Manmohan's legacy as PM: Goodwill earned in 1st stint, but slips in the 2nd

Economic data shows history will be kinder to him for his first term rather than second

"I honestly believe history will be kinder to me than the contemporary media." These were the words of Manmohan Singh at his last press conference as Prime Minister in 2014.

 

If history is to be told through data on economic performance, it may be kinder to Singh for his first stint (2004-2009) and not the second one (2009-2014).

 

Average annual economic growth in the first four years of his government stood at 7.9 per cent before the global financial crisis, triggered by the collapse of Lehman Brothers on September 15, 2008, pulled economic expansion down to 3.1 per cent in 2008-09. Even so, the average economic growth stood at 6.9 per cent during Singh Government 1.0.

 

 

The growth rate appears a bit depressed compared to what was shown by the old method of calculating GDP on the base year of 1999-00 and 2004-05. On that basis, the middle three years – 2005-06, 2006-07 and 2007-08 – delivered more than nine per cent growth rate before it slowed down to 6.7 per cent in 2008-09 due to the global financial crisis. The first stint of the Singh government yielded an annual average growth rate of 8.5 per cent on that methodology.   

 

In the second term, his government came under the attack as charges of corruption against the regime flew thick and fast in later years, whether it was the 2G scam or the coal scam. This was accelerated when Anna Hazare sat on a fast in the national capital to press for the Jan Lokpal Bill (Citizen's Ombudsman Bill) to investigate corruption charges against public functionaries.

 

Amid these developments, the government shied away from taking major decisions in what came to be called a ‘policy paralysis’. The economic growth fell to 5.2-5.5 per cent in the third and the fourth year before accelerating to 6.4 per cent in the last year. The annual average growth rate still stood at 6.7 per cent, a shade lower than what it was in the first reign.    Manmohan singh death live Updates

 

Other parameters of the economy speak volumes about the policy paralysis years. The country's foreign exchange reserves never recovered to $ 309.7 billion, where they were in the pre-global financial crisis year of 2007-08. This was due to a widening current account deficit (CAD) in the second stint. CAD widened to as high as 4.8 per cent of GDP in 2012-13. Even in the preceding year, it stood at 4.3 per cent. Average annual CAD as a proportion of GDP rose to 5.24 per cent during the second tenure from 4.06 per cent in the first as the international situation again turned difficult because of the eurozone crisis. However,  the government and the Reserve Bank of India deftly tackled the taper tantrum crisis of 2013. 

 

Lack of initiative to withdraw the fiscal stimulus, given to prop up the economy amid the global financial crisis, in a timely manner led to a widening of the Centre's fiscal deficit in the second term with the expenditure-income gap never falling below 4.4 per cent of GDP in any of the years. The average annual fiscal deficit of the Centre widened to 5.24 per cent in the second tenure against 4.06 per cent in the first.

 

Price rise was another mismanagement by the Singh government, the impact of which was borne by the common man, particularly in the second reign. The wholesale price inflation rose to as high as 9.57 per cent in 2010-11. And the average annual inflation rate rose to 6.87 per cent in the second term compared to 6.06 per cent in the first.