Neena Vyas

NEW DELHI: Bharatiya Janata Party leader Yashwant Sinha has said that the National Democratic Alliance government had left the economy in the “pink of health,” whereas the United Progressive Alliance had made a “total mess” of it.

He was responding to a detailed analysis of the economy by the Congress on Monday, comparing the rule by the BJP-led government between 1999 and 2004 to the United Progressive Alliance regime led by the Congress from 2004 to now. All the figures released by the Congress – GDP growth, agriculture growth, social sector spending, funds given to States – favoured the UPA regime.

Mr. Sinha said it was unfair to compare the average growth figures for the five-year NDA rule with the average growth during the UPA tenure. That was “not the correct” way of doing things. Instead, only the last year of the NDA rule should be compared with the last of the UPA.

The Congress said the economy had registered an average growth of nearly 8.5 per cent during the UPA regime compared to an average of about 5.8 during the NDA tenure while agriculture growth was 3.1 per cent under the UPA compared to 2.3 per cent under the NDA.

Credit squeeze

He criticised the high interest rate economy under the UPA with comparatively low interest rates prevailing during the NDA tenure. His view was that a high interest regime led to a credit squeeze that had impacted growth and affected demand for housing and infrastructure, without affecting demand for essential food items. The result was that even after inflation had moderated to a nearly zero level, price of essential foods was high.

Disconnect

There was a “disconnect” between the wholesale price index (WPI) showing nearly zero inflation and the consumer price index (CPI) which was showing double-digit inflation, Mr. Sinha said. “Never before in our economic history has there been such a disconnect between the WPI and the CPI,” he added.

Finally, he charged the Reserve Bank of India with mere “tinkering” of repo rate. “What is the meaning of a cut of 25 basis points as done today? It should be cut down substantially,” he argued.