Whose Mistakes Killed The Economy?

As four friends discover, there are multiple villains — the UPA, the NDA, India Inc and the RBI — to blame.

- Aarati Krishnan

After the CSO released its latest GDP growth estimates at 5 per cent for the June quarter, four friends decided to investigate who’s responsible for massacring India’s growth.

Yogesh: Sanju, I hope you’ll admit it at least now that the economy’s been going steadily downhill since the UPA’s golden era. The UPA-2 left behind a quarterly GDP growth of 8 per cent and the NDA has successfully levelled it to 5 per cent.

Sanju: You’re kidding me, right? The UPA-2’s economic policies are the root of all our current troubles. The UPA during its two stints averaged a GDP growth of 6.9 per cent. The NDA in the last five years has averaged 7.5 per cent. Look at the evidence, Sherlock!

Yogesh: Watson, I dispute the evidence, I’m not convinced about the GDP back series. Under the old series, the UPA averaged 7.5 per cent from FY04 to FY14. Come on, even going by numbers from listed companies or bank credit growth, the UPA years felt like boom times.

Sanju: Nice that you should mention bank credit. It is bank credit drying up that has hurt the economy. And who’s responsible for this? UPA-1! The economy took off vertically between FY03 and FY08 with the global commodity supercycle and strong global growth at 3-4 per cent. India’s private sector put up mega steel, power, metal and mining projects and went on a global acquisition spree. With political nudging, banks lent liberally to these projects. Everyone thought the good times would last forever. But they didn’t, right? When the global financial crisis hit, India’s GDP growth crashed to 3.1 per cent. Projects were stalled and banks were left holding the baby. They’re still chipping away at that ₹11lakh crore mountain of NPAs.