White Paper Underlines Lessons That Should Never Be Forgotten

There is no dispute that Dr Manmohan Singh is a good man. But history should never be kind to his Congress-led coalition government between 2004 and 2014.

To err is normal. All governments, from Jawaharlal Nehru to the incumbent Narendra Modi all prime ministers have their share of misses. Who doesn’t know the failures of 2016 ‘notebandi’?  

Nehru was wrong in compromising national security and integrity. His state-sponsored industrialisation proved unviable. Indira Gandhi not only disrupted the democratic run of the country but her industrial policies destroyed the last trace of competition. 

However, they are from a different era and, were not exceptional to make such choices. India took time to realise its mistakes. On the contrary, anyone and everyone in trade, during 2004-2014, knew that the economy was going haywire. 

The Lost Decade

As a celebrity economist with long experience in policymaking — as a bureaucrat, as Reserve Bank of India governor and then as finance minister in P V Narasimha Rao’s cabinet — Singh knew it better than any of us. But, he failed to act. 

Singh did not accept his failures. He kept warming the chair of the prime minister, during the fateful years of 2009-2014, when the nation was watching the destruction of a dream that was hyped by his government during its first term between 2004-09. 

The White Paper by the Modi government captured part of the misdeeds. It would serve as a stern warning to all future governments to remain accountable to the aspirations of the nation. 

It is an understatement to describe 2004-2014 as a lost decade. It was complete mayhem. Remember how the entire country went on fire in the name of land protests during 2005-2008 and, how much investments it had cost? 

All forces working against the nation became active. The government did little. A bigger question is if they surrendered to it. A brand-new aluminium smelter had shut shop in Odisha. The Centre denied them a key mining licence. Rahul Gandhi welcomed it. 

If the ruling party takes an anti-investment stance, what was the fault of vested interests in preventing South Korean giant POSCO from setting up a mega steel plant in Odisha in the name of the environment? 

The seeds of destruction in Singh’s second term were sowed in the first term. Coal block allotments and 2G spectrum licences were distributed to anyone and everyone. 

They were not the only bubbles. From unsustainable power purchase agreements to a proposal to jack up domestic natural gas prices to more than double — there was little trace of sanity in the air. 

The entire energy and infrastructure value chain was in disarray, sinking huge bank finance and eroding investor’s confidence. While freshly created capacities idled, the electricity deficit peaked. 

Leave alone attracting global investment, the outflow of foreign direct investment exceeded the inflow, for the majority of Singh’s second term. The government was borrowing far more than set targets to finance populist schemes. 

Capital expenditure plummeted. Banks stopped fresh lending. Construction activities were moving at a snail’s pace. Capital account deficit peaked. The value of the rupee vis-a-vis the dollar tumbled. And inflation was in double digits. 

India was spared from much of the impacts of the 2008 meltdown, yet the economy was in a perilous state as admitted by several domestic and foreign institutions. The situation was worse than it was reflected in official indicators. 

And, all these happened under the watchful eyes of an economist prime minister. That’s sad. Singh owes an apology to the nation for such a disservice. On the contrary, he claimed innocence. 

A Strong Lesson

What happened between 2004 and 2014 should never be forgotten. Whatever has come out in the White Paper is only a fraction. On the brighter side, it had put things in black and white. 

Congress had an opportunity to admit the mistakes of the past and bring out a thorough review of the performance of the Modi government. Instead, they are engaging in some flimsy claim of “democracy khatre mein hain”.

Citizens want an opposition that would force the government to do better. Congress is not doing any such things and they are losing. It is a disgrace for the democracy that the principal opposition party cannot get 100 seats out of over 525.