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h i n du sta n t i m es , n ew d e l h i t u esDAY, fe b rua ry 1 8 , 2 0 14

g 2014-15 interimbudget

11

UPA YEARS: A BRIEF HISTORY 200405

DECODING THE UPA DECADE Economic reforms, compulsions of coalition politics and corruption allegations have buffeted the UPA government’s quest for growth. India’s economy has swung from heady highs to struggling slowdown In economic analysis, a decade is a long enough period to fit a trend. The jury is still out on how historians would judge the UPA decade of 2004-14.However, some statistics stand out. India’s gross domestic product (GDP) grew at an annual average of 7.6% during the period, including the two latest years characterised by a crippling slowdown--an enviable achievement particularly at a time when the US and the EU were reeling in recession. India’s national income is closing in on the $2 trillion mark

• Manmohan Singh assumes office for a second term as PM following a resounding UPA victory in Parliamentary elections

and per capita income has more than tripled in ten years to nearly `75,000 a year, although the richest Indians may have driven much of the growth in income. Besides, adjusted against inflation, the jump in average income is not as scorching. According to government data, even during the rosiest years of growth, during 2004-05 to 2009-10 when growth averaged 8.4%, the economy generated no more than 2 million jobs for the 55 million people who joined the workforce. This unemployment comes at a time when every sector is short of skilled workers — from masons to teachers to waiters to engineers — perhaps a reflection of an education system that is not imparting skills the economy needs. Yet, there is a body of work to show the government’s intent to dispel India’s image as a “welfare laggard,” through targetted rural job guarantee, health, education and food programmes. The government had also almost clinched a consensus on a unified goods and services tax, and a direct tax code. A lot, however, remain unanswered on the UPA regime’s many methods of administrative arbitrariness. The info graphic alongside seeks to encapsulate the troughs and peaks of the UPA decade.

Modest food price rise counters high fuel costs

Average wholesale inflation rate

9.5

%

9.6

%

very good

very good

• The stunning collapse of Wall Street icon Lehman Brothers triggers a financial crisis pushing the world economy into the worst recession in 80 years • India’s GDP growth slows to 6.7% from a dizzying 9%+ growth in the previous three years • Oil companies raise petrol, diesel and cooking gas prices as global crude oil prices touch a record $147 a barrel

9.3

%

very good

`31,206

4.75%

Stagnant fuel costs bring down the inflation rate

`27,131

Real GDP growth rate

`28,067

• Pranab Mukherjee presents full budget as a finance minister after 25 years amid festering wounds of a global economic recession

• He also announces a-`60,000 crore farm loan waiver and relief scheme in the budget for 2008-09.

6.59%

Costly food on rising demand pushes up inflation

• Nearly 200 people are killed and hundreds injured in a series of co-ordinated attacks by terrorists in Mumbai in November • Finance minister P.Chidambaram raises the income tax exemption limit by `40,000 to `1.5 lakh per annum

text: Gaurav Choudhury, Graphic: malay karmakar

4.47%

• The government survives a vote of confidence brought after Left-wing parties withdraw their support over controversial nuclear cooperation deal with US

• Govt introduces new Companies Bill in Parliament proposing a series of amendments making independent directors, board members and auditors more accountable.

`30,332

• Govt launches Aadhar to provide a unique 12-digit individual identification number issued by the Unique Identification Authority of India. This number serves as a proof of identity and address, anywhere in India. Any individual, irrespective of age and gender, who is a resident in India and fulfils the verification process laid down by the UIDAI, can enrol for Aadhaar • The size of India’s central budget crosses `10 lakh crore for the first time as the government sets in motion to usher in major second-generation reforms

• The government and RBI announce cuts, tax breaks and lending rate cuts for global meltdown-hit companies

Flat fuel prices help counter high food costs

8.6

7.0

%

Per Capita inflation adjusted income

good

6.48%

Costly manufactured goods keep inflation rates high

`24,143 `24,143

• Govt passes the SEZ Act paving the way for setting large duty free enclaves aimed at making India a global manufacturing hub • Parliament passes National Rural Employment Guarantee Act usher the launch of arguably the world’s largest rural job guarantee scheme • Parliament passes Right to Information (RTI) Act aimed at bringing transparency in government functioning and giving access to information on public policy formulation • Finance minister P Chidambaram announces major programmes including ‘Bharat Nirman’ to give a “new deal to rural India”

• Manmohan Singh assumes office as the Prime Minister of India, after the Indian National Congress forms the United Progressive Alliance (UPA) government with outside support from Left parties in a surprise election victory

2004 - 2005

• Value Added Tax (VAT), independent India’s biggest tax reforms initiative till date, gets rolling ending years of Centre-state confabulations • Sensex crosses the magical figure of 10,000 at the Bombay Stock Exchange on the back of frantic buying spree by foreign institutional investors and well supported by local operators as well

