The ‘White Paper’ on the Indian economy, tabled in Parliament on Thursday by Finance Minister Nirmala Sitharaman, has two strands. First, it showcases the achievements of the Modi government over the decade and contrasts that with its predecessor, the UPA, in the preceding decade to score a political point. Second, and this is perhaps more important, the report makes an investment pitch by underscoring the country’s macro strengths.

In its political-cum-investor pitch, the Finance Ministry report says that the global outlook on India has changed from being the ‘fragile five’ to the ‘top five’, contending that India “is now a must have in one’s portfolio”. If India’s inclusion in the JP Morgan index is a milestone event, so is the development of the GIFT City. There is some basis to the assertion that India’s macroeconomic fundamentals today are a draw. Even if the fiscal deficit is above the levels laid down in the Fiscal Responsibility and Budget Management Act, due to the Covid crisis, its management would evoke investor confidence, as a consolidation process is underway. This has been compared in the report to the UPA’s fiscal overreach during the Global Financial Crisis of 2008 and its unsavoury consequences. The report’s assertions on improvement in the banking sector’s health are valid. The stability of the external sector, the rupee and the banking system should register with rating agencies, investors and India watchers, apart from the central bank’s resolve to keep inflation in check.

Fiscal reforms on the revenue and expenditure side have been noteworthy. The average tax-to-GDP ratio between FY15 and FY24 was 10.9 per cent, against 10.5 per cent in the preceding decade. There has been a near doubling of GST collections between FY18 and FY24 to ₹1.7-lakh crore now. However, the report omits to mention that personal income tax collections have overtaken corporate taxes, despite the rate cuts awarded to the latter prior to the pandemic. On the expenditure side, there has been a welcome reform in the Budget architecture, with capex accounting for 21 per cent of total expenditure of the Centre this fiscal, against 12 per cent in FY14. India watchers are expected to take note of the fact that the ‘twin deficits’ — those on the fiscal and current accounts — are in control, particularly the latter. So long as the fiscal deficit is capex driven, it is unlikely to translate into a higher current account deficit or inflation, unless there are leakages.

However, there are no convincing signs that private investment is growing. This is a puzzle the government needs to address. Some of the comparisons with respect to the UPA’s performance on growth and inflation, or India’s image at that time, are arguably overblown. The blame game could have been played down in a report that is purportedly meant for a larger audience.