Economy Comparison: NDA vs. UPA

This week UPA completed 9^th year in the office and general election is less than a year. Therefore, this is a good time to have a look at the economic performances of the current UPA government at the centre and compare against the previous NDA government. This comparison is required because various opinion polls conducted across the country showed that NDA is ahead of the UPA and it gives an opportunity for the people to make an opinion of their own based on the comparative data. The present article discusses the GDP growth, consumer price index inflation, fiscal deficit, current account deficit and external debt. These parameters broadly define the economic condition of any country. Data used in this article are from planning commission website for the financial year from 2000 to 2012. Data from Financial year 2000 to 2004 are considered for NDA regime and same from financial year 2005 to 2012 are considered for UPA regime. 

The comparison of GDP growth and Consumer Price Index (CPI) Inflation between NDA and UPA government is presented in Figure 1. During the NDA period average GDP growth was 5.9%, while same during UPA period was 8.3%. The growth comparison between NDA and UPA clearly shows that the GDP growth during UPA period is 2.4% higher than the NDA period. However, the comparison of consumer price index inflation between NDA and UPA regime gives an interesting result. The average CPI inflation during NDA period was 3.9%, while same during UPA period was 7.7%. This shows that NDA government did good job in controlling the inflation, which resulted higher wealth creation than UPA government since the difference between the GDP growth and the CPI inflation for NDA government is 2 % as against the same for UPA government is 0.6%.

 

 Figure 1: GDP and Consumer Price Index Inflation Chart

 A comparative study of fiscal and current account deficit and external debt was also carried out between NDA and UPA governments, which are presented in Figure 2. The average fiscal deficit during NDA regime was -5.3 % of the GDP, while the same for UPA regime was -4.6 % of the GDP. However, the average current account deficit during UPA government was -2.0 % of the GDP, while the same during NDA government was 0.5 % of the GDP.  From this comparison it is clear that UPA government maintained lower fiscal deficit than the NDA government. In case of current account deficit, NDA government maintained surplus cash for short term expenses unlike UPA government. The average debt to GDP ratio during NDA government was 22.9%, which is lower than the same during UPA government with 29.8%.

Figure 2: Fiscal and Current Account Deficit and External Debt Chart

Overall, NDA regime resulted in creating more wealth by maintaining lower inflation, surplus cash for short term cash expenses and low external debt. On the contrary, UPA regime resulted in lower wealth creation due to high inflation, more borrowings for short term expenses and high external debt.