10,000

2005 - 2006

• The USA and India announce a civilian nuclear agreement during a visit by President George W Bush. The US agrees to give India access to civilian nuclear technology while India agrees to greater scrutiny for its nuclear programme • Govt hands out Delhi and Mumbai airport modernisation to consortia led by GMR and GVK groups amid stiff opposition from Left parties and employees unions • Air India and Indian Airlines merges into one entity called National Aviation Company of India Limited (NACIL) • India’s GDP grows by 9.6 % — the highest since 1989 and second only to populous neighbour China. • Number of cellular phone subscribers in India cross 100 million, eleven years after mobile telephony was opened up for private participation

2006 - 2007

• A string of scams rock the government during the end of the new millennium’s first decade Telecom minister A. Raja resigns facing charges of selling scarce radio spectrum at throwaway prices to ineligible companies, that according to CAG added up to a potential revenue loss of ` 176,000 crore. • Govt allows oil companies to fix prices according to global crude price movements. • Government approves a symbol for the rupee that elegantly combines Devanagiri and Roman scripts

Costly food and fuel fans overall inflation rate

8.9

%

very good

%

good

• Thousands throng Delhi’s Ram Lila ground to support anticorruption crusader Anna Hazare who sits on 12-day fast in Delhi’s Ram Lila ground demanding a strong Lok Pal Bill. • In a major verdict, the Supreme Court cancels 122 telecom licences and spectrum granted to telecom companies in 2008 on the ground that these were issued in a “totally arbitrary and unconstitutional” manner. The SC also came down on the controversial on the firstcum-first-served policy

• Govt approves NRI billionaire Anil Agarwal’s Vedanta Resources’ $8.74 billion bid to gain controlling stake of British oil and gas explorer Cairn Energy Plc’s Indian arm Cairn India

• A retrospective tax on older transactions such as the VodafoneHutch deal and uncertainty over general anti-avoidance rules (GAAR) hurt investor sentiments; govt postpones GAAR’s implementation by three years • The opposition launches an unrestrained attack on the government after a CAG report estimated that arbitrary allocation of coal fields may have robbed the exchequer of potential revenues of `1.86 lakh crore. • Unfazed by political opposition government announces big-bang reforms including allowing FDI upto 51% in multi-brand retail; announces a steep hike diesel prices caps subsidised cooking gas • Rahul Gandhi assumes new role as Congress Vice President

• Pratibha Patil becomes first woman to be elected President of India

• Vodafone buys 67% of Hutchison Essar for $11.1 billion from Hong Kong based Hutchison Whampoa; it is the same deal for which it is fighting a `11,200 crore tax dispute in India. • Sensex scales a record intra-day high of 21,206.77 points on January 10, 2008

2007 - 2008

sales mn tonnes

• Jet Airways and Abu Dhabi-based Etihad announce India’s biggest foreign direct investment deal in the aviation sector valued at `2,058 crore for a 24% stake in the former by the latter • India’s rupee touches a new low of 68.85 as the US prepares to withdraw its monetary stimulus programme as RBI and government curbs in gold imports and eases foreign investment caps

`31,754

%

• Tata Motors acquires a slice of automotive history by buying iconic British car brands Jaguar and Land Rover; showcases Nano whose production was moved to Gujarat from West Bengal following farmers’ protests • B Ramalinga Raju, chairman of erstwhile Satyam Computer Services, resigns after allegedly confessing to doctoring of company’s books

2008 - 2009

good

• Sensex jumps by more than 14,284.21 2000 points in a single day in May after UPA returned to power with stronger mandate in the Lok Sabha elections • India hit by the its worst drought in three decades on inadequate monsoon rain, resulting in fall in farm yields and drop in sown area • The Reserve Bank of India (RBI) purchases 200 tonnes of gold from the International from the Monetary Fund (IMF)

2009 - 2010

13,79,979

15,49,882

15,52,392

19,49,776

2014

petrol (per litre) price

sales tonnes

1400

1300

114.98% `72.47 1200

90.8%

• Parliament passes Companies Bill, the Pension Funds Regulatory Development Authority Bill and the Food Security Act

`33.71

• Food inflationreaches record highs on the back of high onion prices

MARUTI swift car

15744000 tonnes

8251000 tonnes 2004

• Corruption allegations surface barely three months ahead of the XIX Commonwealth Games amid allegations of of major embezzlement of funds by the organising committee

price

sales

1000

274.26% 199000 900

• Parliament passes anti-graft legislation Lok Pal Bill

18.35%

53171

• President Barack Obama arrives with the largest business delegation ever to accompany the US head of state to any country — a clear sign that India’s rising economy has never mattered more to the world’s richest country than now • Govt tables the Direct Taxes Code (DTC) Bill in Parliament to overhaul income tax laws, as also a Constitution Amendment Bill to introduce a Goods and Services Tax to stitch together a common national market

`387000

2014

price

Fuel and food costs remain high for another year

25,01,542

700

2004-05

Average In come (current pr ices)

sales Average in flat adjusted In ion come

600

136.36%

During 2004 -2014, an In dian’s aver grown mor age income e than thre has e times. A tion, it has djusted for grown by 65 infla% implying prices have high eroded hous ehold incom e.

