UPA Regime : A Decade of Derailed Economy

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By Sapana : In my previous article “Crown of Thorns: A legacy from Congress to Modi“ dated 1st August 2018, published on Ind Samachar, I discussed about how Benami investments worth multi- billion (scam money) under UPA Regime resulted in Real Estate Inflation causing a decline in returns from industrial, business & service sector. Misrule and mismanagement under UPA rule destroyed all engines of economy leading to stagflation.

Most of the black money was channelled into land purchases, holding and price of real estate, stock & gold soared high in UPA regime. Despite an inflation rate of 9.27 & economic slowdown with GDP rate only 7.7% in Q2 of 2011, real estate prices rose by 21.3% in 2011.

India was ranked second out of 50 countries for annual growth of residential prices in 2011.

Gold rates were Rs.5,850.00 per 10gm in 2004 which rose to Rs.29,600.00 per 10gm in 2013. Ironically, Industrial production which was all time high at 20% in November 2006 witnessed a record low of -7.20 %  in February 2009.

GDP growth under UPA was mainly due to BLACK MONEY driven inflation without any job creation. Parallel economy flourished because of black money roaming around, fuelling fake growth & as a result illegal trades, hawala transactions, speculation, liaison activities proliferated. People involved in these activities made huge profits in a quick span of time because of their links with corrupt politicians/bureaucrats. This gave rise to a Nouveau riche class which indulged in blatant display of their wealth. Money was lavishly spent on huge bungalows, costly interiors, luxury cars, grand weddings, expensive jewellery & designer/branded items.

On other hand, unemployment rose sharply due to stagflation in industrial, business & service sectors. Business activities catering to upper class thrived while small trade/business activities were affected because of decreasing purchasing power of middle class. Many self employed small traders/ businessmen were unable to earn profits due to stagnated economy & had to shut down their business.

An average Indian earning Rs.50,000.00 per month, who lived comfortably earlier found it increasingly tough to manage his finances after spending a major part of his salary on rent or EMI on housing loan, costly education for his children, expensive medical facilities and costly food and essential items. A boutique owner could easily earn Rs.2-3lakhs per month from making expensive designer dresses for upper class while a skilled/talented Engineer or MBA looked for jobs in call centres / BPOs with average salary of Rs.15-30 thousands. If situation was this dismal for middle class, you can well imagine the plight of lower class. Growing Income disparities created frustration, unrest & disillusionment among common people.

During NDA (1998- 2004) inflation had fallen down to 5.4% paving way for faster economic growth. UPA in 2004, inherited a flourishing economy but failed to sustain economic growth due to its usual profligacy. Inflation averaged at over 10% in 2008-12, crashing down the economy in 2012-13. Hence the allegations of opposition that Demonetisation & GST slowed down the economy are totally false and baseless as the economy was already on death bed before Modi took charge in 2014.

Demonetisation and GST were like Life saving drugs for a Scam infected diseased economy. These measures were short term pain for long term gain for the economy.  As a matter of fact, Demonetisation & GST were TWO major instruments in restructuring economy by driving cash from black economy into mainstream to pave way for long term growth. After an initial setback to overall economy, it has controlled parallel black economy and boosted growth in all sectors of real economy.

Demonetisation caused a surge in Banking Sector deposits. According to Ms. Arundhati Bhattacharya, former chairwoman of SBI, Growth of 8-10 % in bank deposits increased to 22- 25 % after Demonetisation, increasing the lendable resources. This will help rapid growth of India’s mortgage market & will boost growth in housing and manufacturing sectors.

Benami investments were worst hit by Demonetisation as they are dominated by Black money cash transactions. Demonetisation and Benami Transactions (Prohibition) Amendment Act 2016 have transformed property market from speculation to an end user segment which is financed by bank loans rather than investors.

Rate corrections in real estate will help in construction of more affordable houses and achieve the housing for all by 2022 (So say thanks to PM Modi & Your Modi Sarkar). It will also curb inflation due to reduction in price/rent of commercial spaces and also help increase profit margin of Manufacturing and business sector.

According to IMF, Implementation of GST by Modi Govt. is a milestone reform in India’s Tax policy and India will be a source of growth to global economy for next few decades. IMF says “Indian economy is an elephant that is starting to run”. Corrective measures have helped Modi Govt. control black-economy and hence boosted real-economy.

This will provide new growth opportunities to Indian youth using their skills, talent and

hard work, destroying the chances of becoming a millionaire by black money investments in Benami transactions and illegal activities.

In my concluding article, I will sum up all the measures taken by Modi Govt to curb corruption and parallel economy, hence paving way for growth of Real economy. So friends please ignore clamour of opposition and TRUST PM Modi’s behavioral economics which will build foundation for rapid Economic growth in a corruption free #NewIndia.

— Sapna, the author is Post Graduate in Commerce, Lawyer & now an Educationist.

— The author can be followed on Twitter  >>  Sapna @sapna_3