After years of high growth, the Indian economy had suffered a jolt in 2008 end which had cast its shadow on the elections last April-May (2009). The first task of the new government was to restore confidence and the buoyancy in the economy. A bad monsoon last year did not make things easier and if anything had affected the supply situation of food items. Although there was enough buffer stock of food grains, the monsoon failure had generated an inflationary expectation. And prices surely went up and were still remaining at a high level. America and Europe the mainstay of India's exports remained depressed.

There was volatility and uncertainty in the global markets, further worsened by the Greek crisis in the last six months and, more recently, about talks of it spreading to other EU member countries. Fortunately, in the midst of such none too encouraging scenario, Indian economy has been growing and growing at a fairly robust pace one again. In all fairness, in terms of its economic scorecard, the government seems to have done fairly well even when there are clearly areas of slippages from what it had promised.

The UPA II election manifesto had highlighted four main economic challenges. Topping its economic priorities in the manifesto was the promise of high growth with fiscal prudence. In the closing days of its first term, the UPA I government had introduced a stimulus package to restart stalled growth. The new government did not disturb those arrangements and continued these in its first budget after getting re-elected. This had helped the economy to gather steam and regain the growth momentum. The current projected growth rate of 7.2 per cent in the current year is high by any standards for a major economy. Only China has grown faster than India. However, the stimulus measures and the tax concessions had upset the fiscal balance in 2008-09 and 2009-10. For 2010-11 the finance minister had aimed for a fiscal deficit of a lower figure of 5.5 per cent and one has to see how far this is maintained. Even at this level the deficit is fairly high. However, the fiscal slippages have to be viewed against the need for stimulating the economy when growth had gone down into the negative zone.

The manifesto had promised low inflation, where the government has failed. The food prices, which hurt the vulnerable sections most, have persisted to rise without showing much by way of moderation. However, given the nature of inflation, it would be difficult to contain prices without substantially augmenting supplies of food items. Month after month, the food prices have continued to show an inflation rate of above 15 per cent which is unacceptable under any circumstances. This is now leaving an imprint on the overall prices as well. The wholesale price index is hovering around 8-9 per cent which is being targeted to kept at less than 5%. The only hope in the current situation is that if the monsoon turns out normal, the situation could be somewhat retrieved. A normal monsoon and farm production would help dissipate any inflationary expectation. Nevertheless, over the long term agricultural prices cannot be expected to stabilize without substantial step up in supplies. That is difficult to achieve in the short term. The government will have to take a medium to long term programme for increasing food production, improving productivity and farm practices and set up cold chains.

Thirdly, the manifesto had also promised controlling the run-away subsidies budget through more targeted subsidies. There is little progress seen here and whatever efforts were mooted, like freeing up price of petroleum and diesel oil, while holding prices only of kerosene and LPG for poorer households, could not be introduced. Lastly, the UPA II manifesto had promised large disinvestment. Nor could the government implement any ambitious programme of disinvestment to cover part of the large fiscal deficit. Both these would require political will for reform, which cannot be said to be in plentiful supplies in a coalition government. Nor was the government able to introduce the GST so far in its first year. The consolation is however it has promised to do so shortly and taken a few initial steps towards it.

Fourthly, the new government had somewhat mixed record in creating additional employment opportunities. After all, the benefits of growth could be spread out only when it gives livelihood to an increasing number of people. On that score, what we see is that employment had dropped in the wake of the 2008 slow-down of the economy. According to a small sample survey by the NSSO, employment decreased by nearly 5 lakh in October-December 2008. Thereafter, employment increased in January-March 2009. After the new government took over reins, employment increased in 2009 and subsequently. Taking the ups and downs into consideration, the net addition to employment has been to the tune of 13.32 lakh during the calendar year 2009. This is not a large number. However, the figures indicate a positive move after a dip. It can be expected that along with this growth in employment in the organized sectors, there has been expansion of employment in the informal sector as well.

An area of failure has been the persistent shortfalls in the infrastructure sectors. The railways performance has been marred by an increasing number of safety failures, including a glaring stampede in the New Delhi railway station platform. While Ms Mamata Banerjee has laid out an ambitious Vision Document envisaging new railway line construction of 25,000 km in the next decade, there is very little indication that the funds for such huge investment are anywhere in sight. The equally ambitious public-private partnership (PPP) programme has proved to be a non-starter. Members of the high level PPP committee point out that while there were any number of meetings and proposals, there is very little commitment from the private sector to put their investment on the ground. On the other hand, the surface transport ministry in the hand of the new minister made some progress in building roads. The ministry started with euphoria about building 20 kms of new road every day. That obviously was an unrealistic target. In practice, just about 5 kms of new road were laid out a day. Nevertheless, it is better to approach a task with achievable targets than fixing unattainable ones.

In the end, even if there are shortfalls in some of the specific areas which were promised, the achievement of the government has been to regenerate the confidence that was badly dented towards the end of its earlier tenure more by global economic turmoil. However, in the context of the continuing global uncertainties, India's current performance has attracted stellar attention all over and the government deserves some compliment for that. (IPA)