Monday, September 23, 2013

Modi’s fake encounter was with Yashwant Sinha, not UPA!

After Feku reeled off yet another dubious “fact”, this time on the 8.4% GDP growth of the NDA becoming 4.8% under the UPA, it looked like the PM aspirant of the BJP had goofed up yet again with his numbers. After all, everyone knows that the one talking point the UPA has had over its extended 9 year term is the economy. As expected, the UPA pounced on him, with Finance Minister Chidambaram, calling this Modi’s “fake encounter with facts”. Modi himself went silent, as he usually does after saying something preposterous (remember, he doesn’t even entertain questions), leaving the battle to his acolytes to fight. But there was one man who realized where Modi’s statement was really directed. And that man was Yashwant Sinha!

Yashwant Sinha realized he had been played. Modi’s bizarre statistic was bound to focus attention on the NDA’s sordid economic record, and on him as the FM of that government. Not knowing what to do, and left with no viable options (such is Modi’s political brilliance!), Sinha attacked. He attacked like a Rottweiler, against the one party he can attack even in the middle of the night. Except that he knows fully well how his chances of becoming the FM yet again have been extinguished for good!

Now everyone knows that Modi is a wily politician. No one realizes how his mind works, but having observed him for some time now, I think I do. When he made his statement yesterday, he was plotting the most brilliant, the most perfect, butchery ever. This time of his own party colleague; one who had unfortunately made the mistake of rebelling against his personal ambitions. Modi was going to expose Sinha. And he did! Attacking Sinha’s record as FM was never difficult, and Sinha must have been praying that that record never became the subject of a public debate, but alas! Here are some of the “real facts” that Sinha must not face.

First, the economy’s performance as measured by GDP. That GDP growth during NDA was way below that during UPA (5.9% v/s 8%), as Chidambaram pointed out. But here’s something that he didn’t say. That the GDP growth even before NDA was better. It was some 6%+ during the two years of UF government. Who screwed up? Yashwant Sinha!

Second, again on GDP. The NDA did very little to grow the Indian economy. GDP in 1998 was $420 billion odd and in 2004, $620 billion odd. That’s about 50% growth over 6 years (compounded average growth approx 5.9% as mentioned earlier). During the UPA-1 tenure, the GDP grew from $620 billion to $1.22 billion – a nearly 100% jump in just 5 years. And even during UPA-2, it grew from $1.22 billion to $1.87 billion – a 53% jump in just three years till 2012. It’s only during the last two years that the economy has slowed down in $ terms, mainly because of the global crisis and partly because of the policy paralysis that resulted from a vitiated political environment following the CAG/Anna “movements”. Yashwant Sinha had clearly failed as FM!

Third, the lowest GDP growth rate ever hit by the Indian economy since the 1991 reforms was during Yashwant Sinha’s tenure. It was 4% in 2002-3. That level hasn’t been crossed yet, and I doubt it will ever be, despite the most severe economic crisis the globe has seen since the Great Depression of the 1930s. Who was responsible for this? You guessed right! Damn….why did Modi have to start this debate off!

Fourth, the GDP growth was in the 4% region twice during the six years of Sinha’s rule (2001 and 2003). So if Chidambaram needs to consult anyone during this hour of crisis, it is Yashwant Sinha! Now you understand Modi’s grand design?

Fifth, yes indeed, Yashwant Sinha is right (finally!). The NDA did have nil Current Account Deficit (CAD) during its six years of rule and the Congress in fact had about 2.2% during its 9 years (its gone into the 4%+ territory only in the last two years). But any economist will argue that for a developing country like India, a zero CAD is not a good idea, especially when we have such a large community of NRIs that sends in huge remittances every year. And especially since we are attracting hundreds of billions of foreign capital to fuel our growth. If we didn’t have a negative CAD, our currency would soar, making our exports uncompetitive! Poor Sinha again!

Sixth, that India’s economy is actually very well managed even in the context of external debt, the other point that Sinha loves to rant about. Yes, external debt has gone up from $112 billion (Dec 31, 2003) to some $390 billion now, but so has the economy! The right measure to use is debt:GDP ratio, and that number has stayed static at 20-21% since the NDA period. What is better is that the debt-servicing ratio (ratio of interest payments to gross current receipts) is down from 18% in Dec 2013 (11% without redemption of Resurgent India Bonds) to just 6% now. So if anything, we are under less of a debt burden now than we were after the NDA rule! (Now Sinha is screaming!).

If you think this conspiracy theory is bizarre, think again. This form of attack is a Modi speciality. He attacks a fellow colleague, even while the external world thinks he is praising him! Poor Yashwant Sinha. He was left to defend his record, and in the process accuse Chidambaram of being “economical” with facts. He only managed to prove that far from it, it was Sinha himself who was being “comical” with figures!

The real truth is that this latest Feku trick of seemingly attacking the UPA on economic growth, was actually a covert operation – a fake encounter if you will – on Yashwant Sinha. This is Modi telling Sinha – and all the others who dare him – that for opposing him as PM candidate, he will suffer. If elected, Modi will not make him FM. This is quintessential Modi…..and one after the other…..each one of Modi’s colleagues are realizing the capability of this man!

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