`52

2013-14

500

12.15%

`38,048

• Indian markets catche a global flu on concerns over the world economic outlook in the aftermath of the US credit-rating downgrade by Standard and Poor’s (S&P). • Political compulsions force the government to quickly bottle up the decision to allow foreign direct investment (FDI) in multi-brand retail.

104.3 tonnes

`22

4.5

%

bad

7.35%

Successive interest rate cuts fail to tame inflation

6.06%

4.9

High onion and vegetable prices keep inflation high

%

bad

2011 - 2012

2004

2014

eggs (Dozen) price

26,29,839

300

sales

`74,920

150% `50

`68,839 `39,961

46.12%

`38,856

26,86429

200

100

674100 mn `20 0

46235 mn

2012 - 2013

400

104.3 tonnes

2004

2010 - 2011

800

`458000

rice White (per kg)

8.94%

`61,855

1100

2014

• Aam Aadmi Party’s Arvind Kejriwal takes over as new CM in Delhi as Congress trounced in Assembly polls

20,47,895*

By most estimates, India is set to become the world’s fifth largest economy over the next decade in terms of size measured by GDP (in dollar billion). But it still has some distance to cover to catch up with the big economies such as the US and China

China 8939

90.14

165.11

261.07

391.76

584.32

811.59

919.17

898.02

1761

bn $

Plunging rupee reduces the GDP’s dollar value

1757 bn $ GDP’s dollar value is hit by falling rupee for the second year

1589 bn $ Nominal GDP jumps 18% pushing its value to new highs

1262 bn $ Fiscal stimulus of the previous year raises national income

1219 bn $ Ripples of a global crisis slows down GDP growth

1108 bn $ India joins the $ 1 trn club as GDP growth reaches new highs

872 bn $ India emerges as a global investment hotspot

769 bn $ GDP clocks 9% in real terms for the first time since 1989

656 bn $ India’s export shipment grow at a record 24% amid a global boom

Each square represents a billion dollars, stacked together to measure the Indian economy’s size

France 2739

India 1778

(in million)

52.53

A 21% jump in annual exports raises GDP value

2014

USA 16724

Mobile phone connections

1798 bn $

nnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn nnnnnnnnnnnnnnnnnnnn

big economies and india

2013 - 2014

Passenger Car sales

11,43,076

92.5 2004

• Chicago University Professor and former IMF chief economist Raghuram G Rajan takes over as the new RBI governor

* Apr-Dec

10,61,572

tonnes

1500

• Walmart calls off its deal with Bharti group; British retail chain Tesco announces retail foray into India

6.7

%

average

• India hit by the its worst drought in three decades on inadequate monsoon rain, resulting in fall in farm yields and drop in sown area

1700

140 mn

2004

6.7

• Sensex jumps by more than 2000 points in a single day in May after UPA returned to power with stronger mandate in the Lok Sabha elections

156% `46

`33,901

`40,775

• Tata Steel wins their bid for acquiring AngloDutch metals giant Corus at $11.3 billion making it the world’s 5th largest steel giant.

21,206.77

Jump in oil prices knock up prices of most goods

price

• India successfully leads a developing nations’ move for a deal in WTO

`46,249

8.05%

The economy’s current size measured in stacks of US dollar bills would cross the height of 17 Qutab Minars

MILK Full cream (per litre)

`18

`36,202 • India’s GDP crosses $1 trillion joining the elite club of the world’s largest economies.

Despite the recent slowdown, India’s gross domestic product (GDP) — the total value of goods and services produced within country’s boundaries — is within striking distance of crossing the $2 trillion mark joining the elite group of globe’s richest economies. HT plots the journey on how the economy’s size has multiplied in 10-years:

51%

`54,021

`35,825

India’s $2trn tryst

1600

9.56%

3.81%

Demand Dashboard Rising income has led to greater sales of both consumer durables as well as protein food items. Higher demand has led to higher prices

Few e ve the ris nts capture e of S t ensex he Indian ty ind econo . In 10 ex my’’ ye of doll has yielde d mor ars, the be s growth a ars th e nchm a than faith t have ark eq s 3 in Ind 00 flown uiia in sym % returns. Bil bolise the w lions orld’s

2004-05

`26,015 Per capita income (in current prices)

heady tumbled from The rupee has years. 10 e th in s low highs to record rted po im e makes all A weaker rupe stlier. co ad ro ab g llin goods and trave ins also partly expla A falling rupee ion lat inf h hig d hin the reasons be

2013-14

• Govt releases first discussion paper on Direct Taxes Code to overhaul India’s income tax structure by simplifying rules and norms

• IPL, a domestic T20 cricket tournament, begins to packed stadiums that was marred by controversies in later seasons

201314

875.48* Japan 5007

Germany 3593

Brazil 2190

UK 2490


Interim budget 2014: Decoding the UPA decade