The UPA report card - A mixed bag

Ramlal, a rickshaw puller in Delhi, regrets his decision four years ago to vote for the Congress. He felt then that the Congress’s aam aadmi plank would accommodate him and allow his family to share in the prosperity that was transforming large swathes of urban India. Ramlal earns Rs 4,000 per month with which he supports his wife and two children. He also sends money to his ailing parents who live in their native village in Uttar Pradesh. His hopes have been belied.

Ramlal’s lament is that his lot, far from improving, has only got worse. Earlier, he could not only meet his day-to-day expenses and send home money, but also save Rs 500 every month. But today, he can barely manage to feed his children. “The continuous price rise is making my life miserable,” he complains.

Ramlal’s is not an isolated case. It is symbolic of the fact that the aam aadmi, who voted the Congress-led United Progressive Alliance to power, is less than impressed with the government. There is growing unease across various sections of the population over the government’s inability to rein in inflation— it was at a 13-year-high of 11.63 per cent for the week ended June 21, 2008—which, admittedly, is largely fuelled by international factors. But has the Congress and the UPA really delivered on their promises? It has, on some counts, but hasn’t on most others. But Manish Tewari, Congress spokesman, squarely blames the states for the government’s failure to live up to its promises. “In a federal polity, many subjects fall under the jurisdiction of state governments.

There is little the Centre can do to improve the delivery of services at the state level. If people elect competent leaders, they get a competent administration,” he says.

What went wrong?

Economist Omkar Goswami, Chairman, CERG Advisory, feels the government did earnestly try to fulfil the commitments it made in the Common Minimum Programme (CMP). “The rapid growth of the last six years has increased economic inequality, and accentuated the feeling of alienation among those left out of, or touched only peripherally by, the process,” he says. The Gini coefficient— a measure of statistical dispersion that is commonly used to measure the inequality of income and wealth distribution— for consumption expenditure has increased between 1999-2000 and 2004-05, for both urban and rural India. “It is a fact that people have generally become better off, except that some have got more better off than others. Thus, the increase in inequality,” he adds.

Broken promises Ambitious social sector and economic reforms targets set out in the Common Minimum Programme (CMP) have not been met. Targets: Increase outlay for education to 6 per cent of GDP Status: Remains way below target. Allocation stands at 1.06 per cent of GDP in the 2008-09 Budget Targets: Increase outlay for health to 3 per cent of GDP Status: At 0.99 per cent of GDP, the allocation remains way below target Targets: PSU privatisation Status: Stalled due to lack of political will Targets: Opening up of foreign investment in banking, insurance Status: Stalled due to opposition from allies Targets: Labour reforms Status: Stalled due to pressure from the Left

Then, many of the schemes— most notably NREGA (National Rural Employment Guarantee Act), NRHM (National Rural Health Mission) and JNURM (Jawaharlal Nehru Urban Renewal Mission)—launched by the government were improperly administered. Result: the benefits did not always reach the targeted beneficiaries. Says Charan Wadhwa, Professor Emeritus, Centre for Policy Research: “The intentions behind these schemes were good, but delivery has been poor.”

The UPA government has spent over Rs 2,00,000 crore on fighting poverty, but has not been able to achieve its poverty alleviation targets. The Bharat Nirman scheme, to improve rural infrastructure, is 66 per cent short of its goals. NREGA, UPA’s flagship scheme for the aam aadmi, is generating large-scale corruption instead of employment and has, in most areas, done little to improve the lot of rural workers.

The CAG report on the performance of NREGA reveals loopholes in the system. It reports that in Bihar alone, Rs 2.77 crore and Rs 8.99 lakh were paid to unregistered and fictitious labourers, respectively, during 2006-07.

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Again, the Congress begs to differ. “You should ask the people for whom NREGS makes the difference between getting a meal and starving. It is working very well in states like Andhra Pradesh, Maharashtra and Madhya Pradesh, and is money very well spent, though there may be a few instances of leakages,” says Tewari. The government’s achievements in the areas of health and education, too, are way behind its own targets.

Here, too, Tewari defends the government’s report card. “If you check the records, you will find that the money spent on education and healthcare has increased handsomely since 2004 when the UPA government entered office,” he says.

According to R. Baladevan, Senior Associate, Centre for Civil Society, a not-for-profit organisation devoted to improving the quality of life in this country, the UPA government has not been able to provide any new direction to the country. It has simply increased allocations for cetain schemes instead of trying to remodel and improve the projects. “If a system hasn’t worked for 50 years, what’s the use of pumping more money into it?” he asks.

