upon on Trade Facilitation at the 9th Ministerial Conference of the WTO at Bali. It is very strange because India has been firmly opposing the Trade Facilitation from the very beginning since 2001. This was one of the four Singapore issues which were set aside on the single handed opposition of India. India meekly surrendered to grant greater market access in order to buy a Peace Clause. As a result food security has come under international scrutiny and there are many restrictions to its enlargement. India even failed in negotiating the revision of external reference price which would have given a window to India in case of MSP and other factors.
MOCKERY OF THE POOR
The skewed approach of the government was on display when it defined the poverty line at Rs. 32 per day. The confusion was confounded by various reports on poverty. The country was up and angry against this government notion of treating a person with an income of Rs. 33 per day as non poor. Even the Supreme Court castigated the government. This is the result of confusion in the government’s thought process.
QUESTION MARK ON GOVERNMENT DATA
First time the reliability of government data is being questioned. Recently government revised its own data regarding GDP growth of 2011-12. Correct data is the foundation of good planning. Distortion in data is a serious lacuna and must be dealt with all seriousness.
INFRASTRUCTURE DEVELOPMENT NDA vs. UPA
Infrastructure is key development for a growing economy. The NDA had unleashed ambitious infra projects in roads, highways, railways, ports, airports and irrigation. That changed the face of the rural hinterland and also ensured large scale job opportunities. The NDA’s initiatives in expansion of education through Sarva Shiksha Abhiyan, IT etc. have added a real value to the national wealth. While NDA achieved 11km of road building per day the UPA promised to double it at 22 km per day and achieved less than 2 km per day. The Electricity Act 2003 changed the power scenario of the country and presented ample opportunities to grow unhindered. UPA even wasted this chance and underachieved on its own targets. It failed on UMPP projects and on ensuring a seamless coal supply. The Prime Minister laid the foundation stone of the two freight corridors crisscrossing the country but even after eight long years nothing concrete is happening on these corridors. The apathy towards infrastructure has caused a further dent to the economy and employment creation.
A body blow was delivered to the Indian and foreign investors confidence by the UPA government with its retrospective tax proposals and flip-flops in relevant investment policies. As a result presently Indian’s are investing more outside India than the net FDI inflow. The FDI announcements have not materialized and repatriation on earlier FDI is growing. This needs correction.
MOOD OF THE NATION
The country deserves much better. People want country to move speedily on the path of holistic growth, ensuring full employment, freedom from ever rising prices and corruption. BJP is committed to navigate the Indian economy to the new height with innovative ideas from the muddle created by the UPA. BJP states have showcased how economic development is possible even in unfavorable situations. BJP has a clear cut vision for the sound and sustainable economic development ensuring faster growth. This was visible during the NDA regime under visionary leadership of Shri Atal Bihari Vajpayee.
What India now needs is a real dose of political leadership to put the derailed economy back on the tracks. The country can no longer afford any further political experimentation at the cost of economic mismanagement that the country has enormously suffered under the Congress led UPA regime. Therefore, BJP has presented to the nation a decisive and progressive leader in Shri Narendra Modi. The people of the country have offered tremendous support to the BJP campaign. Voters this time are not only voting for a change but they are voting to give decisive mandate which can change the course of the India’s economic development. People this time are voting for the country and for its economic revival.
15 Jan 2014
Narendra Modi's address to FICCI national executive
We need to add value to minerals instead of directly exporting them as it is. We need to add value to every natural resource.
Demographic dividend and democracy dividend.
1,00,000 apprentices were taken by firms. Government has given Rs.1500 per month.
100 rupee online courses in subjects specially required by companies. Whenever, a new company wants to invest in Gujarat we find out what manpower it wants and we inform universities to start courses to provide manpower to the company.
We should also manufacture world class mobiles and laptops.
7 Jan 2014
BJP will take steps to increase share of NRIs in FDI to 40% from the present 10 to 15%.
6 Jan 2014 - Talk by Arun Jaitley
Arun Jaitley mentioned low cost manufacturing in his talk. Industrial engineering is an important discipline in this regard.
In the above video, initially, Jaswant Singh's talk on foreign policy was there.