The Hindu Business Line : UPA’s reform plans on hold

New Delhi, Aug. 7 With an advance ‘score card’ in hand which shows that the economic track record of the United Progressive Alliance (UPA) would compare “very favourably” with that of the last four years of the National Democratic Alliance (NDA) regime, the Government has practically called a halt to any major economic reforms policy initiatives till the next general elections expected in early 2009.

Till then, the idea is to dig in and consolidate the achievements so as to project an unparalleled economic growth by the end of 2008.

Big initiatives shelved

Sources in the Government indicate that major economic reforms initiatives like raising the foreign investment limit in insurance, amendments to the banking laws to provide voting powers in proportion to shareholding, or large-scale public sector disinvestment have been as good as shelved.

Though these issues were to be thrashed out with the parties supporting the UPA Government from outside, Left party sources told Business Line that no discussions had taken place on these issues and no meetings have been scheduled e ither to take up these matters.

Government sources also confirmed that given the strong stand of the Left parties on these moves, there was little point in pursuing them.

Projections

The likely scenario, as envisaged in the internal assessment, projects that economic growth during 2004-05 to 2007-08 would average about 8.6 per cent per year against the average 4-year-period growth under NDA at 5.6 per cent. Even laggard agriculture is expected to notch 2.9 per cent average growth against the 2.2 per cent average of the NDA.

Projections also show that there have been more investments under its rule than that of the NDA. The gross domestic investment rate, a key driver of economic growth, averaged 25 per cent of the gross domestic product in the last four years of the NDA regime, but would climb to 33.6 per cent average during the UPA period.

On infrastructure, the note opines that “we are now in a position where sustained effort at implementation of the current year’s target would produce excellent results. By mid-2008, the UPA performance will look much better than the NDA in roads, airports, ports, railways and even in power (where massive additions to generation capacity will be put in place in 2007-08).”

Fiscal deficit

The other plus points jotted down in the report include an average fiscal deficit of 3.8 per cent GDP, much better than 5.6 per cent of the NDA’s, average export growth of 28 per cent plus, compared with only 15.2 per cent achieved during the NDA regime, and foreign direct inflows of an average $12 billion a year against the NDA average of $4.9 billion per annum.

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