In a rebuttal to the former finance minister Yashwant Sinha's remarks on the state of economy under the Congress led United Progress Alliance's (UPA) government, finance minister P Chidambaram said "he' is a distant memory to the people of India".
On Sunday, Sinha of the Bharatiya Janata Party (BJP) said Chidambaram had been a spoiler and posed an 18-point questionnaire to him on price rise, unemployment and subdued growth.
Chidambaram claimed that the country's economy was on a strong footing and will end the financial year with 4.6% fiscal deficit, addition of $25 billion to the reserves and a narrower current account deficit (CAD).
The economy was far more stable and stronger than what it was ten years ago. "I can only see the spirited growth in the economy provided the next government adheres to the ten-point agenda that I outlined in the Interim Budget," said Chidambaram adding that global ratings agencies have stopped downgrading India.
Within an hour the BJP retaliated, saying the Congress leader suffered from "selective memory" and was a patron of crony capitalism. In the allegations and counter-allegations, the focus of political discourse has been on the economy over the past two days.
"I would like to say with full responsibility that the Congress-led UPA and Chidambaram in particular were the biggest patrons of crony capitalism," BJP leader Ravi Shankar Prasad told reporters. He alleged that 2G spectrum, Aircel Maxis and 'Coalgate' stood testimony to this.
Prasad said Chidambaram's decision to "run away" from the polls was the first admission that the tottering Congress had lost the will to fight. Taking a dig at Chidambaram, he said though it was not clear how both employment and unemployment can go down, "I agree Chidambaram will soon be unemployed."
Prasad, said the finance minister was giving technical answers while the country was looking for practical answers.
"Chidambaram is speaking a white lie when he says Narendra Modi's business model is that of crony capitalism," Prasad said.
He said "UPA-I reaped the harvest of what the NDA sowed and UPA II suffered the toxic harvest of UPA I."
Sinha said BJP's immediate priorities, if they come to power, will be to undertake expenditure reforms and softer rates. He also hinted at a 25 basis point cut in the key rates.
Chidambaram, meanwhile, laid down the macro economy figures of his tenure in the economy. "This year will end more or less as we planned. We have succeeded on fiscal deficit. We have sharply contained the current account deficit (CAD). Last year the CAD was at $88 billion. This year, we have not only contracted the CAD, we have also added $25 billion to the reserves. I will not say we have contained inflation but we have tamed inflation," Chidambaram added. He also blamed the economic slowdown of September 2008 for severely impacting the economy.
Experts, however, feel the Congress has reversed the growth cycle.
"NDA took the GDP from 4% levels to 8% levels, while UPA brought it down from 8% to 4% levels. The average in both cases will come out to be the same but to talk of averages is misleading as the direction of the economic cycle has been reversed. If the UPA's economic performance has been so good, why is there a sense of betrayal among the people?" The government's claim that the post Lehman global slowdown impacted the economy is dishonest as the next quarter itself, January-March of FY '09, growth again picked up at 6.9%.
The real blunder was the last full budget of 2008, one year before the 2009 elections. The fiscal floodgates were opened to completely flout the fiscal responsibility and budget management norms, when there was no need at all and the fiscal deficit widened to 6% from 2.5%," said Rajiv Kumar, senior fellow, Centre for Policy Research.