But the pulls and pressures of running a coalition government meant that the UPA leadership was never in a position to take necessary but politically contentious decisions. “You wonder about the longevity of a dog whose tail is longer than its body,” quips Goswami.

The Prime Minister himself has acknowledged the government’s failures in many areas—like infrastructure, PDS (public distribution system), power sector reforms, corruption, etc. Peak power deficit, at 16.6 per cent in 2007-08, is worse than 2003-04 figure of 11.2 per cent. “Poor implementation of schemes has been a blot on UPA’s economic governance record,” says Goswami.

Global factors

Singh, in his address to the nation on the fourth anniversary of the UPA government, blamed the upward pressure on prices since 2007 on the steep increases in global crude oil and food prices. However, not everyone agrees. Experts feel that the situation would not have gone out of hand if the government had foreseen the price trends.

“The government is now trying to kill the fly that is inflation with the axe of monetary policy,” says Arun Shourie, former Disinvestment Minister and senior BJP leader.

Rajiv Kumar, Director & Chief Executive, ICRIER, feels the government should have taken difficult decisions—like raising the retail prices of petroleum products in line with global crude prices—when the economy was sailing along. “It did not use the good times to consolidate the economy,” he says. Agrees Subir Gokarn, Chief Economist, Standard & Poor’s, Asia Pacific: “If it had passed on the international price movements to consumers, it wouldn’t have been in such a grave predicament as it is today.” Then, the Rs 60,000-crore farm loan waiver scheme announced by Finance Minister P. Chidambaram in this year’s Budget is also generating controversy.

Loan waiver schemes have not always paid political dividends in the past, and already, there are influential political voices demanding expansion of the scheme to include more farmers. And there are also very real fears that the scheme will encourage wilful defaults and weaken the banking system further.

Hopes belied

The coming to power of the UPA government had generated a lot of expectations not only at the bottom of the pyramid, but also in the business community. India Inc. had expected the “dream team” of Manmohan Singh, Chidambaram and Deputy Chairman of the Planning Commission Montek Singh Ahluwalia to launch the second phase of liberalisation.

The economy was on a high growth trajectory during the first three-and-a-half years of the UPA government. The stock markets and the real estate sector were booming, Indian corporations were going global and the economy was growing at over 9 per cent. Labour reforms, banking and insurance sector reforms, pension reforms and disinvestment of public sector units were urgently needed to keep the momentum going. But these were put on the backburner under pressure from the Left.

Soon, the feel good factor generated by the booming economy began to taper off as inflation rose, industrial production declined and the stock markets wobbled. BSE’s market capitalisation has fallen from Rs 70.70 lakh crore on January 8, 2008 to Rs 41 lakh crore on July 3, 2008. Monetary policies to rein in inflation are taking a heavy toll on the manufacturing sector. The Index of Industrial Production (IIP) has grown by a mere 6 per cent in the first four months of the calendar year compared to 12 per cent in the corresponding period last year. According to Dun & Bradstreet, IIP is expected to remain downcast till interest rates come down.

The Congress, expectedly, brushes aside any suggestion of failure. Says Tewari: “You just have to look at our record of successes. The RTI (Right to Information) Act, Sarva Shiksha Abhiyan (SSA), the Mid-day Meal Scheme, NREGS, and loan waver for farmers are shining examples of the good work done by this government.”

Asked to comment on the government’s performance, CPI(M) Politburo member and Rajya Sabha MP Sitaram Yechury, says: “It’s a government in a state of crisis. This is no time to evaluate it.”

The crown jewels

Many feel that the RTI Act is the most significant contribution of the UPA government. “It not only empowers citizens but also enhances democracy and brings about accountability in the public sector,” says sociologist Ashis Nandy.

And, of course, there’s the Indo-US nuclear deal. Most independent experts, most notably former President A.P.J. Abdul Kalam, say the deal is good for the country. If the Prime Minister can pull off the deal, he will probably go down in history as the man who secured India’s energy security and changed its strategic and geo-political doctrine forever.

In balance, these two (RTI and the N-deal), then, are likely to be the lasting contributions of the UPA government. But there’s also an election to be won and an electorate to be wooed and neither RTI nor the Ndeal is likely to resonate with the voters. And therein lies the irony of this government’s achievements.

Additional reporting by Kapil Bajaj